Interactive’s New Year, Part 1

Last year may (really) turn out to be the one in which the slump ended. Smith Barney analyst Lanny Baker last month predicted a 20 to 25 percent increase in online ad spending for 2004, and Jupiter Research puts next year’s online ad expenditure at $7.6 billion, up 21 percent over its 2003 projections. (Jupiter Research is a division of this publication’s parent company.)

In the spirit of looking ahead, we’ve asked seven luminaries from different categories of interactive marketing to share their forecasts for 2004. We’ll share three with you this time, and four in the next installment, to be published Tuesday.

1. The email perspective: Hans-Peter BrØndmo, SVP of Strategy and Corporate Development for Digital Impact

If you’d asked me three or four months ago, I’d have had a somewhat pessimistic outlook, but that’s turned around. I’m pretty optimistic about the email space in 2004. There’ll be two primary drivers of change in 2004 that’ll ultimately impact consumers favorably and support those trying to serve consumers in an appropriate manner.

While there might be a lot of questions around how effective the CAN-SPAM Act is going to be, it’s pretty clear we’ll see some high profile cases against spammers. The Spitzer case is probably a harbinger of things to come in 2004. I think there’ll be a series of high-profile anti-spam cases, where heavy spammers will be prosecuted under new law. While it won’t reduce spam in a major way…it will add one more layer of checks and balances for the legitimate players. All these players will rise to one standard, in terms of their sending practices. For some of the not-so-legitimate players, it’ll be even harder to operate. They’ll either go even more underground, or they’ll be forced to clean up their act. In short, I’ve become convinced that legislation will have an impact.

The second thing I expect to happen is driven more by the technology side. It’ll be the year of accountability at the technology level. A big push will happen toward identity-based services and reputation-based services. It’ll become significantly more difficult to hide your identity as a sender and send high volume, unauthenticated mail.

You won’t kill the beast in ’04, but you’ll see the solutions space migrate toward authentication and reputation-based solution. I’ve become entirely convinced that we can solve the spam problem. The problem as it exists today, with its epidemic proportions, will go away. And we’ll start seeing the underlying infrastructure level solutions that will affect that.

The big concern I have for ’04 is phishing: identity theft emails. Those guys are overseas and are very good at forging, concealing their roots, and representing themselves as legitimate senders. If even a small number of consumers put their information into one of those scams, the effect could put a chilling effect on all of commerce. The issue will probably take center stage, while some of the other spam issues will fade. This is the black cloud over 2004.

2. The publisher perspective: Brian Quinn, VP of Eastern region ad sales for CBS MarketWatch

Looking at large brand advertisers, we see more and more evidence that online is just part of the mix. A good example is General Electric, a pure corporate branding campaign. Online is not only a part of it, but they’ve done exclusive creative work for the medium. When you see a bellwether advertiser act like that, it just makes interactive more credible.

We’re seeing a lot less attention paid to traditional metrics like clickthroughs. It’s just less important.

Another trend is cross-media campaigns: A lot of people have talked about integrating with other media. Now we’re seeing agencies ready and able to execute programs this way. Online just seems to work well with TV.

There’s also this ongoing debate about whether there should there be an upfront online. We think that’s ridiculous. You can’t have an upfront when you don’t have a defined inventory.

Another interesting thing to watch is behavioral targeting from companies like Tacoda and Revenue Science. But just because you can do targeting doesn’t mean you should.

3. The search perspective: Ted Meisel, CEO of Overture

The success of paid search in 2003 is just the beginning of what we can look forward to in the coming years. We believe the industry is still in its infancy, and will likely experience more tremendous growth as companies continue to see search as a valuable core part of their marketing plans.

Although search technology has improved tremendously since its inception, only a small percentage of deep content on the Web is being crawled for inclusion in search listings. It is important as an industry that we are committed to digging down even further into the dynamic content on the Web to pull out the “hidden” information beyond the home page. This will make the search experience even more relevant than it is today.

I see 2004 as a year in which companies like Overture will continue to be focused on the expansion of new and increasingly powerful approaches to targeting offers, including contextual advertising and local search listings, as well as developing products and services to make it easier to use search and related advertising.

Contextual advertising will continue to be an important source of leads for advertisers looking to maximize their effectiveness online. In a recent study by Forrester Research, 70 percent of the surveyed businesses said they planned to increase the contextual advertising portion of their search marketing budgets in 2004. We’re confident this number will continue to grow as advertisers become more familiar with the benefits of content-based targeting.

Another primary industry focus this year will be local search listings, estimated to reach $1B by 2008. Local search products will allow advertisers to easily market to interested customers within a defined radius of their business location. This will make it much simpler for searchers to obtain the exact business information they need to purchase products or services locally.

Personalization will also be a key focus for the industry in 2004. As search engine companies learn how to better interpret consumers’ inquiries, the search experience will become more precisely tailored to their individual needs. As an industry, our mission should be to finish a user’s thought before they think it. When we reach that level, we will be able to provide users with the highest quality search experience possible and advertisers the strongest return on their marketing investments.

Read part two.

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