On a warm, dry Arizona day, 73 agency representatives and 200 industry players including vendors and publishers gathered at the Camelback Resort in Scottsdale to discuss some of the prevalent issues facing the online industry. Although the cacti and dry heat of the desert does not always cater to growth and fertilization, the energy in the room was vibrant and the expectations for the day’s speakers were high.
The morning kicked off with an introduction by Joseph Jaffe who read a letter from Rick Parkhill, president of iMedia Communications. In the letter, Parkhill expressed his disappointment in not being able to attend the summit. “The group assembled in Scottsdale this week represents a tremendous brain trust that is sure to result in lively and insightful discussion,” Parkhill wrote.
During this introduction, Derek Hewitt, President of iMedia Learning and former vice-president of Global Marketing, took the opportunity to introduce iMedia Learning, one of two new iMedia companies. Furthering the mission of iMedia Communications, iMedia Learning aims to move the needle more in the adoption of interactive marketing. The company also plans to put together online education courses that give traditional folks a thorough grounding in interactive marketing.
“In our little corner of the world, so many changes occur in so little time,” Jaffe stated in his final remarks. “The only constant is change.” He then highlighted some of the major changes that took place in the past year:
- Google was voted 2002 “Brand of the Year,” ousting Coca Cola and Apple
- Dot coms coming of age as profitability is becoming the norm and not the exception
- Bill Lamar Jr. super sized Online’s budget allocation
- The IAB unveiled its UAP, which is another “giant step forward” in terms of standardization
- The Industry figured out how to make a big impression by selling audience
- Unit sizes broke through with half- and full-screen pages and formats.
Starcom’s Jack Klues Speaks of Fusion
Following Jaffe’s introduction, Jack Klues, CEO of Starcom MediaVest Group (SMG), captured attendees’ attention as he discussed the importance of “Fusion,” the intersection of online and offline communication.
Continuing with the theme of change, Klues addressed the fact that traditional avenues to customers have lost some impact because of the following changes:
- Consumers continue to gain more choice and control – from the remote control to TiVo, technology is enabling consumer control
- Population continues to fragment into numerous passion groups that are uniquely defined
- There’s a whole new menu of media options – clients’ investments are maximized across a broader range of platforms
- There’s an intensifying demand for performance.
Klues highlighted further changes such as the fact that market influences are converging, Internet usage has increased with customers devoting nearly 60 minutes of every day to this medium, and traditional media avenues are being digitized and manipulated.
Then Klues asked some loaded questions to get attendees thinking: “If all this is true, why are we entering what is expected to be the biggest upfront television market in history? Why are my clients sending me into that market instead of demanding that I put more of their media dollars into digital efforts?”
The answer? “It’s because by and large our industries haven’t collaborated on a common value proposition to give to our clients.”
Before clients can embrace fusion, agencies and key industry players will have to forge the path, doable through four main deliverables that connect brands to buyers:
- Better insights: “We realized that if we could tap into consumers’ passions, we could build roads into their psyche,” Klues says. “The Internet lets us do that like no other medium.” With the Internet, knowledge can be gathered about what youth – a population that lives in an interactive world – like to do, which games they like to play, where they hang out.
- Investments: While offline gets more eyeballs, online gets more of the right eyeballs. “The right combination of both is a powerful mix.”
- Outcomes: Online and offline measurements such as ROI, impressions, visits can only accurately paint the whole picture if they are aggregated and analyzed. The only real measurement is ROO -- “Return on Objectives” -- but formulas are still needed to build the metrics that prove and quantify the relationships between clicks, impressions and real brand momentum.
- Creativity: “Offline plans, when focused with online opportunities, open up new doors for innovative ideas.”
To effectively illustrate the importance of Fusion, Klues showed a series of case studies.
Ending with some final thoughts, Klues urged agency representatives to:
- Quantify and package their data
- Expand their purview
- Look at what is being done offline and develop rich content ideas that help fuel the power of brands
- Facilitate partnerships
- Push the limits of content
John Skipper: The Integrated Media Game
As EVP of ESPN, John Skipper claimed that his techno phobia has served him well in creating a profitable Internet business. As the founder of ESPN.com, Skipper shared his ideas with summit attendees regarding ESPN Motion and some secrets to successfully bringing content online.
“In a new medium, people still care about the same things they cared about before there was a new medium,” Skipper says.
To illustrate his point, Skipper brought up a few examples. When television first came out, people wanted to see the same things they had only been able to hear before on radios; eBay is successful for the same reasons that flea markets are – both are appealing to a the same human behavior; and search engines such as Google and Overture are today’s versions of libraries. In essence, the killer applications are those that focus on what consumers care about and make them more compelling.
However, every medium has to create content that is only available in that medium. Skipper admitted that one thing that drives him crazy is repurposed wire stories. Skipper gave some examples of what ESPN.com has done to create content that is unique and can only be done online including the LeBron James Lottery, which mathematically calculates which team will receive the first pick to draft LeBron and Fantasy Baseball.
Attendees were also shown a clip of a hockey game in the Staples Center on EPSNMotion. Five hundred and fifty thousand people logged online to view the game and a million and a half people downloaded ESPN Motion over the last month or so.
He then gave some numbers that support ESPN.com’s decision to move to broadband. In 2001, 55% of the connections used to connect to ESPN.com were broadband; in 2002, it was 72%; and this year, 78%. In addition, 92% of the connections at work are broadband and 52% of connections at home are broadband.
Similarly, advertisers have committed themselves to using broadband on the site. In 2001, 12% of advertisers used some sort of rich media while this year it is 50%.
Closing his speech, Skipper said, “There’s nothing more exciting than to be able to be a part of a great new medium.”
Town Hall Meeting
After two thought-provoking speeches, the floor was open to questions. Doug Weaver, president of Upstream Group and Joseph Jaffe mediated. Some key issues covered were:
- According to Skipper, in order to convince someone to invest in upfront dollars, you have to have scarcity and ideas. With infinite inventory, there would be no reason to have upfront. Also important is ideas because you have to have reasons for people to set aside money.
- Klues treats broadband advertising much like syndication: get sites, piece them together on a client-specific basis, drive them against ideas, try to find common consistent strategies and then go from there
- In determining whether credit should be given to online or offline, it really depends on the idea
- ESPN Motion will never be thrown in as added value
• PVRs are not a threat, they’re an opportunity. Although the industry is always changing, the evolution has been very positive. PVRs are just another place to advertise.
Insight: Broadband Penetration/User Trends
After a 15-minute network break where the group was able to get coffee and mingle, the summit took on a new focus: broadband. Charlie Buchwalter, vice-president of analytics for Nielsen/NetRatings, pointed out some important trends and discussed how changing demographics and the continuing penetration of broadband are prompting leading agencies and advertisers to entertain new creative solutions and expand their use of rich-media technologies.
Using a series of charts to illustrate, Buchwalter pointed out that two to three times more pages viewed and time spent is due to broadband. Also, 18- to 24-year-olds is the fastest growing age group adopting broadband with 46% of people in this group currently using it. The percentage of 25- to 54-year-olds using it is 36, and 24% of people aged 55 years and over use broadband.
“At home, not a month goes by that more and more people are using broadband – we’re talking about 35 to 36%,” he says.
Other trends are: People who have broadband tend to have higher incomes; and broadband users have a propensity to spend. In about every single case for commerce activity, people who have broadband are spending significantly more online than narrowband. Buchwalter explains this as being due largely to online tender. “The more that people are online, the more comfortable they are, and they tend to buy more online.”
Speed allows people to do things they never were able to do before, and it’s literally transforming the way the market is adopting the Web.
Using this as his transition, Buchwalter addressed rich media. Broadband is clearly not the only reason rich media is growing, but it is definitely helping to make applications such as ESPN Motion possible.
Future trends may be in advertisers adopting TV-style Internet ads. Although it’s off to a slow start, Buchwalter says the technology does exist, and he predicts the trend will continue upwards throughout the year.
Sites such as Teen People and Celebrity Wonder are some portals hosting TV ads. Also, Dell, AOL Time Warner, Toyota and Walt Disney are some of the traditional advertisers that are pushing the limit and trying it.
Buchwalter wrapped up with some parting shots:
- Rich media has caught on
- Paid search is a differentiating strength for online media
- More agencies and advertisers are hearing a cross-media story
- Large traditional advertisers are increasingly on board.
Insight: NBC & FeedRoom
Continuing along the lines of broadband, Jon Klein, CEO, and Joe Cottone, director of Business Development for NBC Television Station, discussed growth strategies, demonstrated examples, and shared case studies related to overcoming advertising hurdles to ensure value for clients.
Cottone started the discussion with an overview and a feel for how NBC uses broadband to complement what its doing for online strategy. Titled “TV Online and On Demand,” NBC has invested in its online strategy in several ways:
- Believe in product by mentioning in on air
- On-air Web promotional spots
- Keep it simple: no downloads, no speed selection
- Get news department buy in
- Increase distribution.
Klein took over to discuss the results of a Dynamic Logic branding study conducted on an Ameritrade campaign that found “TV-like” results:
- 46% lift in brand awareness
- 37% lift in intent to purchase
- 3% click-through rate
- 96% viewed flash ads
- 80% viewed entire 15-second video spot.
Cottone closed the speech with some case studies including:
- Tribeca Film Festival
- Fort Lauderdale Business and Convention Bureau (created a 15-second ad followed by a 60-second creative when clicked on)
- Cavit Collection (30-second vignette in news cast)
- “Meet the Press” television show (took network type property online)
- Telemundo (took pop video content online)
- Toyota (won 2002 iMedia’s “Best Creative Execution”).
“Everything has come together well with the broadband experience and we’re seeing great results,” Cottone concluded.
Keynote: Andrew Heyward
President of CBS News, Andrew Heyward, wrapped up day one of the summit and spoke about how the explosion of choices and narrowing of niches have profound implications for news junkies, content providers and society itself.
He opened with the identification of some market trends:
- An information gap has developed between generations
- There has been a dramatic decline of share and share of voice
- There is much more competition – network news has turned into a commodity
- Technology now enables people to access information anywhere
- Pictures have driven out words to some degree
- Personality has taken a back seat to immediacy – which has led to detriment of the product
- Comparative advantages are diminishing – reporting live from anywhere in the world is no longer unique or special
- News commodities had to become a real business
- There is now a tremendous emphasis in marketing – new media is able to create a news environment suited to customers
He also mentioned some bizarre market trends such as:
- The notion of “Survival of the Sanest” – Differentiations should be the driving force among networks but in fact they are all very similar. The more different you become, the better off is your competitor
- Dramas and news channels have come together (i.e. Law and Order and reality shows)
- Talk radio and news channels have merged (i.e. Fox News)
Some of the main challenges are:
- Engage the next generation
- Figure out news-on-demand model
- Aggregate audiences
- Broadband is useful, but we have to figure out a way that television and broadband can complement one another.
What are the implications?
- A common, shared culture is now in jeopardy
- Implications for democracy and an increasing information gap between the rich and poor
- In a world of infinite choice, there is a greater role for editors and established brands.
Heyward left attendees with some final thoughts: It is important to remember that broadband represents a whole new medium for news content providers and that the winners will be those who figure out how to integrate. After all, Heyward points out, throughout the history of technology each new media manages to find a place, allowing passive experiences to coexist with interactive ones.
Town Hall Meeting
The final keynote speaker for the day provoked conversation during the Town Hall Meeting and afterwards during lunch. Opening up the floor for questions, the first was asked by Doug Weaver regarding what CBS was most proud of in regard to its coverage of the war. Heyward’s response was the coverage reported by journalists on the front lines.
Some other key points discussed during the session were:
- There is a challenge to not get so enamored with tools across the entire spectrum of new business
- The notion of appointment television will continue to be important – there will be a continued need for a shared, common culture. As long as people regard computers as a supplement, then they will not be a threat
- Television provides discernable added value – something is missing if Internet is the only place consumers go to for headlines
- The challenge is to satisfy traditional viewers while providing Internet users with something that goes beyond the Internet
- CBS’s core values of credibility and competency have to remain solid
- A common misconception is advertisers influence news coverage.
