Sunny Web Ad Forecast Belies Concerns | Adweek Sunny Web Ad Forecast Belies Concerns | Adweek
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Sunny Web Ad Forecast Belies Concerns

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NEW YORK Internet executives gathered for Advertising Week here gave off the palpable feel of a winning team at a victory celebration. Greg Stuart, outgoing CEO of the Interactive Advertising Bureau, told a packed room at the group's MIXX Conference, for instance, that, by its own calculations, Web advertising was nearly an $8 billion business in the first half of the year, continuing a four-year rapid expansion.

Despite the buoyancy-and sense of vindication, there was an undercurrent of restraint. Some execs were concerned that the good times and intense interest in digital could obscure continuing challenges facing the still-young industry, from the risk of a softening economy and confusing metrics to lagging creativity.

"We still have a lot of work to do," said Joanne Bradford, chief media revenue officer at Microsoft's digital advertising unit, at the conference. "I think [we have gotten] a little fat and happy."

Hanging over the gathering was troubling news from Yahoo. Long considered an Internet bellwether, it had warned investors a week earlier that it saw slower-than-expected spending from auto and financial advertisers, two of the top three spenders on Web ads. More ominously, the company said the pullback was not just in text placements but in graphical ads, suggesting that marketers might not be adopting the Web as a branding tool as quickly as had been predicted.

Worries were reinforced last Tuesday when research firm eMarketer downgraded its outlook for the industry, shaving $800 million off its forecast from six months earlier. Greg Coleman, evp of global media sales at Yahoo, downplayed his company's ad wobble, saying its top 200 advertisers continue to increase spending substantially. Execs at MSN, AOL and other top sites said they saw no slowdown, and Mike Kelly, president of media networks at AOL, suggested the Yahoo decrease was more the result of the arrival of new Web ad players like MySpace and digital offerings from ABC and others.

To draw brand dollars from outlets like TV, Web ad execs have pointed to its singular advantage over offline media: its measurability. Clicks and impressions can be accurately tracked online, and advertisers can figure out their return. Yet some warn the Web has not gone far enough establishing reliable metrics for ads that range from in-game placements to pre-roll video, which could impede it from attracting larger portions of ad budgets. "There needs to be some common currency," said Tom Lynch, vp and head of marketing integration for ING.

One area of particular concern: Web video. Broadband video continues to be sold on an impression basis, rather than the reach basis of TV, making it difficult for advertisers to run cross-media campaigns, said Adam Gerber, vp of advertising products and strategy at Brightcove, a distributed video company, and a former Media- Vest exec. "At the end of the day, what matters is how many people did I reach," he said.

Another potential rain cloud cited: a lack of creativity on the Web, which is still morphing from a print-like informational medium to a full-fledged entertainment vehicle more reminiscent of TV, said Kelly. Web video was again pointed to as exhibit A. Most of the streaming video placements continue to be repurposed TV commercials, which risk turning off consumers, warned Coleman, who called their length "very challenging from a user's patience standpoint."

Despite the challenges, though, execs said they saw a bright future for the transition to digital media, particularly compared to where online advertising was just four years ago. Kelly said he believes the Web is on the cusp of a creative renaissance, like TV advertising of the Bill Bernbach era. And Bradford said in an interview, "We used to be happy for people to come and listen to us. We've gotten to the stage now of [asking] what's the second act of this business."