Will Wall Street Rain on Digital’s Parade?

Leave it to Wall Street to rain on Advertising Week’s parade.

Just days before Advertising Week kicks off in Manhattan, it’s hard to escape the gloom permeating the city.

In New York’s financial district, the television satellite trucks are lined up in the neighborhood. Nearby, business journalists and analysts are on a death watch, reporting on the implosion of long-time financial institutions such as AIG and the freefall of the stock market.

With that as a backdrop, the question persists: what does this mess mean for online advertising budgets through 2009? The answer is anybody’s guess, since media buyers and planners are in the midst of working out plans for the coming year. But one cannot escape that nagging feeling this downturn is far worse than the dot-com bust of 2000 — when startups crapped out like players at a dice table, setting back digital advertising for a few years.

Lessons From the Past

While digital advertising has since made a comeback, its practitioners may still need to go back more than a few years to learn from old-timers who’ve toughed out severe downturns before the Internet was a twinkle in Tim Berner-Lee’s eye.

This week, I got a chance to hear long-time Mad Ave. ad man Cliff Freeman when he spoke at the New York Public Library event sponsored by the One Club for Art & Copy. The 67 year old is known for his work for Mounds/Almond Joy candy bars (“Sometimes you feel like a nut…sometimes you don’t”) and the Wendy’s “Where’s the Beef” campaign.

After the 1987 stock market crash, Freeman succeeded thanks to some luck, good timing, and a creative campaign. His agency had won business from Little Caesars, which was selling two pizzas — with up to 10 toppings — for $9.98. “Two pizzas for one low price, that relatively high value totally worked in our favor,” he said.

What followed was the “Pizza! Pizza!” campaign, which Freeman said helped the pizza chain grow its business.

Fast-forward two decades. Freeman said ad agencies today could do well by working with businesses that offer high-value services or products at a low cost to consumers.

Looking Ahead

At this week’s OMMA conference, speaker after speaker remained optimistic about online advertising’s future, although most appear to temper their enthusiasm in light of the troubled economy.

“It’s a little scary out there…the crumbling of our international economy,” said eMarketer CEO Geoff Ramsey. His firm has revised its forecast for online ad spending three times over the past six months — and that’s before the dire news of this past week.

While eMarketer expects the growth rate for ad spending in all media will increase 1.9 percent in 2008, it estimates the online sector will climb by 17.8 percent this year and 14.5 percent in 2009. “Our numbers put growth in search and display advertising even-steven,” Ramsey said.

Even as the ad industry grapples with economic calamity, online marketing continues to evolve. Judging by what’s happening at Hulu, an ad-supported online video site, marketers should look for incremental yet smart advances in digital advertising. The site, which streams television shows and movies, gives viewers the option of seeing a 2:15 spot, for instance, before a TV show or seeing pre-roll and midroll ads. In other instances, viewers might be offered a choice of commercials to see. Do they want to view an ad featuring the Nissan Z sports car, Nissan Rogue SUV, or Nissan Titan truck?

“We’re giving users and advertisers choice,” said Jason Kilar, CEO of Hulu, a joint venture between News Corp. and NBC Universal.

Bottom line, as Ramsey pointed out, is advertisers in this environment have three choices.

“You can be fearful and bury your head in the stand. You can be complacent and hold onto your media budget — don’t rock the boat. Don’t experiment.” Or, he said, “you can come out fighting and be determined to win.”

Join us for ClickZ Presents: Online Marketing Summit, September 25 at the Sheraton San Diego.

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