OPINION: Stuart Elliott in America

Ah, spring, when a young man's fancy turns to thoughts of love and

a young industry's anxiety turns to thoughts of survival.

It's the online advertising industry that finds itself worrying about

its ability, as the boilerplate that accompanies accountants' audits of

failing companies warns, to continue as a going concern. Two springs

ago, the industry's prospects seemed as bright as the sun that shines an

extra hour with the arrival of daylight savings.

Last spring, after the meltdown of the Nasdaq caused by the implosion of

overvalued dotcom stocks, there were cautionary words but little

tangible evidence of trouble.

Come this spring, the sap may be rising, but the industry's prospects

are falling. That was underlined last week when the Interactive

Advertising Bureau reported revenue results for 2000, and for the first

time the increase in marketers' online spending from the third quarter

to the fourth quarter was an anaemic single-digit percentage rather than

a robust double digit.

The gain from the third quarter of 2000 to the fourth quarter was 8.5

per cent, compared with hikes of 30 per cent to 40 per cent in previous

years. Estimates by industry analysts for the first quarter of 2001 (the

bureau doesn't issue forecasts of its own) call for a decline in the

high double-digit range.

There was a time when the abrupt reversal of fortune among the

interactive agencies would have been welcomed by their older, stodgier


The boisterous confidence of the dotcommers often came off as arrogance,

particularly when they derided the greyheads on the traditional side of

Madison Avenue and practised personnel policies that resembled Logan's

Run (ie sending people off to die, career-wise, once they turned


But with the general economic turndown, the mainstream agencies have now

become just as leery of joining the ranks of the walking wounded as the

new agencies have been for the past several months.

Besides, many traditional agencies are smarting over investments they

made in the online realm that were not too long ago worth billions of

dollars, but have since plunged to levels that resemble not how shares

are priced in the stock market, but how produce is priced in the

supermarket: Agency.com, dollars 1.97 a share; Modem Media, dollars 3.31

a share; Organic, 59 cents a share; Razorfish, 80 cents a share.

To be sure, valuable lessons have been learned, ranging from a

realisation that the internet is not going to replace any of the media

that preceded it, to an awareness that there's nothing to be gained from

technical proficiency that doesn't help connect consumers to the brands

being peddled.

And there's a sea-change in attitudes toward the arrival of broader

bandwidth for home computers, which had been deemed the all-purpose cure

for the dotcom blahs because it would enable agencies to deliver

television commercials on PCs for the packaged-goods behemoths that pay

most of their bills.

This spring, the perspective is that PCs need TV spots the way that,

well, TV needs TV spots. If viewers are doing everything they can to

avoid commercials, why bring them someplace they don't already appear?

It makes as much sense as selling pet food online.

In the meantime, maybe the stock market can borrow an idea from the

supermarket and sponsor a sure-fire, traffic-building crowd-pleaser: a

two-for-one sale.


Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus