Online Advertising: Bouncing Back

Sometimes a good shock to the system is exactly what is needed. And a shock is what the online advertising industry has been enduring over the last three quarters, buffeted by the unforgiving forces of high supply and flattened demand.

It has been a tough year so far. It wasn’t long ago when everyone knew a millionaire; now you know at least three people who have been laid off. For many, exuberance has given way to insecurity.

But the industry is responding in the right way — with innovation, not retreat. Plenty of signs point out that the online advertising industry is rebounding with creative solutions for advertisers and new approaches to presenting their messages.

In my last article, I described how Yahoo, in the past considered somewhat prudish in its willingness to adapt to advertisers’ needs, took a bold step by devoting its entire home page to a rich media ad for Ford Explorer. The Ford ad must have been complicated to execute; yet I hear that Yahoo has more exciting moves in store.

Last Friday, CBS MarketWatch joined the list of sites that have been featuring innovative advertising executions. On the site’s home page, a fixed-placement banner and skyscraper, throbbing with color and animation, advertised Budweiser beer. Inside the site, where visitors get market updates, the site background was wallpapered with Budweiser logos.

According to someone involved with the project, the campaign was bought in dayparts and was planned to run on Friday afternoon when people were gearing up to go out and drink a little. An intelligent media plan combined with eye-catching creative integrated into content is the type of advertising that gets the industry excited.

Some interesting developments are taking place on the technology front as well. Last week, I met with Jonas Lee, CEO of Poindexter Systems. Its software is a “dynamic ad generator” that prepares and assembles ads on the fly. It’s an application that holds a lot of promise for online marketers.

For direct marketers, Poindexter can break down ads and Web pages into many different elements and assemble them a split second before they are served. Just as direct marketers experiment with message, creative, and offer, Poindexter allows infinite combinations of elements to respond to response data, profiles based on IP (Internet protocol) address, even purchase data. Optimization is fluid and automatic.

Also compelling is the flexibility it gives to marketers. Poindexter allows marketers to control ads while they are in rotation. Ads can feature real-time information, and marketers can control what is in their ads through a simple interface, responding to market conditions and breaking news, without having to retraffic creative. It’s like being able to rewrite your newspaper ad just before it hits your customer’s doorstep.

Interesting executions and innovative technologies aren’t the only reasons for optimism. In the past couple of months, speaking at industry conferences in San Francisco, Boston, Miami, and New York, I have encountered a surprising degree of consensus about how to move the industry forward.

Publishers, agencies, and technology providers are coalescing around the need to convince mainstream advertisers, the ones who now only spend a tiny percent of their huge budgets on the Net, to invest online.

So far this year, it has been tough going. But the market is starting to warm up again. The industry that emerges out of this year’s downturn will be more mature and filled with opportunity.

Hang in there.

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