Notes from a true believer: the rise of online advertising

Get ready for a generational shift in the lucrative advertising business. While traditional media may be feeling a bit down in the mouth, online advertising upstarts are just hitting our stride. You've seen us around. We're the search and display ads that sell you electronics, clothing and vacations. What's more, we're gaining confidence that a recession just might help us, not hurt us.

Sound a bit optimistic? Let's look at the numbers. Online spending will reach $28.5 billion in 2008, a 29 percent increase from 2007, according to an eMarketer forecast. Compare that with overall projected spending for all other media, which is expected to gain just .7 percent. Big difference.

There are plenty of reasons online is going to surge ahead while traditional media outlets struggle to stay on their feet. First of all, we do a better job of actually selling products and branding companies. A hundred years ago businesses were buying ads by section: sports, business, entertainment. It may have seemed cutting-edge then, but now it just seems antiquated and highly unaccountable.

Online advertising has evolved to the point where we can use behavioral, contextual and other targeting to reach very specific audiences. "People, not pages" has gone from a vague hope to actual practice. We can get our goods and services in front of the people who actually want and need them.

Plus, we're figuring out better ways to do it every day. Have you seen what display paired with search can do? In some cases, it gets off-the-chart results. And both display and search advertising are poised for the kind of growth we live for. All totaled, U.S. spending is projected to rise to $50 billion by 2011.

We're also using vertical networks to expand our reach while maintaining that audience focus that businesses crave. 

In addition to pure selling, online advertising has also carved out a niche as a great branding tool. Companies are gaining stature and cachet not only through targeted advertising but also through the company they keep online. They're aligning themselves with other trusted and respected sites, gaining additional credibility and draw.

Not convinced yet that the online ad business will sail through a recession? Sure, in the 2001 downturn, we were the first to go. Maybe we deserved some of that. We were untried and untested, and we ran some pretty cheesy ads.

That's all in the past.

Now, we just might be the last ad venue standing. In a climate where every advertising dollar has to pay for itself, we can demonstrate ROI like no one else. Remember that old advertising adage: "I know that half my advertising works; I just don't know which half." That just won't fly anymore. Advertisers are demanding accountability, and we're giving it to them.

And we're just getting started. Online advertising makes up just 7.6 percent of all advertising, so we have nowhere to go but up. We fully understand that we're dwarfed right now by TV and print, but those media forms are suffering from a host of chronic problems, many of which they didn't cause and can't control.

Let's talk newspapers and magazines, for example. The cost of doing business rises every day, from the global demand for paper products driving up prices to those lumbering delivery trucks sucking up gas at $3.40 a gallon. Ouch!

The TV audience was already fracturing -- and in some case defecting -- before the writers' strike that's already got advertisers demanding their money back.

Pile all that on top of the fact that people's media consumption habits are changing, and you've got a recipe for boom times in the internet ad business. Besides our targeted, interactive, measurable advertising, people have a love affair (dare we say addiction?) with their computers. In just three years, 25 percent of media consumption will be online, with ad growth expected to double to 15 percent, according to projections from the Yankee Group.

Need info on the presidential candidates, the latest health scare or celebrity shenanigans? You know where to go. Need a date or just want to chat with others who enjoy your obscure hobbies? Log on, you'll find it. Social media will be one of the growth stars, with ad revenue rising a whopping 163 percent from 2007-08, to top $1.5 billion, according to eMarketer.

Here's something else the online ad business has done right: We've made it easier, more efficient and cheaper to buy ads. We understand that the sheer amount of inventory and the complexity of targeting ads to the right audience can be overwhelming. Buyers need help, and we're giving it to them. We're also giving them protection from being associated with the wrong sites. Do you really want to advertise beef on PETA's site or adult toys on PBSkids.org?

In fact, while we're still fans of traditional advertising outlets (we have our must-see shows on the networks, and we're not ready to give up our Sunday paper), we're simply very bullish on online, in good times or bad.

Joe Apprendi is CEO of Collective Media, a leading online advertising network specializing in premium publishers and leading advertisers. Read full bio.

 

Comments

Arun Krishnan
Arun Krishnan February 11, 2008 at 12:47 PM

An excellent article. Advertising and real estate are the first industries to be normally hit by a recession. However, since the last dip in 2001, CPM advertising gave some share to CPC, which is now making way for CPL. IDC estimates that lead gen marketing is growing at 71% YTY, more than twice the overall industry. With the convergence of mobile and interactive television with online advertising, this trend should rapidly accelerate.

As the cliche goes: Bring it on - if need be.

Arun
http://clickedthrough.wordpress.com

Arun Krishnan
Arun Krishnan February 11, 2008 at 12:47 PM

An excellent article. Advertising and real estate are the first industries to be normally hit by a recession. However, since the last dip in 2001, CPM advertising gave some share to CPC, which is now making way for CPL. IDC estimates that lead gen marketing is growing at 71% YTY, more than twice the overall industry. With the convergence of mobile and interactive television with online advertising, this trend should rapidly accelerate.

As the cliche goes: Bring it on - if need be.

Arun
http://clickedthrough.wordpress.com

Arun Krishnan
Arun Krishnan February 11, 2008 at 12:47 PM

An excellent article. Advertising and real estate are the first industries to be normally hit by a recession. However, since the last dip in 2001, CPM advertising gave some share to CPC, which is now making way for CPL. IDC estimates that lead gen marketing is growing at 71% YTY, more than twice the overall industry. With the convergence of mobile and interactive television with online advertising, this trend should rapidly accelerate.

As the cliche goes: Bring it on - if need be.

Arun
http://clickedthrough.wordpress.com