Climbing Back: Up from the bottom

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As the advertising sector limps toward a shaky recovery at best, leaders in the interactive marketing and media space are fairly upbeat about the next six months. They believe that smart marketers will maintain or slightly increase their interactive media commitments despite sluggish economic conditions. Then again, after the dot-com meltdown of 2000, the interactive media sector hasn't had that much farther to fall.

"On the bright side, advertisers are spending more now than they were at the beginning of the year and that's a good sign. ... It's a media buyer's market now," said Lon Otremba, execVP-strategic planning and operations for AOL Time Warner's America Online. For that reason alone, Mr. Otremba said marketers ought to experiment with new interactive technologies and programs.

Battered but not beaten, the troubled unit has overhauled its executive ranks and is retooling to make its interactive marketing organization more customer-centric.

Upbeat prognostications to the contrary, the interactive category's stocks continue to be pummeled. CNET Networks, for example, saw its stock edge close to $1 last week on concerns of losses, layoffs and lower revenue.

not all bad

While conventional wisdom suggests that Internet publishers with tech-heavy advertising rosters such as CNET are having a horrendous year, it's not all bad news. The damper on print advertising has meant something of a renaissance for the business and technology portal and other Internet publishers.

"The top 20 tech marketers spent about 46% less in print in the first quarter of 2002 compared with the same period in 2001, and they spent 37% more with CNET Networks during the first quarter 2002 compared to first quarter 2001," said Barry Briggs, president of CNET Networks Media.

Despite tough market conditions, there are a few signs that marketers, particularly consumer package-goods advertisers, are taking the interactive space more seriously. Nestle's Purina, Unilever's Dove and other brands have conducted research on the effectiveness of deploying online media in concert with offline advertising. These and other advertisers are beginning to explore the array of new rich-media formats and streaming technology as the interactive medium struggles to grow up. They're seeking viable metrics, including reach and frequency, return on investment and the ability to reach valuable target audiences.

Yahoo! will continue to focus on tailoring interactive marketing solutions for its customers, taking advantage of the sluggish economy to proactively fix specific Internet marketing problems such as customer acquisition, creating and managing data profiles and driving purchase intent. In doing so, it has focused on vertical business sectors including financial services, consumer package goods and retail.

Tim Sanders, Yahoo!'s chief solutions officer, works with some of the portal's biggest customers and finds that while they're increasingly embracing testing and experimentation with interactive marketing programs, fear exists as well. "Marketers are going to have to be more accountable for each dollar they're spending and they're having to come up with unaided results," said Mr. Sanders. "It's very scary to them [marketers], this flight to accountability, so we ask ourselves, `How accountable are we, and how acceptable are we?"' Mr. Sanders said.

Good questions. But one constituency-Wall Street-doesn't seem to like the answer, as the market last week once more slammed Yahoo!'s stock. For advertisers and investors alike, it's the age of accountability.

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