More Online Ad Spending: Blessing or Curse?

You may have noticed a change among your coworkers lately. Suddenly, they seem lighter on their feet. They’re more optimistic about the future of the company and their own success. The transformation is due to Internet advertising finally receiving a major boost: Online ad revenues are way up. We’re back in the game.

The Interactive Advertising Bureau (IAB) recently issued a press release to this effect, declaring Q4 2003 a record quarter for U.S. online revenue growth. Revenues (based on sales from the top 15 ad sellers) topped out at an estimated $2.2 billion, a growth of 38 percent from the same quarter a year earlier. These numbers surpassed the $2.1 billion registered in the last biggest quarter this industry ever saw (Q4 2000).

IAB President Greg Stuart said of the increase, “Our medium continues to lead where others have fallen off, and smart marketers know it and are shifting dollars and gaining share.”

Welcome news to everyone in interactive advertising, particularly those who’ve been struggling to regain ground. But it raises a question that should give us pause: Will the latest influx of online ads change the way we buy media?

Consider the potential ramifications. Increased ad spending — a sure sign of success — is likely to attract more offline advertisers, especially those who have been cautiously awaiting a green light to buy. This includes your clients’ competitors. Those tech-savvy buys are no longer enough to maintain an industry lead.

Record ad revenues also mean every advertiser on the block will try to attract their share of the market with superior, eye-catching ads. The quality of the creative appearing next to your own will rise, too.

Finally, there’s obtaining your client’s desired ad space. Increased ad spending routinely leads to sold-out inventory on top sites. That could leave a good number of buyers in the lurch. It can also lead to increased ad clutter. Smaller sites may increase their ad offerings in an attempt to get a bigger piece of the advertising pie. If you’re a buyer with a soft spot for network buys or small independent sites, this could reduce effectiveness of your ads and lower consumer response rate.

Who would’ve thought such a boost would leave one pondering the potential negatives? While we certainly don’t intend to bite the hand that feeds us, we’d be remiss if we didn’t have a battle plan. The solution to most any challenge we face in this industry is to come up with ways to stand out from the crowd. My recommendations for spending all those ad dollars rolling in — wisely:

  • Surround sessions. NYTimes.com and Boston.com have been offering this feature with considerable success for over a year. The model allows the advertiser to dominate the inventory a targeted user is exposed to during a site visit. Wherever the visitor goes, he’s completely immersed in only your client’s advertising. According to New York Times Digital, the sites’ parent company, the model generated $1.7 million in 2003.

  • Full-page ads. This category includes Unicast’s Video Commercial and Eyeblaster’s Full Page Overlay. These ads are intrusive. That’s the point. Full-page ads get top marks for commanding attention. They can easily be closed or skipped by the viewer. They put full emphasis on the advertiser by literally eclipsing the competition. Even if a site is littered with clutter, a full-page ad obliterates the problem.
  • Exclusive sponsorships. Whenever possible, buyers should negotiate exclusive sponsorship of their client’s desired site section or e-newsletter. Like surround sessions, this allows the advertiser to monopolize available ad inventory and eliminate competition.

    Most sites are willing to offer reduced ad rates in exchange for a guaranteed sale of a large chunk of inventory. Don’t hesitate to ask. Keep ads subtle; visually bombarding users with rich media ads could have a negative effect. You’ll be the only advertiser around for those surfers to blame.

A surge in online ad spending is a blessing we sorely need. With a solid media buying plan, we may just survive it.

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