Howto End the Ad Slump

The euphemisms are funny. My favorites are “severe downturn” and “slowdown.”

Let’s admit the truth. The Web ad business has collapsed. Banner space that once sold at $30 per thousand is lucky to get $1. All that talk about getting a premium for targeting based on intimate knowledge of ad targets is gone. Some smart buyers are picking up what they call “remnant space,” but the rest of it is going begging.

Attempts to solve the problem with new ad formats have just made things worse, says Jim Nail, a senior analyst at Forrester Research. The smaller buttons and minibanners have just added to the clutter, and rich media isn’t as easy to serve as it seems.

But the biggest problem is that Madison Avenue hasn’t rushed in to grab the bargains left by the dot-bomb. Three of the five biggest buyers of the new Internet Advertising Bureau (IAB) formats, according to a recent AdRelevance study, are online casinos.

John Thompson, vice president of worldwide marketing for WhiteCross Systems Inc. in Chicago, which analyzes campaigns for big advertisers, says the problem is that Madison Avenue still doesn’t know what they’re buying online. They may know who saw your ad, but they don’t know who is going to see it.

When you buy an ad in the Chicago Tribune, for instance, the Trib can tell you who saw it from the subscriber list. (Newsstand sales are pure gravy.) When you buy an ad on chicagotribune.com, it can’t.

So Thompson is working with ABC Interactive, part of the Audit Bureau of Circulations, to encourage sites to do what the New York Times did long ago: force users to register.

“If you’re interested in just raw numbers,” he said, “you ought to let everyone in the front door. But how far you let them in is up to you. You can let them in the foyer and put up a small hurdle and demand, say, an email address.”

If you look at your site as a house, then the deeper the user comes into the house, the more data the user should be forced to give you, he said. It should be layered like an onion, so you know where those coming into your bedroom live and have detailed demographics on those coming into your kitchen. (Before visitors open your virtual refrigerator, they should pay.)

With a layered registration approach, advertisers can know just what they’re getting. Outer pages may have lots of ads, sold as remnant space. Fewer people will read inner pages, but these people will be more fully qualified.

“Until online media offer the same measurements Madison Avenue can get offline,” concluded Sean Black, VP and interactive media director at Grey Direct eMedia in New York, “big advertisers can’t do an integrated buy.” That won’t solve the problem by itself — all advertising is in a slump — but when that slump ends, maybe your results will turn around.

Technology tools will help, and rich media will let us put TV-like ads on Web sites whose results can be measured accurately. But if we want to play on Madison Avenue, we have to speak the language.