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Online Advertising in 2003: Predictions

  |  January 8, 2003   |  Comments

Whither online advertising in 2003? Think TV, cross-media, and broadband.

Last year at this time, I made only one prediction: If the industry worked together facing pressing issues, things would get better. I figured that was a pretty safe bet. 2001 was such a nightmare for the entire Internet economy, things could only improve.

I was right. The industry made good progress in prioritizing issues, using rich media, developing the medium's value proposition, and measuring online advertising's value in the media mix. Still, most people I know in the business still work for struggling companies hoping for a turnaround year. Will we turn the corner in 2003?

I've been writing for ClickZ for three years. This is the first year I've decided to make more than the most general of predictions. As is customary, I'll review these predictions in 12 months and see how I did. So without further ado, here are my predictions for 2003.

Broadband Content

AOL announced late last year the company's strategy hinges on getting broadband users to pay for AOL's premium content geared to high-speed connections. Though it remains to be seen whether the strategy will pay off for AOL, this year more publishers will offer specialized content for broadband users, often for a fee.

The number of broadband users is slowly reaching critical mass. It makes sense for publishers to leverage bandwidth-hungry applications such as streaming video to offer more value to users and a more flexible platform for advertisers. ESPN.com has already begun to stream video interviews and highlights to broadband users, along with a video ad. It makes the site more fun to visit and more compelling to advertisers. Watch for more of the same in 2003.

ITV

For an industry once awash in hype for any minor technology or marketing application that came along, it's surprising when a new approach receives less attention than it deserves. Such is the case with iTV. Although there are no real technology standards and the market is highly fragmented (as the Web was in 1995), millions of people are already using some form of interactive TV, with thousands joining their ranks daily.

Whether iTV will become like TV with special features or like the Web with TV content is not yet clear. iTV faces major issues forming an identity. Cable companies in particular are betting heavily that viewers will find interacting with a TV set worthwhile. Though the budding industry has yet to find its killer app, I predict iTV will be on the industry's radar screen by year's end.

Fewer Ads, More Impact

I'm cheating on this prediction, because it was after the New Year when AskJeeves announced it would eschew banner ads in favor of more intrusive rich media formats. Sounds like a good idea.

Online advertising has, for some time, fallen victim to laws of supply and demand. Banners have proven effective, but advertisers want impact, not impressions. More publishers will decrease quantity and magnify quality of their inventory by using larger units and richer media.

Cross Media

If you read my column regularly, you know I believe priority one for the online industry is finding the best ways to complement TV and other offline media. Why? That's where the budgets are. Advertisers are amenable to using the Internet to magnify their huge investments elsewhere.

The Interactive Advertising Bureau (IAB) invested heavily to organize research to measure online's effectiveness and efficiency in the media mix. Results for a half dozen studies are expected in the early half of this year. Most major advertisers, publishers, and agencies will this year come to understand integrating the Web into cross-media plans is the way to use it most effectively.

Do these predictions mean the online industry will experience a turnaround in 2003? I can only repeat what I said last year: If we work hard, things can only get better.

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ABOUT THE AUTHOR

Jeffrey Graham

Jeffrey Graham is vice president of client development at Dynamic Logic, a company he joined in January of 2001. Dynamic Logic specializes in measuring the branding effectiveness of online marketing. Jeffrey has served as research director at two online advertising agencies, Blue Marble and NOVO, and has worked with clients such as General Motors, Procter & Gamble, and Continental Airlines. He has taught Internet Research at New York University and has a Masters degree in the subject.

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