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
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