AD:TECH Dispatch

I’ve spent this week at the AD:TECH conference in San Francisco, along with around 3,100 of my industry colleagues. I must say, I haven’t seen folks at this show so upbeat in years. It helps the conference began just as the Interactive Advertising Bureau (IAB) released all-time high quarterly numbers for online ad spend; the industry brought in $2.3 billion in the first quarter. It was a statistic quoted by plenty of panelists and moderators.

There were many other signs of the industry’s renewed vibrancy. For one thing, participants certainly felt like partying (especially when vendors were footing the bill). At least two bashes kicked things off Monday night, but party hopping got serious on Tuesday, when folks from one company tooled around in a rented HUMMER limousine. A 1999-era exuberance hung in the air, but it didn’t seem especially irrational this time.

My observations from the show.

Video Is Hot

We’ve been hearing for years about video advertising’s potential online. Now it seems the format is finally hitting its stride, at least from the publisher side.

In one panel, ESPN Motion’s director and general manager Ed Davis discussed plans for increased personalization on the sports content site, which has proven to be popular with advertisers. Since ESPN Motion involves video downloaded to users’ desktops in the background via an application, the company has a great amount of control over its bandwidth use. This capability has helped ESPN Motion overcome one of the biggest hurdles around streaming content: Costs increase as users increase.

ESPN Motion plans to leverage that capability as it adds personalization. The site will automatically download video content to users’ desktops. Clips are selected based on users’ self-selected preferences and the site’s observations about their interests.

The company will also launch send-to-a-friend functionality in the next two weeks and will make its video searchable. Davis expects the net result will be users watching more video — and, therefore, more associated advertising.

“There’s a big financial incentive for us to solve personalization,” said Davis. “Even if users don’t really realize what’s happening with the system-based personalization, it’s saving us money.”

A conversation with MSN Video’s Todd Herman and Steve Moss confirmed the positive video outlook. “We will be a respectable cable-sized audience in 12 months,” predicted Herman, streaming evangelist for MSN.

Word-of-Mouth Marketing

The show saw the launch of the Word of Mouth Marketing Association (WOMMA), brainchild of Intelliseek’s Pete Blackshaw and BzzAgent’s Dave Balter. It was standing room only in several panels devoted to word-of-mouth marketing. Clearly, marketers are trying to get a handle on blogs and other forms of user-generated content. I’m really looking forward to seeing this space develop.

Ad Network Overpopulation

Speaking of developing spaces, among its exhibitors AD:TECH had no fewer than 10 (I’ve lost count) different ad networks. New network BlueLithium, included in a ClickZ Features story on ad networks, officially launched new contextual targeting across its system. Another new player, Casale Media, also made its trade show debut.

Though success of the Google and Overture models have no doubt fueled the resurgence of the ad network, the sheer number of new networks are a bit of a concern. I doubt the industry can support that many new networks, and I don’t see any differentiating factors between most of the players.

Accountability Still Rules

One commonality new network space entrants share is a devotion to performance-based pricing. A venture capital panel on Tuesday shed at least some light on this trend. After being burned during the dot-com bubble, venture capitalists appear uninterested in anything as squishy as branding. Another note of caution: Even investors interested in the space think profit margins are at all-time highs. They expect them to decline over time.

Interestingly, search marketers and agencies felt slighted by AD:TECH organizers, though the usual suspects showed up as exhibitors. Only two panels were dedicated to the hot search marketing space. Both were on the third day, after the crowd had thinned out substantially.

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