Ad:Tech Shows Signs of '90s-Style Exuberance

'Golden Age of Internet' Hailed; See Ad Age Original Video Clips

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SAN FRANCISCO (AdAge.com) -- With predictions that online revenue will soar as high as $35 billion by 2008 and e-commerce will comprise as much as 10% of all retail sales, a record 9,000 registrants instilled Ad:Tech 2006 with a whiff of 1990s-style exuberance.
Venture capital
"We are at the very beginning of the digital age," said Mark Kvamme, venture partner, Sequoia Capital, in a keynote address. "The money's coming," he said. "The wave is coming." Kevin Ryan, managing partner, Kinetic Results, put it this way at a panel discussion on the future of search: "The VC dollars are flowing like it's 1999."

Mr. Kvamme decried the low proportion of marketers' spending on online advertising. Marketers spend 38% of their budget on TV with its declining viewership, he said, while only 5% of advertising is in the Internet. At the same time, the cost-per-thousand rate on network TV is $64, while Internet advertising costs $10, with a premium Internet buy costing $30. In light of declining readership, "Who wants to own a newspaper?" he asked, complimenting the executives who sold Knight Ridder.

Naysayers proven wrong
In the Internet's early days, Mr. Kvamme said creatives at his ad agency, CKS Partners, told him creative advertising could not be done on the Web. Today, more and more online advertising is taking the form of brand advertising, he said. "You can do branding on the Web," he said. "Is creative dead? No."

The Net will fill with content, especially consumer-created content, which marketers should not fear, he said.

Nevertheless, some attendees were cautious about concepts such as viral marketing. "It's a double-edged sword," said Steven Keller, director-online marketing, Assurant Health, Milwaukee. He said it was unlikely he would trust his brand to a viral effort. "I work for a risk management-based company," he said.

Voice-activated search
In a panel discussion on the future of search, John Battelle, founder and chairman, Federated Media, a company selling advertising on author-driven sites, predicted search has become a user interface similar to Microsoft Windows. "We are getting to voice-activated search, which is an interface and a navigation system," he said.

But not all the conversation was so bullish. Frederick Marckini, founder and CEO, iProspect, expressed some concern about poor quality search results. "How horrible can you make a search result before people stop clicking?" he asked.

Among the research unveiled during the conference was a study backed by Isobar and Yahoo that looked into how WiFi is changing consumers' lives. Conducted in five cities around the world, the study found consumers using broadband connections over a laptop or through mobile phones have very different relationships with their devices than those using traditional media.

Shopping habits
Perhaps more important for marketers, however, is the finding that one in three wireless Internet users report shopping more online because of their ability to spend more time in more places on the Internet. "For marketers, this opens up new possibilities for engaging people online, and makes integration between online and offline media even more crucial," the report said.

The report also found creativity an important element in online advertising, with about half of respondents queried saying entertaining and funny ads are best. The old creative models based on TV advertising or even short films are not considered the smartest way to go, however: Only 14% of respondents who are broadband users suggested marketers put those kinds of ads on the PC or mobile screen.

And in a somewhat ironic twist, spending time with a laptop or wireless phone screen made feel people feel closer to friends and family. One-quarter of the respondents said they were more active politically or in their community because of the Internet.
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