• by Nate Elliott , January 31, 2005

Recently an online research company announced that 2005 would be the year of rich media. I love rich media, and I've spent a lot of time trying to make it better, more effective, and easier for sites and agencies to use. But that research report couldn't be more wrong. There will never be a 'year of rich media.'

Rich media simply isn't a big industry. It never has been, and despite all the money that's been poured into it over the years, I don't think it ever will be.

At JupiterResearch, we've forecast that rich media advertising will generate $1.3 billion this year, and $3.2 billion in 2009. These numbers are big. But most of this money would've come into online advertising anyway. That's because the vast majority of rich media impressions are plain vanilla Flash banners that have taken the place of GIF banners.

These aren't the spectacular rich media ads that creative directors dream about. They're simple, hardworking ads that use rich media for basic animations and interactions. This type of rich media doesn't win awards; it just makes everyday banners more effective.

When most people in our industry think of rich media, they think of out-of-banner ads like Eyeblaster and Unicast Superstitials. These ads are splashy, often impressive, and generate high prices for both sites and adservers.

But out-of banner ads must be frequency-capped, which limits the amount of money that sites and vendors can earn from them. As a result, these splashy ads simply don't represent enough of the industry to allow sites to count on them for big money. And they certainly aren't prevalent enough to single-handedly support a rich media vendor.

Unicast provides the classic example. For the last five years, Unicast has owned the hearts and minds of the largest brands in the world. Movie studios, carmakers, and CPGs simply couldn't get enough of the Superstitial. The format has been part of nearly every major online campaign, and more often than not, it's the one ad the online marketing director shows off to the CEO. But despite this, Unicast has never been able to find enough inventory for its ads, and the firm has consistently lost money. Last month they were sold for almost nothing to rich media laggard Viewpoint.

Unicast and its competitors are finally seeing the future of the industry. They're finally realizing that to make money in this industry, you have to focus on plain vanilla banners.

Unfortunately for the sites and the vendors, it's incredibly difficult to make money on basic banners. Advertisers pay five or 10 times more for an Eyeblaster or Superstitial than they do for a GIF banner. By comparison, rich media banners sell for only two or three times the price of a GIF, if there's a premium at all. Meanwhile, sites pay adservers up to 10 or 20 times more for an out-of-banner ad than for a GIF banner. A rich media banner, on the other hand, costs maybe three or four times more than a GIF.

With the industry focusing more and more on low-priced banners, it's become increasingly likely that rich media just isn't going to turn into a good business. Instead, the format may have to be content simply providing a better way for advertisers to reach consumers online.

Believe me, there's no shame in that. Online advertisers too often don't reach consumers. If rich media can help them do so, then it will be giving the industry something more important than the money it generates; it will be giving the industry power, effectiveness, and legitimacy.

I'm not giving up on rich media, or turning my back on the industry. I simply think it's time to recognize that these tools will be best and most frequently used to improve what advertisers are already doing, not to make advertisers do something amazing and new.

I still love what rich media can do for online campaigns. I still think every advertiser should be using rich media for all their ads. But I also realize that rich media will never truly dominate online advertising. Instead, I believe that rich media's future will be its past -- simple, compelling, interactive banners that take existing ad inventory and make it more effective.

-----

I've enjoyed writing for MediaPost over the past several months and I appreciate all the feedback I've received from these columns. On February 1, though, Jupiter is moving me to London to expand our European research. It's an exciting change, but one that will leave me unable to continue writing each week. I plan to make guest appearances in this space, and in between you can always find me at my blog.