Signs of Online Life at Ad:tech

Search ads a hot topic as old spirit returns to conference

Ad:tech, once one of the hottest online ad conferences, has gotten its groove back.

More than 3,000 people showed up for last week’s event at the Palace Hotel here—back to 2000 levels, said Ad:tech chairwoman Susan Bratto. There were more exhibitors, and Yahoo!, Google and DoubleClick were among a resurgent group of party-throwers—causing many to joke that Ad:tech was partying like it was 1999.

And why not? Online ad spending totaled $1.6 billion in fourth-quarter 2002, up 9 percent from the third quarter, according to the Interactive Advertising Bureau, and PricewaterhouseCoopers projects online spending in the U.S. to rise 6.5 percent in 2003, compared with an 8 percent decrease last year and a 9 percent drop in 2001.

During one panel, Adidas’ Mary Wilhelm said the company has boosted its online budget by 40 percent. In general, said PwC’s Peter Winkler, corporate advertisers are starting to dedicate 2-5 percent of budgets to Internet advertising.

The industry still has plenty to do. Spending was down 16 percent overall in 2002, to $6 billion. During the peak year of 2000, the industry saw $8 billion in spending.

A bright spot is the surging market for search advertising by companies such as Google and Overture. IAB/PwC figures suggest keyword ads accounted for 15 percent of online ad revenue in 2002, almost a threefold increase from 2001. Overture’s Bill Demas said the search-engine ad space is about a $1 billion market but projected to grow to $7-8 billion within four years.