• by Paul Gough , September 30, 2002

It’s been another tough year in the online media business, but more than 130 of the industry’s movers and shakers stepped back to see where we’ve been and whether the new year is going to bring any relief.

The two-day event, held Wednesday and Thursday at The Yale Club in New York City, was organized by Media Magazine (a sister publication of MDN). It painted a picture of an industry in change but still very much alive.

Jim Meskauskas, president of MediaDarwin, noted in the keynote address that the boom times are long over and many of the dotcoms in business in 1999 are no longer at the end of 2002. And the boomtimes aren’t coming back. “It is an unrealistic expectation,” he said.

But eventually, he predicted, the consumer trust badly hurt by the dot-com bust will return and advertisers will warm up to the Internet. And there’s more work to be done. “We know what we’re doing and now we’re trying to figure out how to make it work better,” he said.

Thursday’s conference focused on five topics:

Consumer Branding

As the online industry struggles for its place at the table, one thing is clear: Interactive media has a place in planning and buying.

“The web is a complement to the overall marketing plan … At the end of the day, if you take that whole marketing plan and you sell more stuff, you’re successful,” said Scot McLernon, executive vice president of sales and marketing at CBS MarketWatch.

Doug Jaeger, creative director at TBWA/Chiat/Day, said he doesn’t think that any other media operates the way the Internet does. It’s more expensive creatively to advertise on the Internet because of multiple executions, he said.

Part of the problem is that no one’s really sure what the Internet is. David Cohen of Universal McCann said it can be used for awareness or for direct response. “It’s what we’re struggling with. It can be a lot of things,” he said.

Many said the Internet is slowly eroding away at TV’s big budgets, but it would take time. Irit Spitalnik, vice president of Ampira Media, said TV and the Internet couldn’t be compared because each has its own personality and merits its own advertising.

Agency Consolidation

What’s driving agency consolidation in interactive media? Wall Street or client need? Panelists agreed that it was client need.

“Clients are asking for it, traditional agencies are saying ‘we don’t have it’ and they’re getting it,” said Carat’s Greg Smith. Agencies acquire that expertise by either acquisition, strategic partnerships or outsourcing.

“Interactive is incredibly complicated to make it work. It takes a lot of investment and a lot of resources,” said Jeff Lanctot of Avenue A. While there was some debate over whether traditional agencies could make money in interactive, Lanctot said there is money to be made and Avenue A is doing pretty well. But then, as he noted, the stakes are higher for companies like Avenue A that just work interactively. Traditional agencies can return to their other work; interactive companies sink or swim in that area alone.

Roni Jenkins of J. Walter Thompson said it’s imperative that interactive media have its place at the table from the beginning so planners create ideas that are “media agnostic.”

Smith said at Carat, everything interactive is done in the language of mainstream marketing. OMD Digital’s Sean Finnegan said in teaching traditional media about interactive, it helps to speak the same language.

Email Marketing

See separate story here.

CRM

Where’s the Web’s future? Relationship marketing.

That means CRM but much more than that to build a relationship with their customers, said Paula Fedoris of iDeutsch. She said clients are now asking how to work with the new medium to build things like loyalty programs online.

Jason Heller of Mass Transit Interactive said these relationships are incredibly important, building direct sales from consumers, research to build a stronger base and evangelism between consumers. And it goes beyond interactive with multichannel CRM. Fedoris said the consumers have to have choices of how to get in touch with you.

“It all revolves around overall customer value and how you can increase that value,” Heller said.

Marketers are finding that preferred channels depends on a consumers’ age. Wahlstrom Interactive’s Kevin Ryan said people older than their 30s seemed to prefer offline communications to email.

The 5% Medium?

Is today’s interactive spending as good as it’s going to get?

“It’s a pretty simple question to ask, it’s not as simple to answer,” said MediaDarwin’s Meskauskas.

Ruby Gottleib of Horizon Interactive said in the past year, she’s seen a lot more clients willing to invest online where previously they felt they weren’t ready. “I’ve seen growth and I don’t believe it at all that this is as good as it gets,” she said.

The Digital Edge’s Adam Gerber said it was too early to determine.

“This medium is still maturing. We don’t know what it will look like five years from now … I think the medium has to prove itself. The medium will earn what it deserves,” Gerber said.

“I keep comparing it to cable when cable was young. … It took 10 years before it was successful,” said Max WorldWide’s Bill Wise.

Sharon Katz of Modem Media said the industry needs to do a better job with brand management and what the medium can do. Clicks aren’t going to do it, she said. And she suggested that moving to a one-advertiser-per-page format might help remove the clutter and clear the way for the message.