As the end of 2004 approaches I, like most of you, am celebrating a landmark year for Internet advertising. I'm also beginning to turn my thoughts to next year. Here's a small list of the big issues I see heading our way in 2005:
Scale. Can we scale? This was the topic of a presentation by Lincoln Millstein, COO of New York Times Digital, at the iMedia Summit last week. Now that we've convinced traditional advertisers and marketers online is the place to put their money, can we scale sufficiently to accept a significant increase in their budgets? The industry is already experiencing a shortage of high-value inventory. Key vertical channels and rich media inventory are selling out across the Net. Much of the new money earmarked for online advertising is price sensitive, so publishers won't just be able to raise rates wholesale. The money won't move online if prices aren't appropriate. This problem will have to be solved in 2005.
Systems. Publishers have focused so much of their efforts over the past three years on cutting costs, they haven't been able to upgrade much of their publishing, ad-serving, and inventory management infrastructure. Survival and profitability were necessary, immediate goals; building bullet-proof systems wasn't. I suspect this will change, and 2005 will be the year publishers reverse their neglect. Expect a lot of focus on systems and infrastructure.
People. Many working in the industry spent the past three years staying out of the rain (read: getting and staying in a safe job, even if it isn't the best job). Employers spent the time keeping compensation in control, limiting hiring, and making everyone do more with less. This dynamic is changing fast.
With the industry looking at hockey-stick growth projections, many talented folks are looking around to pick their next ride. At the same time, companies are much more aggressively hiring. As a result of increased market demand, they find they need to increase compensation to keep their best talent from straying. Finally, hype and opportunity in the industry are once again bringing a flood of money from venture capitalists and other capital markets. This means more demand for talented people willing to take chances. Finding, hiring, and retaining top people will be a very big issue next year.
Expectations. With excitement again building for the dot-com world, we're once again setting expectations for massive industry growth. Keeping expectations in line, and at rational levels, will be critical to keeping the industry in control. The market and our companies will grow a lot next year. Will they grow as much as the newly minted entrepreneurs and investors hope? Probably not. It will be important to keep that in mind as 2005 unfolds. Unlike the first bubble, we must keep expectations and reality more in line.
Arrogance. This one worries me a lot. In 1999 and 2000, we saw a lot of folks with a "Master of the Universe" attitude. (There's always been a lot of it in the traditional media and marketing worlds.) I fear as our industry accelerates, we'll find arrogance creeping back in to how we act and do business. As inventory tightens, will we find our sales folks shifting from selling marketing solutions to taking orders? Will we find ourselves paying less attention to customers and more to ourselves, listening less and talking more? Will we worry more about where we're having lunch than how much value we deliver for our customers?
We've done it before. We see folks in the network TV and magazine businesses do it every day. If we do it again, we'll lose much of the credibility we reestablished over the past four years. Here's our chance not to repeat the mistake.
Public policy. Now that our industry has a seat at the business table, we need to understand the important role we must play in public policy. As much as we think of ourselves as swashbucklers chasing new business opportunities created by innovations in digital communications technology, we can't forget we touch hundreds of millions of people. We affect their lives. We deliver valuable news and information to them. We deliver information about products and services they can buy. We help them connect with each other. We don't touch only their computers, we touch their lives. With that comes responsibility, whether embedded in laws or not.
We must treat audiences, their cultures, and laws with respect. If we don't act responsibly and control our efforts, legislators and prosecutors will do it for us. 2005 is a year to be proactive and make public policy one of our strengths, not one of our weaknesses.
2005 will be a great year for online advertising and digital marketing. It will be a year that proves we're no longer "new" media. We're on equal footing with all other media. Let's use this coming year to prove we can be the superior medium for marketers to reach their customers.
Dave Morgan founded TACODA Systems in July 2001 and serves as its CEO. TACODA is a pioneer and leading provider of behavioral-targeted online advertising solutions for driving quality branding relationships. TACODA delivers advertisers high quality, targeted audiences from premium sites, powering successful online advertising campaigns. TACODA-enabled Web sites, which number over 2,000, reach over 70 percent of the U.S. Internet audience monthly. Its roster of customers, mostly Fortune 1000 business, includes branded national, regional and vertical sites, and 75 percent of the top 20 U.S. newspaper companies. Customers include the New York Times Digital, Weather.com, iVillage, Gannett/USATODAY.com, The Tribune Company, Belo Interactive, BusinessWeek.com, About.com, Advance Publications' Advance Internet and Forbes.com. Virtually every top 50 online marketer has run campaigns on TACODA-enabled sites, including travel, automotive, packaged goods, consumer/health products and consumer electronics companies.