THE NET EFFECT: Growing up in public - The next three years will decide if the internet will be a spotty geek or a young sophisticate. So what do the experts predict?

DAVID MCMURTRIE, managing director Ad2degne UK



I think we are beginning to see advertising agencies paying a little

more attention to integrating all their advertising activity, including

digital media, and that is a process which is really going to develop

over the next three years. We will see the end of separate digital

divisions within agencies as digital media starts to be much more

integrated in the planning process. Advertisers are beginning to wake up

to the fact that what they do online should reflect their other

activity. It can also lead the process. The Nike Run London campaign was

a great example of taking a creative idea which was originally for the

online space and moving it into other media.



What is happening in today's marketplace is that nobody is actually

saying to the client "you should be moving some of your budget from TV

or other media into digital media". Digital media has carved out its own

niche.



If we are going to progress that, we must start taking some of the

budgets from traditional media. Obviously interactive TV will help that

process as it will make TV buyers sit up and pay attention.



I don't think there will be much more development in banners and

buttons.



Instead there will be more use of site content to build up more of an

ongoing dialogue with users.



In three years' time we will have 3G, which will give your mobile phone

a constant connection to the web. Whereas the WAP experience was

disappointing for most people, 3G will allow people to use their phones

in a previously unexplored way as it is broadband for mobile phones.

Mobile communications will have to be used carefully as you can run the

risk of upsetting and alienating people. If you communicate with people

on a mobile device they are going to pay a lot more attention to that

message.



CHARLOTTE NESER, managing director Abel and Baker UK



My big lesson learnt has been to treat forecasts and predictions with

caution. Looking back at the predictions made three years ago, a lot of

them have been wildly inaccurate. People have been too optimistic about

the take-up of the internet and consumer behaviour has been hard to

predict.



The visions of lots of sites did not happen. It may be that in three

years' time, the dreams people were talking about in 1998 may in fact be

realised.



Virtual changing rooms are much more likely to happen. People will be

able to scan their bodies. Everyone's measurements will be mapped out in

3D photo booths. It will be saved with your profile and you will be able

to tell if clothes and footwear fit you.



The sectors that have done well so far are music, books and flights.



But the experience of talking to a travel agent or going into a clothes

shops has not been replicated online. More people will have faster

connections at home which will mean their experience of the internet is

much more pleasant. At the moment, it is peppered with negatives. People

will spend more time online and content will become richer.



From a creative point of view, we will be able to run the campaigns we

have been aching to run in the UK. At the moment we have ideas we cannot

run because the market is not ready and the internet speeds are not fast

enough. We have just done a campaign for MTV where you can type in the

lyrics for a song and it is synthesised to music and sent back to

you.



That kind of campaign is using innovative technology but you would have

a better experience with a faster connection. You could run these things

on a much more mass scale.



It would also be great if people stopped making such a big deal of the

internet. It needs to become a useful tool in people's lives which they

enjoy using. From a marketing point view it should become just another

channel through which to reach people.



MARTINA KING, managing director Yahoo! UK & Ireland



We have got past all the hype and what counts now is good old business

fundamentals. A dotcom business needs its income and it needs to manage

its cost base.



The first thing that is important over the next three years is that

England does well in the World Cup finals, which will give us all a

morale boost.



In terms of the internet, my big hope is that it will not be seen as an

adjunct or a separate business unit and that it gets integrated into

main marketing schedules. At the moment it isn't.



The internet does not do housewives with kids, but we do ABC1 adults

brilliantly and it's still a very upmarket young audience. Online

Yahoo!



beats all the quality daily newspapers in terms of the number of ABC1s

we reach but we have been useless at telling people about it. This is

the most difficult group to reach. They are out and about. They are busy

people but they're on the internet.



There has been considerable talk about our need to look at alternative

revenue streams. My big challenge is to make sure the media model works

and we have every faith in that. We are working with advertisers to make

sure their advertising works on Yahoo!. We can prove that it does. I

cannot go out and talk to clients unless I know that is the case. It's

been really important to get the evidence and now we have it.



I think we will start to see charging for all sorts of things. The

internet has operated as a free model. I think the bulk of it will

remain free. If you are a newspaper, you have a cover price as well as

an ad price. People will not have to pay to come onto Yahoo! However,

there may be elements of Yahoo! that people will be more than happy to

pay for.



Now we can run cinema and television commercials. Hopefully broadband

will give us the opportunity to run more beautifully-crafted

commercials.



We ran Mini's commercial on our homepage and it was hugely

successful.



MARYAM BAZARGAN, partner interactive Optimedia



It will not necessarily be "new" media anymore. TV audiences will be

interacting with programmes a lot more. Who Wants To Be A

Millionaire?



is bringing out an interactive TV game. If you have got the interactive

element, people will want to use it. You have to bring it more to life

for the audience. If you are watching a gameshow and you know the

answers, you get frustrated for the person who is playing the game. If

you can respond with your remote control, I think that makes the

programme more exciting. The more you allow the audience to interact

with the programme, the more they are going to enjoy interacting with

it.



Broadcasters are going to have to fight for their audiences. As more and

more people take up digital they are going to be spread across 200

channels. Programme- makers and broadcasters are going to have to work

harder to keep their audiences. If you are watching a film for two hours

you are not going to want to interact - although there are already DVDs

where you can choose the endings. But I'm not sure how many people want

to do that. If you are watching a film you just want to be

entertained.



On Sky Digital, when you are watching the football, there is a channel

where some of the fans are doing the commentary. You get a chance to be

the commentator of your club on national TV. That is part of the

interactivity.



I somehow don't think we will be watching films on our mobile phones

because people will want increasingly smaller devices. Who will want to

watch a film on a tiny screen?On mobiles, we will be able to have much

more localised targeting of advertisements. Retailers will be able to

send out specific offer messages to actively recruit footfall into their

stores.



JAMES BOOTH, director TangoZebra



Advertisements have to work for media owners and advertising has got to

remain viable for media owners. They will start to support ad formats

which fit the look and feel of their sites. What seems to be most

attractive to them are bespoke sponsorship formats designed to work in

conjunction with the host sites. A lot of people are talking about

sponsorship at the moment. It's an area which is seen as exciting and

slightly untapped.



I think advertisers are still going through an educational phase. Lots

of formats are being delivered and not all of the advertisers are up to

speed with all the opportunities that exist. The recipe for success is

probably finding the right balance between the host site having

something that works well for their end user without being too

intrusive.



Some of the formats will remain. The effectiveness of pop-ups will

decrease because people will become accustomed to turning them off

before the content is loaded.



We do not know what is going to happen with interactive TV. Some of the

formats are now being developed with broadband and interactive TV in

mind and there will be more and more interesting uses of Flash. If

anything we are waiting for a time when interactive TV can better

support more interesting formats of web publishing.



Some host sites have got higher end user numbers than some of the cable

TV stations and yet they struggle to win advertising. That is the battle

we have to win. We have to present the internet as a valid medium. The

dotcom ad spend has dried up and it is being replaced by FMCGs. They are

driving a lot of the new ad formats. It is driving the development of

the work we do here.



Lifestyle sites could get merged. There are some terribly valuable

pieces of real estate online and that is not going to go away providing

we are responsible about how we move advertising forward.



JED GLANVILL, director m digital (part of MindShare)



For all of us at m digital, the key thing is that online digital is

impacting on businesses and brands in extremely different ways. There is

no one rule and it's almost impossible to predict what is going to

happen to an emerging advertising model.



For some big brands, the internet offers a new sales channel. You can

now buy IBM computers on the web and Ford is selling cars via the

web.



Ford's actual fulfilment is done by the dealer network - they have a

massive dealer franchise. The web site is complementary to that as

people can select and order their cars online. More than 50 per cent of

people are using the web to research prior to purchasing a car. That is

enough to merit car companies delivering brand messages to those people

to help influence them as part of that process.



Ford, for instance, is using the internet for brand-building, direct

marketing and as a sales tool. The unique selling point which the

internet has is the potential to talk to people in a direct way. In the

UK, the Ford Group, which includes Land Rover and Jaguar, is moving very

aggressively into this market.



FMCG advertisers are not going to sell products directly over the

web.



They were advised to create web sites in the past which arguably gave no

benefit to the consumer. What the web gives FMCG advertisers is the

opportunity to reach a lot of people, and increasingly that is being

achieved through partnerships. As the internet becomes more mass market,

there will be more opportunities for joint ventures.



MARI-KIM COLEMAN, vice-president Jupiter MMXI



I think one of the biggest things you are going to see is more and more

traditional players coming on to use the internet and incorporating the

internet into their business strategy. You are going to have traditional

companies using the internet to cut costs and increase efficiencies.

They will be using the internet for better internal communications and

for customer service. Dell computers is a perfect example of a company

that has done this incredibly well. Everything is done online.



In spite of the internet bubble bursting, every metric we are looking at

shows things are continuing to grow in terms of the online population

and in terms of advertising. A large proportion of internet users are

using retail sites. The slowdown has caused less confusion for

consumers.



Because there are fewer choices for them it has become easier for an

online user to be satisfied. Before you were having a new retail site

nearly every day.



There has been an incredible amount of consolidation in terms of online

publisher content sites and e-tailing sites. The average UK internet

user is visiting far fewer sites. In June 2000, 35 sites accounted for

50 per cent of time spent online. In June 2001 there were only eight

sites that accounted for 50 per cent of time spent online.



Growth levels were in the 100 per cents for online advertising but that

could not last for ever. Growth for this year in online advertising in

the UK will be 24 per cent. In less mature markets in Europe, such as

Italy and Spain, it will be higher. In Nordic countries it's slower.



In the UK market, the highest growth sector will be interactive TV. By

2005, the number of households that have interactive TV will equal the

number of households with PC internet access. Fifty per cent of UK

households will have interactive TV by 2005. In the next three years,

the advertising industry needs to understand what advertising models

work for interactive TV.



Our forecasts for advertising on wireless are pretty conservative. We

think the PC internet and interactive TV platforms will be more

important. We're not bullish about revenues from advertising on

wireless.



MARTIN LINDSTROM, senior vice-president Digitas



In 1995, when the web appeared for the first time, we changed from being

a one way-driven world to becoming an interactive world. We have not

really managed to get down to that point of truly one-to-one

dialogues.



Take SMS messaging and interactive TV. Both of these will enable us to

get closer to one-to-one dialogues. In true one-to-one dialogues, I will

know, for example, if you have any children. I will know your favourite

magazine and I will be able to predict what you want tomorrow. We will

have enough information about you which will enable us to send out

messages to you using the best possible channel.



Just imagine: you have been on a web site and participated in a

Coca-Cola competition. As you are walking down the street, your mobile

phone will know you are passing a kiosk and you will receive a SMS

message telling you to buy two bottles of Coca-Cola for the price of

one. It will inform you that you have to go into the kiosk to redeem the

offer. When you come home you will be exposed to a Coca-Cola TV

commercial.



It's going to be about the ability to optimise each channel so they are

working together to achieve some kind of synergy. This will mean TV

working by itself; it's more about TV talking to mobile phones. They

will be able to adjust messages every time they learn about you and be

even more targeted.



They are going to customise their messages to a stronger degree than

they have done before. It will not just be a case of having one message

for one audience. They are going to have 15 different messages for one

audience.



You will be sending out messages which change according to where a

person is and what they have done.



Marketing in the future is going to be a highly sophisticated tool. It's

going to become a much more diversified type of strategy. One-to-one

will always succeed as long as you follow the rules of the game. If a

consumer says: "do not communicate with me ever again", it will build a

brand, as, even if you never communicate to that person again, you will

have impressed them just by virtue of the fact that you have taken the

trouble to listen and act.



ROB NORMAN, chief executive Outrider



People generally overestimate the short-term impact of technology while

underestimating its long-term impact. There was a whole engine of false

economic activity at the start. People were able to create hugely-funded

organisations and were able to trade in commodities of unknown

value.



People have not successfully proven the ways in which different assets

delivered via the internet can generate revenue streams for their

businesses.



One of the things which is pretty clear about the internet is that

people are engaging with it. There are big numbers. In terms of consumer

usage it is the fastest-growing medium. Ever. Nothing has ever got close

to it. What is interesting is whether the consumers actually regard the

internet as a medium. Media people do think of any blank space as

advertising inventory.



In the same way as nature abhors a vacuum, media people abhor blank

space.



The challenge is to try to deliver and create a relationship between

brand advertisers and the consumers. You need to find the right places

online where the users will have an affinity with the brands that are

being promoted.



The question is: how can you take brand messages to a relevant community

in a way that does more than talk about a product?



The most interesting part about the internet is its fabulously narrow

targeting. It offers a tremendous ability to have different creative

messages.



But we have to revisit the notion of return on investment and define

different measures of return on investment for different people.



I think it is inevitable that there will be fewer but more robust

suppliers of content. I do not think there is enough revenue to support

the width of offers that exist in the market. I'm convinced news content

will remain tremendously important. I think that stretches into sport,

finance and so on. And there will be lots of community stuff as people

want to connect with each other.



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