• by Cory Treffiletti , Featured Contributor, June 2, 2004

In the last few weeks, I've read numerous articles about how the advertising climate has made a distinct turnaround. Ad:Tech San Francisco last week certainly confirmed these suspicions as more than 4,000 people descended upon the city by the bay to hear about the present and the future of online advertising. There were parties with lots of people (and the usual array of Audio/Video technical difficulties), and there was a buzz that had been noticeably absent over the last few years.

This second wave of growth is exciting. It brings with it a maturity that demonstrates the direction we are headed, and there are two things I want to point out which signal this direction.

The first is the extended planning cycle that many companies are apparently shifting towards. Though the model of an upfront in the online space is applauded by many and condemned by many others, we are seeing across the board that companies are laying out their interactive efforts in a 6 to 12 month lead time. They are snapping up the best inventory early, forcing their competitors to react accordingly. Many video placements are being locked up in this fashion, as are homepage elements and other broad-reach, highly effective placements. This demonstration of supply and demand in action represents a very important trend as last-minute opportunities and last-minute planning projects will become fewer and far between. Advertisers who wait till the last minute will be relegated to the secondary and tertiary inventory that will not provide them with the ROI they seek, and will have to change their planning cycles accordingly.

The second thing I'm seeing is the continued news that online ad spending, as it becomes a more well-thought-out portion of the media mix, is going to continue to increase. This becomes obvious when you try to make an apples to apples comparison with other forms of media spending. If you attempt to calculate your online ad spending into GRP's (recognizing that the model for doing so is still less than perfect), you will see how miniscule your online ad spending truly is in comparison to the potential audience that is currently online. In many cases, an online spend that is equivalent to $300,000-400,000 a month may only represent 5-10 GRP's. These are relatively small numbers when you compare them to your spending in other forms of media, which may be as much as ten times higher. (Of course you can poke holes in this when you consider the elements of national vs. regional reach as well as the inherent problems with the rating point metric itself.) What's more, if you include the fact that you can track the direct ROI from these dollars much more confidently than you can track offline spending against a specific target audience, it's a no-brainer that you should increase your online spending further.

Now I can already predict what messages will be posted on the Spin board. There will be messages saying that my math is flawed and that I am overstating the issue. There will also be messages that state, "With increased spending comes increased exposure to risk, coupled with a point of diminishing returns at which online spending becomes less efficient." To these statements I respond that since we are able to have a discussion on these numbers, it supports the concept that online is a more important vehicle and continuing to grow in importance. The fact that we can debate this topic at all just goes to prove that these numbers are being examined and considered. The fact that these arguments exist just goes to support the concept that you should be spending more in this medium.

As you start to plan further in advance, these types of analyses should be supplied by your agency. Agencies need to take the lead to provide the apples to apples comparison so their clients will have a truer understanding of their marketing dollars.

I welcome this next phase of interactive growth, as I'm sure that many of you do. I hope to continue debating these, and many other items, as the week's progress.