The beleaguered dot-com does indeed try harder, but Microsoft Network does not, said online media experts at seven agencies that participated in the survey. (For full list of participants, see opposite page.)
AOL Time Warner's America Online unit, which incorporates everything from the flagship AOL service to the Netscape.com portal, placed in the middle, ranking second in every category.
Yahoo! placed first in all categories, ranging from responsiveness to understanding of the ad business and improvement (see chart).
MSN scored last in every category. The behemoth's highest score-a 4.6 out of 10 in its ability to customize ad programs-was lower than any score in any category awarded to AOL or Yahoo!
Ad Age inaugurated the survey after a year in which all three companies began a concerted wooing of ad agencies in the wake of the dot-com meltdown.
Executives at Yahoo!, among other companies, have admitted that when ad dollars were flooding in, their so-called "sales" staff were often no more than order-takers, answering the endlessly ringing phone and raking in money for often ill-conceived banner ads. During the boom, Yahoo! and its rivals also drew agencies' ire for the way they ignored agencies in favor of direct relationships with advertisers.
Attitudes changed as ad dollars shrunk from $6 billion during the first nine months of 2000 to $5.6 billion during the first nine months of 2001, according to figures released earlier this month by the Interactive Advertising Bureau. Online media companies realized they'd better change their way of doing business. Fast. But until now, no one had asked the media companies' new target market-ad agencies-how they thought the process was going. Ad Age's survey picked topics of great concern to online media buyers and planners, such as responsiveness, flexibility in employing new tools and technologies, and ability to customize ad programs.
The agency experts were asked to rate, on a scale of 1 to 10, the performance of AOL, MSN and Yahoo! in each category. Given that all three companies started the year behind the ad agency eight ball, Ad Age also asked the panelists to rate how much improvement they'd seen in performance over the last year.
In a medium where favorites change from month to month and all online media companies are targets of complaint from media planners and buyers, the unanimity of the results was the greatest surprise. Below is further detail on how they fared.
YAHOO! FOR YAHOO!
Yahoo! executives may look back on 2001 as a long night's journey into day.
The portal began the year with the sorry news that its revenue spigot-buoyed almost entirely by ad revenue-was running dry. For the first quarter, Yahoo! reported net revenue of $180.2 million as compared with $230.8 million for the same quarter in 2000. By the third quarter, its year-on-year revenue had practically been cut in half-to $166.1 million from $295.5 million for the third quarter last year. (It has forecast revenue of between $160 million and $180 million for the fourth quarter, vs. $310.9 million for the fourth quarter 2000.)
But if its performance in the Ad Age survey is any indication, the company, which derives some 80% of revenue from marketing services and commerce, soon will see the fruit of its labors to be Madison Avenue-friendly. The new approach first became apparent to many online media executives in June, when the company sponsored a "Yahoo! Agency Alliance" summit at the Doral Forrestal in Princeton, N.J. (AA, June 18). At the time, Yahoo! executives positioned the meeting as just another in a long series of agency get-togethers, but online media experts saw it as something more.
It looks like they were right.
As one panelist, Andy Chapman of @tmosphere, commented, "Yahoo! has shown consistent willingness to develop customized ad programs at a range of budget levels and appears committed to furthering their capabilities in broader, more integrated partnerships. They have also made a real push to bolster their sales staff with more senior, strategic personnel that can help move this forward."
The panelists' only complaint about Yahoo! came from Modem Media's Sharon Katz, who said there are sometimes "inconsistencies" between the agency relations staff and the sales team.
Media and Internet veteran Wenda Harris Millard, who joined the company in October as chief advertising sales officer, said the portal is working "toward closing the gap," concentrating on building expertise in client categories that should alleviate any problems. "We're making some real progress in our move toward becoming more vertical," Ms. Millard said.
OK AT AOL
It is somewhat surprising that AOL, which by dint of market share alone has often been criticized, was viewed mostly positively in the survey. One would hope that the online unit of the world's largest media company would score well in its understanding of the ad business (although at a 6.4, it was outstripped by Yahoo!'s 7.1). But given AOL's marketplace clout, it's notable that AOL scored a pretty strong 5.9 in both responsiveness and improvement in its relationship with agencies.
Panelists said AOL has improved its ability to customize ad programs. That's a positive sign for those who have been frustrated by, in particular, the AOL service's reputation for boring buttons and banners and one-size-fits-all selling of its online real-estate in individual sections.
One of AOL's major innovations this year, in terms of truly leveraging its uncommon corporate-wide scope, was the creation of a cross-platform Advertising Council composed of ad sales executives from all across AOL Time Warner. It also placed newfound emphasis on building a sales team with category-specific expertise.
The AOL Time Warner Ad Council-headed by Myer Berlow, president of AOL Time Warner's Global Marketing Solutions and AOL's former top sales executive-is not perfect, say media planners, but has begun to work in ways that benefit advertisers and agencies. Noted OgilvyOne's Jonathan Adams, "So far, they have discovered what many of us already knew: Clients will no longer risk making multimillion dollar deals with any media company without their agency's involvement and counsel from the beginning."
The critics' chorus is still active, however. "Negotiation is still a challenge from property to property-not just based on price, but on general terms and execution," said Adam Gerber of Digital Edge.
AOL's other big challenge is what Mr. Adams referred to as the AOL service's "antiquated coding." Indeed, much of the proprietary service is built on Rainman, a publishing tool that limits creativity. Thus, online ads on AOL's Web-based properties are often more innovative than ads inside AOL's subscription service.
Responded Robert Friedman, who took the reins as president of the unit's Interactive Marketing Group in August: "We really do have the opportunity to provide solutions that involve marketers and their agencies. And toward that end, one of the things that we're going to do is push a little bit of the creative programming piece of what we can do to deliver results."
Microsoft Network recently invested $100 million in a program to make the ad community comfortable with online advertising (AA, Aug. 13), but you'd never know it by the online unit's performance in the Ad Age survey.
The company's challenge, it seems, is now to put its money where its mouth is. MSN has received plenty of press this year about its innovations, which include the $100 million MSN Advantage Marketing initiative and almost three dozen new ad models (AA, June 25). These range from the opportunity for an advertiser to briefly "own" the recently redesigned MSN.com home page to pop-up ads that shrink in size after their initial appearance. Its overall positioning has stressed MSN as the ultimate provider of marketing solutions on digital devices.
Online media execs seem unimpressed by MSN's efforts, though it's possible to explain MSN's poor performance on ad agencies' not being familiar with the new models. Common criticisms? That the company is more interested in pushing its services than understanding advertisers, and that it still spurns the agency community.
"Microsoft is the least media and marketing savvy of the bunch," said Bcom3 Group-unit Starcom MediaVest's Rishad Tobaccowala. "Most [MSN executives] prefer to deal directly with clients and find ways to wow with technology rather than [with] marketing or consumer insights."
Tim McHale of Tribal DDB noted the marked contrast between MSN and its competitors. "AOL and Yahoo! have made major strides in improving agency relations during the course of 2001," he said. "MSN seems late to the table with regard to this, and thus seems to be lagging behind."
Joanne Bradford, who joined MSN from McGraw-Hill Cos.' Business Week last month in the new role of VP-chief media revenue officer, said in a prepared statement: "We take all of our customers' feedback seriously, and are deeply committed to continuing to improve our ability to meet agencies' needs. Online is a critical piece of a smart media mix and online is the most powerful way a marketer can engage a customer."
Contributing: Tobi Elkin