R-Word Meets O-Word

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SAN FRANCISCO — Online media organizations pondered the prospects for Internet advertising growth during a panel discussion. The consensus: cautious optimism.

The best-case scenario put forth during the ad:tech conference here this week, was that interactive advertising would continue to suck dollars from traditional media. However, a lack of standards and measurability for newer online media, such as digital video and social networking, continues to slow the movement of dollars from the largest advertisers.

The Interactive Advertising Bureau, a trade organization, estimated interactive advertising revenues at nearly $6 billion in the last quarter of 2007 — before the mortgage meltdown and credit crunches really hit.

WashingtonPost.Newsweek Interactive, the digital arm of the two print publications, has seen “advertiser reluctance” in the financial services, travel and classifieds categories, according to Jennifer Moyer, COO, and she expects more decline in revenue from auto advertisers. Nevertheless, she said, “Marketing legend says that in a recession, marketers move dollars from traditional outlets like television, where it’s more difficult to measure, onto Web advertising, where [prices] are lower and the measurability is much higher.”

But, while digital certainly continues to bite off bigger and bigger chunks of marketing budgets, major advertisers, such as Proctor & Gamble or GM, won’t transfer huge portions of their budgets from traditional media to online until they can analyze and compare the two, according to Curt Hecht, executive vice president and chief digital officer for general manager of media agency GM Planworks/Starcom Mediavest Group.

“Digital media is good at behavioral insight, but not attitudinal,” he told the conference audience. “Consumer packaged goods clients want both. If I spend $20 million on Yahoo over a year, I want to know what did I do for my clients’ products over that time?
As more dollars flow in that direction, clients will demand to know.”

The popularity of social media and user-generated content further muddies the view for advertisers, he said. “If a marketer launches a new product and creates a conversation around it, how do you pull that into traditional measures? That’s a huge unknown.”

This article was first published on InternetNews.com. To read the full article, click here.