Rich Media: Time to Pay the Piper

Editorial note: As announced last week, the Rich Media column has been renamed Advertising Technology to broaden its scope. Eric Picard and Jeremy Lockhorn will cover rich media, as well as technologies for ad serving, analytical tools, wireless, interactive TV, and other intersections of technology and advertising.

We’ve all watched with horror and fascination as some of the established leaders in the rich media industry have driven into the financial guardrail lining the information highway. From my perspective, it’s been an incredibly strange ride as companies I’ve sparred with have ended up in the rearview mirror.

So the question is: What happened? Why do we see companies like ePod shutting their doors and Enliven’s future in question? The real answer is the quiet little secret being kept in this industry. The biggest reason these companies are failing is probably… you.

Advertisers and agencies alike have done a lot of complaining about the poor performance of banner ads, and they’ve taken advantage of the soft market — demanding favors of rich media providers and pressuring them to accept lose-lose terms in order to win business. This has kept many rich media providers from gaining traction as businesses and, eventually, has driven them out of the marketplace.

I’ve had numerous conversations in the past year with people who consider themselves forward-thinking about online advertising, then turn around and “prove” that mindset by demanding free tests of technology and services. I’ve had people gleefully tell me, “It’s easy to get a free test of rich media, so why should we pay for it?” This is a dangerous cycle — one that’s hard to break, not only for the rich media provider, but also for the advertiser and agency. New players in the market are always going to offer some free tests to get some leverage. Established players can’t afford to fall into the trap of competing strictly on price.

Over the past six months, as some established providers got closer and closer to that guardrail, they responded to this pressure by giving away technology and services to win business. But as we’ve all seen, a deal can’t be a winner unless all parties win. And while it might be easier for a provider to swallow this practice when dealing with a large advertiser, it’s a trap that’s very difficult to exit. There may be some value to having a showpiece created for a top advertiser, but it isn’t so easy to move beyond that free test, even when you significantly surpass all of the client’s goals.

I’ll tell every advertiser and agency right now: It ain’t free — and it never will be. You’re going to pay one way or another, either with cash or with the time and energy it takes to learn how to work with a partner — and that’s time and energy wasted when this partner subsequently goes out of business. This is not good business, and it isn’t good for the online advertising industry.

And, frankly, you shouldn’t expect it to be free. Rich media has proven value that needs to be recognized by all the players involved. In times of tougher accountability, it’s beginning to be the only kind of campaign that makes sense at all. Of all the things in the world your company has to pay for, you should spend wisely on those that have proven effective at increasing ROI.

And let’s not forget that it’s taken incredible market pressure to force publishers into providing new rich media formats — and they’ve finally done this only as they neared desperation. Some publishers have been proactive — testing and accepting new technologies, working with rich media providers to make sure we’re compatible. While accepting a proven rich media technology in the banner space is a fairly safe bet, until recently there has been very little willingness to provide more innovative and higher-yielding formats.

The hurdles are understandable on the publisher side — irritating ad formats certainly can drive users to other venues. But there are many ways to balance higher returns without negatively impacting user experience. Usually the biggest roadblocks to providing more advertising value for advertisers are at the lower levels, where a junior person is strictly following the written policies of the publisher. It takes someone higher up to agree to go forward with anything out of the norm, but often the culture in these groups breeds a sense of superiority, making it difficult to reach the decision makers.

So publishers take note: Since your implementers are often not willing to step outside the boxes you’ve carefully laid out for them, put a process in place to enable these special deals. Reward your team for being proactive — sometimes very large potential deals go stagnant simply because the person in trafficking bounces back anything unusual. Listen carefully — not only to the advertisers but also to the rich media providers out there. Some of us have good ideas.

So there you have it — yet another lesson in traditional business that the Internet economy forgot or ignored. No deal works unless all involved can gain from it. Leaders on all sides of the industry need to start making command decisions and stepping up to the plate. Unless you invest in success, you and all of your partners are bound to fail.

The good news is that publishers are finally coming around and actively experimenting with rich media and alternate ad formats. Major advertisers who have — up until now — merely dabbled with online advertising are starting to get serious. There’s nothing that will motivate performance among the rich media providers like a major competitor failing in a public way. And there’s nothing to motivate advertisers and agencies to adopt technologies focused on ROI and accountability quite like cold, hard market reality.

Looks like a perfect setting for success.

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