The bi-annual gathering of marketers, online publishers, agencies, interactive technology providers and other industry players drew 2,000 attendees, three times as many as the May 2002 gathering in Los Angeles. The mood was decidedly upbeat, but in the city most closely identified with the dot-com boom and bust, industry players aren't about to gloat. Still, there was a renewed sense of mission and vigor among those in attendance.
Fueling this momentum, industry players said, is the adoption of broadband, offering consumers high-speed access to the Internet. Broadband usage, as research from the Online Publishers Association and several of its member publishers has shown, lures affluent people to spend more time researching, browsing and ultimately purchasing goods and services on the Web.
Nielsen/NetRatings on June 17 reported that in the U.S., 39 million people, or 13% of the population, are accessing the Internet by broadband connections. At-home broadband usage grew 49% year-over-year while dial-up Internet users decreased 12% in May 2003. Consumers over the age of 65 are the fastest-growing age group using broadband, up 64% to 1.7 million users. Students represent the largest group of broadband consumers, 7.8 million, up 51% from last year, though more than 12.3 million students still access the Net using dial-up connections, Nielsen/NetRatings reports.
"[Ad] sellers and buyers have been held hostage by dial-up [Internet] usage," he added. Once broadband penetration hits a critical mass of 30 million households, similar to how the cable TV industry grew in the 1980s, marketers are more likely to embrace the Web, said Peter Petrusky, a principal at Pricewaterhouse Coopers.
Even as some top ad spenders, such as McDonald's Corp., Unilever and Coca-Cola Co., are dipping their toes into the digital stream, many others continue to sit on the sidelines. "Traditional marketers have waited because they still don't understand the medium and how it fits into the overall [media] mix, though that is starting to change," Mr. Petrusky said. He cited cross-media studies by the Interactive Advertising Bureau that point to efficiencies gained by integrating digital media into a traditional media plan.
Interactive advertising revenues in 2002 reached $6 billion, according to Pricewaterhouse and the IAB, down from $7.1 billion in 2001. However, revenues rose 9% in the fourth quarter of 2002 over the third quarter, representing the first quarterly increase in two years. For 2003, Mr. Petrusky projected a 5% to 10% growth rate for Internet advertising, while Marc Ryan, director of analysis, Nielsen/NetRatings, forecast a 5% rate.
"We're on the education curve," said Mr. Ryan, who described the mindset of marketers skittish about online media as "offline media protectionism." To allay concerns about return on investment, publishers and other industry players need to offer marketers clear and uniform ad standards; provide dynamic rich-media advertising; make interactive ad buys easier; speak in the same language as offline media; and provide measurable results using accepted methodologies.
"Rich media will drive brand marketers online," Mr. Ryan said.
Advice to marketers
Marketers should take new forms of media and emerging technologies seriously or risk being left behind, said Bob DeSena, director of relationship marketing for Masterfoods USA, a Mars Co. Mr. DeSena, who helped lead a global online contest to choose the next M&M candy color (purple received the most votes), said the process taught him that marketers need to make consumers part of the marketing process.
"The consumer is the boss," he said, adding that the Internet facilitates communication and, ideally, an ongoing dialogue with consumers.