Commentary

Will 2005 Be the Year of Rich Media?

One of the great joys, and at the same time great frustrations, of working in the online industry is that change is constant. How well we adapt to change is a factor in our very survival. We are part of an electronic evolution that punishes those who think they can rest on their laurels. Many of the applications and ideas that emerged in the primordial days of the Internet have died, and those who fail to innovate or improve will soon have a place in that same graveyard.

What are some of the changes in rich media we can expect in the coming year? How well will we adapt?

Rich media and search will converge While it may have passed unnoticed since it was announced just before the holidays, Google search results can now link directly to images, streaming video, and many forms of rich media. This comes at a time when eMarketer says that significant online advertising growth will come from consumer packaged goods (CPG) marketers as they start to use the Internet for branding campaigns. CPG marketers have traditionally used television for branding in large part because it has sight, sound, and motion. Now, between search and rich media, the Internet can not only deliver sight, sound, and motion, but much greater targeting efficiency and accountability. Consumers spend more time engaged with rich media than with any other form of online advertising (one of our units is pulling more than 600 seconds of user exposure). Once CPG marketers realize they can use search to capture generic searchers and deliver them a rich media branding there will be no turning back from a strong convergence of search and rich media.

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Consolidation will accelerate The technologies most rich media vendors offer have not changed appreciably in a long time. The older a technology is, the cheaper it sells for in the marketplace and eventually becomes nothing more than a commodity. As noted, the online industry demands innovation all the time. Although there are lots of new-sounding options and features, most rich media vendors don't invest in R&D, are not strong in marketing, and worst still, have only one technology that will turn obsolete -- or into a cheap commodity -- as time goes by. Already, basic rich media prices have gone down with only the most sophisticated new technologies commanding a premium price. Without real innovation, the only efficient way for those companies to survive is to merge between them and consolidate in the market.

Lack of a commitment to R&D is but one factor driving consolidation. Too many vendors offer only a platform and fail to deliver service to publishers and advertisers. Implementing an effective rich media campaign can be time-consuming and maddeningly complex. If rich media vendors do not provide 24/7 support in addition to great marketing ideas, they eventually will fail or be forced to merge in order to survive.

A classic evolutionary process is already happening as larger companies that provide innovation and support are achieving more economic power. If managed wisely, this power will lead to greater market share putting the weaker companies into a downward spiral from which most will never recover.

Prices will increase for prime inventory leading to new ROI demands Since the burst of the dot-com bubble, the Internet has struggled to elbow its way into a place at the table where serious ad dollars are served. One sign that we have finally arrived is that there is, for the first time, a serious online ad inventory shortage. Some of it is simply inefficient planning, controls, and forecasting, but much of it is simply demand outstripping supply.

The good news is that the crunch will cause prices of prime inventory to rise back up to a respectable cost per million level. It will be healthy for the industry to want to buy inventory in advance in order to lock it up for clients. On the other hand, I think it will lead to even greater pressure on accountability and possibly to new metrics to measure the success of ads. When people pay more, they should expect more from an return on investment perspective. Already pay-per-click is an endangered metric thanks to click fraud. What seemed like a straight-line measurement is now perceived to have many dead ends.

With prime real estate tight, advertisers will look beyond simple clicks to metrics like length of exposure to customers and perceived value of the unit by consumers. This, in turn, will lead to a burst of creativity in rich media R&D to develop units that keep the customer engaged and have a perceived value that transcends the ad message. Not only will ads have to grab consumers, they will be required to hold their attention and perhaps even capture their imaginations.

Yes, change is constant. But we will adapt and thrive. Rich media is an integral part of the evolution of advertising. When the world turns to the Internet, we will be ready.

Mookie Tenembaum is the founder of United Virtualities and the inventor of many of online advertising's newest, most innovative technologies. He holds more than 20 advertising technology patents.

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