Put down the telephone. It's time to log on Madison Avenue was hardly the first to embrace the Internet revolution. In fact, the advertising industry hesitated, and only when unprecedented amounts of startup capital brought overnight success to Internet specialists did the more established agencies dive in.
Change--the creation of Ogilvy Interactive, iDeutsch and JWT Digital, for example--was due to opportunity, as well as fear. It became clear that if agencies did not adapt, they could go the way of the baseball doubleheader.
Today, agencies are not only embracing dot.coms, they're partnering with them, signing clients to fee-plus-equity deals. Agencies have successfully met the threat of the Internet head-on--or have they?
While e-commerce fuels agency growth, shops have lagged in the utilization of such technology to manage that growth--a dangerous dichotomy. What's clear: The advertising business is, and will be, based on speed--speed that traditional methods can't attain. The media industry must embrace e-commerce for the transacting of advertising inventory.
Media outlets continue to proliferate, while concurrently fragmenting into niche properties. It's all in response to advertiser demands for targeted vehicles that generate positive returns. This requires a greater number of executions to deliver the same reach, yet margin pressures prohibit adding staff.
Further, media selling has become increasingly faceless, as media buyers no longer have the time to meet with media salespeople. This leaves the telephone as the main technological ally of the media planner or sales rep. How many telephone-based businesses do you see thriving 10 years from now?
Advertising cannot be immune to the market realities of every other vertical industry. No existing marketplace that depends on one-to-one communications for its buying and selling will flourish against the real-time capabilities of e-commerce.
E-commerce is generally viewed as antithetical to media selling because it imposes an open marketplace on a traditionally private form of distribution. People fear a loss of control and the commoditization of media. Actually, e-commerce is tailor-made for media distribution, especially for confidential pricing.
Media is a unique product because the same item of inventory carries different values for different customers. Consider a computer magazine. It commands a high price from its endemic advertiser base and a much lower price from nonendemic advertisers. An e-commerce platform allows media suppliers to maximize their inventory.
E-commerce offers the ease and efficiency critical in today's increasingly difficult buying environment. E-commerce also enables agencies and buying services to increase their core services without increasing overhead.
Isn't it ironic? Madison Avenue embraces the Internet for its clients but has not done so for itself. It's time to look inward--to welcome the changes of the e-world. The promise of this new era is bright; the risk is simply letting it pass you by. K
Alan B. Masarek is chairman and CEO of AdOutlet.com in New York