• by Lynn Russo Whylly , March 22, 2007

The game has changed for good. Don’t get caught playing catch-up.

It was only a dozen years ago that Netscape kicked off the first Internet boom with an initial public offering that sent its stock value up nearly threefold on the first day of trading. Of course, a company can only coast on an IPO for so long. Netscape, now a subsidiary of AOL, has long since lost its leading-browser status.

But Netscape’s hardly alone in its reversal of luck. In the last dozen years, fortunes have been made and lost many times over as new companies have launched, enjoyed wildly successful runs, and then faded into oblivion. Consider that only a few short years ago, Friendster and Angelfire were among the most talked-about start-ups.

Now, a host of new companies are springing up — apparently daily, if not hourly — all hoping for a slice of the Internet economy. With marketers continuing to migrate budget online, TV networks distributing shows on the Web, and consumers seeming to rely on the Internet more and more for media, nearly everyone believes there’s money to be made online.

At the same time, many feel a sense of urgency — a fear that if they don’t move quickly, they’ll be left behind. And if breakneck speed carries its own dangers, well, that’s the entrance fee to play in today’s Internet economy.

“This is not a time to be risk averse,” says Nick Grouf, CEO of online ad agency Spotrunner, who will deliver a keynote address at MediaPost’s OMMA Hollywood Conference & Expo, titled “High Anxiety.”

“The first thing marketers need to understand is that change is inevitable, and by embracing, accepting and driving change, you have an opportunity to change it,” he says. Grouf adds that the ad business has witnessed more changes in the last three years than the last 30. What’s more, the pace will only accelerate as all media goes digital, advertisers seek more accountability, and the market becomes increasingly fragmented.

Users are fickle. For proof, look no further than Friendster, which quickly gained traction, only to be displaced by MySpace.

Companies that are reluctant to acknowledge the constantly mutating new-media world won’t succeed. “You’ve got to recognize that this is overwhelmingly positive for the industry and represents an opportunity for sophisticated businesses ahead of the curve to grab more share,” Grouf says. “I can’t imagine a more exciting time to be a marketer.”

Yet there’s no denying that the prospect of upheaval unsettles many in the business. “It’s hard to find people who want to change the system when they are sitting at the top,” says Nick Nyhan, founder of Dynamic Logic and emcee of the OMMA Hollywood conference.

These themes — the inevitability of change, its risk and rewards — will be explored in depth by a slate of media, marketing and advertising executives at the conference, scheduled for March 19-20.

Other keynote speakers include Arianna Huffington, co-founder and editor-in-chief of The Huffington Post, a nationally syndicated columnist, and author of 11 books, Jason McDonell, Director of marketing, Doritos Brand, Frito-Lay, Inc., Bant Breen, president of Interpublic Futures Marketing Group and David Carson, co-CEO and co-founder of Heavy.

Huffington will explore big media’s continued attempts to remain relevant in a keynote address and will participate in a panel discussion about big media’s waning influence as new sites and blogs continue to emerge.

It’s not just blogs that have helped reorder the hierarchy of Internet companies. Search engines and the e-commerce giants have also played a major role, says Shelly Palmer, “Content is important, but in the post-Google world, contact is king,” Palmer says. “Look at the contact providers of today: Google, Amazon, eBay, iTunes — all of these companies make their living by putting people in contact with things they want to be in contact with.”

Meanwhile, all media is going digital — which allows for more precise targeting, but also results in dramatic fragmentation. “What’s exciting about a shift to digitization is it moves us toward more addressability,” says Grouf. “It presents an opportunity for a viewer to see content that is hand tailored and hand selected in front of them, at the right time.” At the same time, among the hundreds of TV channels, digital radio and myriad online opportunities, generating broad reach becomes quite difficult.

Nyhan adds that consumers wield particular control over digital media — a fact that doesn’t sit well with everyone. “Companies will need to accept less control as part of embracing digital opportunities,” he says. “Some will and some won’t — it’s a big decision with a lot of ramifications.”

Among those ramifications: the definition of “good” content is itself in flux. “There are now many 15-year-olds who define what is good content for the industry by sending the links to their friends,” says Nyhan. “What they send was defined good by them, not by awards shows or creative directors.”

Adds Grouf, “You will see content delivered in much shorter bites. It won’t be about 60-minute programs, it will be two to four minute bursts of information.” Think YouTube, podcasts, blog posts and casual games.

It nearly goes without saying that no discussion of online media is complete without talking about Google. There’s no question that Google has proven indispensable to the Web — both for developing a search engine that lets people navigate the Internet and for its remarkably successful paid search business.

But can Google find success in other, more traditional media? And, if so, what will that mean for ad agencies, media companies and other Internet players. These questions and others will be addressed in the panel discussion about whether Google will turn out to be a “One-Trick Pony” or “King of All Media.”

Regardless of its role in the future, Google has helped drive the resurgence of online ad spending in the last few years. In fact, online ad spending has soared more than 30 percent for three straight years (2004-2006), and eMarketer projects around another 19 percent growth this year.

Much of that growth — though by no means all — has come from search marketing. Now, however, with broadband penetration at all-time highs, many industry executives are turning their attention towards video, wondering how to monetize the growing trove of online clips.

Spending on rich media including online video is expected to nearly triple to $6.2 billion in 2011 from $2.1 billion this year, according to eMarketer.

Jordan Rohan, managing director, RBC Capital Markets, maintains that profiting from online video might turn on figuring out how to extend shows created for the Web to more mainstream outlets. “There are three online video business models: viral and user-generated content; shows with modest production quality and ability to extend into mainstream media channels, and distribution of highly produced long-form content,” Rohan says. “YouTube dominates the first. The second is wide open, and the third requires hundreds of millions (if not billions) of dollars with which to pursue content licenses.”

Of course, there’s always online video ads — pre-roll, post-roll or some other form — but it’s not yet clear which types of video ads will prove most successful online.

After all, the Web isn’t TV — at least not yet. The traditional 30-second spot doesn’t make sense for a two-minute video clip. “We still have a lot of work to do within the main areas of what digital marketing is,” says Nyhan. “Sometimes we get caught up in the new thing when we haven’t nailed the big things we all know about.”

Heavy.com’s David Carson reminds people that it’s ok to slow down and take some breathing room before committing to any particular models. “People should not be in a state of panic,” he says. “People should be in a state of great execution. A business model means nothing if you can’t execute against it.”

Besides, online or off, some fundamentals of good ads remain constant, Palmer says.

“Great marketing trades on fantasy and aspiration,” he says. “The way to prosper during this time of change is to think about your job with the vision, foresight and excitement that you had when you started in the business. There are many challenges coming from many places, but to succeed is to see change and challenge as opportunity.”

For more information on the Hollywood Conference & Expo, go to www.mediapost.com and click on “MediaPost Shows.”