The End of the Experiment

Wow. If there was any doubt the industry had once again attained 1999 levels of excitement and energy, this week’s Ad:Tech show dispelled it. What can one say to 6,000-plus attendees, dozens of exhibitors and an atmosphere full of buzz and optimism?

What’s fueling the excitement? Following, a few of the trends I discussed with folks at and around the show.

Revenge of the Dot-Coms

What I found fascinating was that so many of the predictions and trends made “back in the day” are showing real signs of coming to fruition. No longer are we discussing the results of toes dipped into the interactive waters. We’re talking about real budgets from well-established companies.

“Three years ago, you would have flooded the Internet” had you spent 10 to 20 percent of established marketers’ budgets, Jonathan Nelson, chairman and founder of Organic, told me. This current level of spending, he said, is driven not only by fear of the erosion of TV audiences, but also by solid, hard-won experience with the medium. “You don’t move 10 to 20 percent of your budget based on a whim.”

Those substantial allocations are what the Internet is beginning to get from some marketers. Just yesterday, the Interactive Advertising Bureau confirmed its preliminary numbers for 2004, which show online advertising revenues surpassed the previous revenue record — set in 2000 — by nearly 20 percent.

Just as we suspected back then, experience with addressable media, advanced tracking, and powerful analytics are coming in handy — not just online, but in other IP-based digital media such as interactive TV and mobile.

Video/Broadband

If there was a star of this show, it was video. In her keynote address, Morgan Stanley’s Mary Meeker said broadband was reaching the “sweet spot,” between 25 and 50 percent penetration, when it will begin to drive real innovation. It looks to me as if agencies and marketers are getting ready. I heard about interactive agencies hiring creative talent with experience in TV or film, about media buyers pushing clients to set aside an “innovation bucket” for experiments with original video content.

The folks at Organic told me about the way they incorporated video into a recent campaign for DaimlerChrysler. The Dodge “Spring Sales Event” campaign is a mainstay for the automaker. It’s designed to move units, not do anything particularly brand oriented. The agency went out to the dealerships and videotaped Dodge owners talking about and driving their vehicles. The result? Real Customers. Real Reasons to Buy.

“There’s a clear creative renaissance happening on the Internet,” said Troy Young, Organic’s vice president of interactive strategy. “Broadband penetration has created the imperative for us to do a better job of storytelling.”

It’s not just advertiser-produced content that’s piquing marketers’ interests. They’re also abuzz over user-generated video and audio, such as podcasts or Google’s Video Upload program. How marketers fit into this picture remains to be seen, but it’s fascinating to speculate about a future in which people consume and produce video as easily as they do text today.

It’s Entertainment

One of the more interesting panel discussions I attended focused on branded entertainment. The idea behind the trend, of course, is that as users increasingly gain control over their media consumption, marketers should craft entertaining, rather than interruptive, messages.

“The DVR will prove to be the beginning, the emancipation of marketing — and content too, but marketing,” said Peter Storck, president of K-Town Group, speaking on a separate panel. “In some months — 13, 18, 24 — the DVR is going to look like the torpedo that broke the dam and crated new ways of marketing.”

It can be a sort of non-media media strategy, in that some approaches, a la BMW Films, cut the usual suspects out of the mix. The ad doesn’t appear within a pod on the TV show. It is the TV show, the game, whatever.

Startling the audience, Brian Terkelson, director of entertainment marketing at MediaVest, related he had a $1 billion client with the aim of reaching a young male demographic. That client decided to eschew TV altogether this year. That company’s money will instead go to channels like out-of-home, word-of-mouth, public relations, and of course, online.

“Things are shifting when a brand this big says ‘no more TV’,” Terkelson said. He acknowledges, however, this particular brand manager might be a little unusual. “It’s a brand manager maverick. Wild, wild, West,” he said. “Everybody’s going ‘can he do that?’ We’re saying, ‘Who cares? It’s really cool. Let’s go with it.'”

Search’s Maturity

Notable for its absence was any frenzy around search. The once-red-hot sector is simply taking its place among the many available media choices.

“It’s rapidly become a mature medium,” said Organic’s Nelson.

Even Google’s big announcement in conjunction with the conference; it would be offering animated image ads on a CPM basis, wasn’t really about search.

I’m not saying search isn’t important. On the contrary, it’s become so important as to be fundamental, and no longer quite as cutting-edge as it once was.

The End of the Experiment

While Ad:Tech’s carnival atmosphere may have been reminiscent of 1999, there’s no question things in the industry have changed dramatically. We saw a keynote from the EVP of merchandising and marketing at The Home Depot. Brand marketers like Mitsubishi, Wells Fargo, HP, Target, Dow Corning, and Chrysler were on the agenda. Agencies with speaking slots spoke represented even more bold-faced marketing names. The experiment is over. Now, it’s for real. Isn’t it exciting?