The 100 Percent Solution for Online Advertising

  |  April 8, 2004   |  Comments

Vision from the top: Microsoft and competitor Yahoo! united to present one of the strongest arguments yet for online advertising's future.

It's a great time for online advertising. Not just because spend is growing at strong, steady rates. Not just because equity analysts and venture capitalists (VCs) are excited and found our phone numbers and email addresses (misplaced for the past three years). It's great because there's finally some real vision and leadership, which have been lacking for years.

Companies and leaders are stepping up with a real vision for the future and "big hairy audacious goals," as Jim Collins, author of "Built to Last" and "Good to Great" would say. I was fortunate to see Microsoft CEO Steve Ballmer stand before an audience of over 500 ad agency and marketing executives at MSN's Strategic Account Summit in Redmond two weeks ago to declare his vision: By 2010, a full 100 percent of advertising will be delivered across intelligent IP networks. He explained the reasoning, and it seems logical. Ballmer believes all media, from online to TV, from games and music to print, will be transmitted into homes through the Internet and routed to personal devices and applications through PCs and new digital entertainment platforms.

It doesn't matter whether he's right or whether it turns out 70, not 100, percent of media are digitally transmitted by 2010. What matters is the CEO of one the largest and most important companies in the world stepped up to the plate and articulated a vision that's both challenging and compelling. We need that. We must look beyond short-term issues. We must look to what's possible, not just what happened yesterday. That's how we'll grow.

MSN's conference hit all the right notes. It may have been one of the best industry events I've attended in my 13 years in online advertising. Here's why and why it's important to write about it two weeks after the fact.

I'm sure you've read about the event by now. Ballmer made headlines beyond his 100 percent solution vision, both for pronouncements on Microsoft's search strategy and for dodging questions regarding rumors of Microsoft acquiring AOL. Bill Gates (it was the first time since Ballmer became CEO that he and Gates both addressed a customer event) talked about the networked device future and advertising. Rex Briggs, probably the smartest media researcher practicing today, unveiled new and astounding research quantifying the power of online advertising to drive offline sales in consumer packaged goods and in automotive. Most important, Yahoo CEO Terry Semel courageously entered what many may have viewed as the enemy camp to talk about the industry's collective power, the importance of buying campaigns across major online networks, and the significance of industry standards.

There were strong messages behind the news hooks. The event was about the industry's maturity and a vision for its future:

  • Leadership and cooperation. Not only did both Gates and Ballmer take active roles in the conference and discuss online marketing substantially (both handled very specific questions on issues from measurement metrics to behavioral targeting), but they also invited Semel. They're big enough to allow a competitor to address their customers. Semel is big enough to understand the importance of a united front. That's not happened before in this industry.

  • Pragmatism. Ballmer's 100 percent vision was balanced by a message from Joanne Bradford, MSN's chief media revenue officer. She hammered home a challenge to agencies and marketers to commit 8 to 12 percent of their ad budgets to online. She backed this challenge with compelling research indicating marketers will gain from the increase.

  • Focus on fundamentals. Industry standards and research were at the forefront. At the core of Semel's presentation was our success in developing and implementing standards. Greg Stuart of the Interactive Advertising Bureau (IAB) backed this up with more discussion on standards.

  • Truth. Microsoft took strong steps in its rhetoric, contrary to the days when this industry was clouded with vaporware. Ballmer talked openly about Microsoft's failure in the search arena. He took the blame for outsourcing their search product and getting their butts kicked. He admitted Microsoft is starting over and won't create a perfect product out of the gate but promised to version it until it's right.

    That's a far cry from what we've seen in the past and, unfortunately, is beginning to happen again as VCs scramble back into the space. Almost every digital marketing start-up that couldn't get traction in the past two years is adding new business models. They all have a search aspect, or social or behavioral targeting. It's like the old days when floundering start-ups were Internet advertising networks or CRM-enabling. This time, the market will be much smarter.

  • Consumer privacy. Gates took this one head-on, and Semel came out firmly on the consumer side. Gates derided spyware tools and spam, committing to software developments to make both disappear. Semel fielded questions on behavioral targeting and targeting ads across networks and sites. He made it clear Yahoo would steer clear of delivering personally targeted ads that are not permission-based.

It's a great time to be in interactive advertising. Given the strength of the numbers we're seeing (look at Monday's S-1 filing for Advertising.com's public offering, if you want to know how well some industry leaders are doing), it looks like we're going to make a strong run at the 100 percent solution.

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ABOUT THE AUTHOR

Dave Morgan 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.

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