Efficiency Key to Web Ad Industry Weathering Economic Storm

Many successful players in the online ad industry, Google being a prime example, have thrived by building systems that enable ad buying efficiency. However, executives from both the buy and sell side say most online ad buys entail too much time, too many people, and too few standards. In order to ensure the industry stays on pace for growth — particularly during the current economic downturn — greater efficiency is needed, they say.

Unless the industry streamlines its processes, said Digitas EVP Media Carl Fremont, it won’t be able to continue charging clients incremental fees borne out of inefficiencies in the campaign process.

“We’re not going to scale this business unless we get more efficient,” he said during an Advertising Week panel discussion yesterday, titled, “Recession Session.”

“I think it’s absolutely true,” TheStreet.com’s SVP advertising sales Tom O’Regan told ClickZ News, regarding the need for more expeditious processes.

Agency executives cited one advertising industry initiative, “Project Reinvention,” as something that could bring about the types of process changes desired. The effort, affiliated with the American Association of Advertising Agencies, aims to standardize terms and conditions, insertion orders, and other process-related items that tend to bog down online ad buying.

The industry is so young, Cary Tilds, SVP of Team Detroit’s Digital Media Division, told the crowd in the New York Times Center, “There aren’t a lot of processes or known ways to do business.” For instance, it’s difficult for agencies to keep track of which companies offer which types of services. “We need to have a central way to know who does what.”

Execs also pointed to the need for standards in ad metrics, a longtime lament of agency people and marketers dealing with digital and cross-media campaigns. Indeed, the campaign reporting and measurement process can also take an excessive amount of time because publishers and third-party ad firms often provide incompatible data.

Despite inconsistency in metrics, the fact that digital advertising enables a plethora of measurement data to prove its value could help the industry keep afloat during the recession. “In a tough economy…the top honchos at these firms, they want to know where every dollar is going,” said O’Regan.

Ad sellers have attempted to ease the online ad buying process, by creating ad exchanges or other systems that allow advertisers to buy large amounts of targeted inventory more easily. Ad network giant Platform-A, for instance, recently announced it is developing a self-serve bid-based ad buying system. And Yahoo yesterday unveiled its long-anticipated display ad platform, Apt, which offers a number of features geared toward ad process efficiencies. Those features include creative work-flow automation and easier cross-selling between Yahoo and partner publishers such as those in the newspaper consortium.

The industry should continue to innovate, execs said, despite the fact that budgets may tighten in the face of a faltering economy.

While the weakening economy has many advertisers worried about dwindling budgets, some marketers are boosting online ad spending, said O’Regan, who has actually seen larger RFPs coming in to TheStreet.com lately. “The marketers really feel like they have to spend their budgets to be able to pitch for more,” he said. Because companies are putting together their 2009 budgets, media buyers want to make sure there’s a big enough slice for online efforts next year.

“If you don’t spend it, you’re going to get less,” said O’Regan.

Speaking before the panel session, Lou Dobbs, anchor and managing editor of CNN’s “Lou Dobbs Tonight,” suggested that recognizing the potential impact of the recession on the industry is important. “I wish there were other industries that would be so direct in confronting the reality that is now,” he said.

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