• by sondra , Jarvis Coffin , December 11, 2006

A recent cover story in Ad Age ("The Short Tail," Nov. 27), which has been well reported in the online trade press, was the old news that most of the ad dollars online go to a handful of large players. According to the article, 72% of ad revenue in Q4 of 2005 went to the top 10 ad selling companies. Almost all of the ad revenue in last year's Q4 (95%) went to the top 50 ad selling companies.

Those of us who labor online have heard all this before--for years. So, why is this newsworthy? I have a hunch that it is because mainstream advertising is becoming unconsciously aware of the fact that having all that money in those few places is out-of-step with the media environment called the Internet. It's an anomaly.

To that point, one assessment Ad Age makes in its article accounting for the concentration of ad dollars is that they are TV dollars migrating to the Internet, which means they must behave like TV dollars. I suspect the assessment is accurate despite the absurdity; obviously, TV dollars belong on TV.

I've sold advertising for my whole career, except for two years at the beginning that I spent on the ad agency side. As a salesperson, I've had the privilege of selling for some of the world's foremost publications, including USA Today, Business Week and The Los Angeles Times, each of them very big ad sellers. Ad Age, in fact, was my first sales job. Despite the competitive advantages of each of these publications, my customers always had a problem it was hard for me to solve: how to allow them to reach their best, most important customer, and eliminate the media waste inherent in how we charged for and delivered their messages.

See, it's great that the Los Angeles Times, for instance, dominates the Southern California market, and it's accepted that it is a "must buy" for retailers and all others interested in reaching what was (as I recall) the world's eighth largest economic region. But if you only want to pay to reach people in part of that region, or part of the people in the whole region, what do you do?

It's an old problem, but it has an answer in today's media economy: the Internet. Consumers were first to recognize this. They bit into the Internet hard and haven't let go. The Internet solves the same problem for them that it solves for advertisers: it eliminates waste. I read the sports section. I don't read the travel section. I follow baseball, I don't follow football. I am a Red Sox fan. I am the sum of my own parts and my media habits reflect that, now more than ever. Indeed, the secret to the Internet's success long-term will be how well aligned its value is with the needs of both consumers and advertisers, which is the case with all great media.

This is all easy to understand, but harder to put into media practice. We can tick off the reasons for that, too: fear, entrenched power of established media, budget scarcity, measurement and standards, creative flexibility, media planning resources, etc. We could be talking about the advent of cable TV or FM radio. The forces at work are the same. First the audiences get it ("I want my MTV"), then we wait.

We know all this, we Internet laborers. So, my hunch is, it's dawning on the broader market that something's got to change. TV dollars do not belong online. It's not a good answer. Internet dollars belong online doing for advertisers what the medium does for consumers (which does not, by the way, include spending much time hanging around portals).

The story the ad trades should be running on their covers right now is the emergence of the ad network as a dominant life form online (see Dave Morgan's column, "Ad Network Resurgence," for instance). That's the story, taking place in real time, that comes after the one about how ad spending is concentrated on a handful of top Web sites that mimic TV. The ad network story is interesting because it implies that the market needs distribution, not concentration. The market is reacting to the fact that the ability to efficiently and transparently access lots of Web sites is somehow important to eventual success. That may not be in the numbers from Q4 of last year, but clearly many people think it will be in the numbers going forward. My bet is we'll read about it in the ad trades in November, 2008.