MICROSOFT EXEC SOUNDS OFF ON NET: BOB HERBOLD REFLECTS ON '94 SPEECH HE WROTE

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In a pivotal speech three years ago, urging the ad community to take charge of new media, Procter & Gamble Co.'s then-Chairman-CEO Edwin Artzt avoided one key topic: the Internet.

The address by the chief of the nation's No. 1 ad spender to the American Association of Advertising Agencies rocked Madison Avenue in May 1994. But was there any value in a speech that missed the emergence of the ultimate new medium?

Absolutely, said Bob Herbold, author of Mr. Artzt's speech and now exec VP-chief operating officer of Microsoft Corp.

PREPARE FOR NEW MEDIA

Mr. Artzt wanted to make the ad community aware of what might be coming and prepare the industry for change, said Mr. Herbold, who at the time was P&G's senior VP-information services and advertising. Mr. Herbold argues the specific predictions are less relevant than the broader call to action to prepare for new media.

Mr. Artzt made his speech at the pinnacle of hype over interactive TV, offering video clips from such ITV champions as Time Warner Chairman-CEO Gerald Levin, Tele-Communications Inc. President-CEO John Malone and Barry Diller, then chairman of QVC.

"Within the next few years-surely before the end of the decade-consumers will be choosing among hundreds of shows and pay-per-view movies," Mr. Artzt said in the speech. "They'll have dozens of home shopping channels. They'll play hours of interactive videogames."

Mr. Artzt's pitch: If advertisers and media didn't intercede, interactive TV could emerge as a mostly ad-free medium, meaning advertisers could no longer count on the broadest medium of all-TV-to reach a mass audience.

ITV sank under its own hype, unable to generate the bandwidth needed to deliver the product.

But Mr. Herbold-who gamely proposed Ad Age take a fresh look at the speech-defends the do-or-die message in the address. "It was an appropriate thing to do given everything that was known at that juncture," he said.

Mr. Artzt was hardly alone in failing to forecast the explosion of the Internet. Only a minority predicted it: A month before Mr. Artzt's speech, Net-scape Communications Corp. opened to develop a Web browser. But a majority-including Microsoft-only saw the Internet phenomenon after it began.

Microsoft now is the largest advertiser on the Web. P&G, too, has its bet on the Net: The company (www.pg.com) has registered domains for more than 120 sites, including crisco.com, badbreath.com and dentures.com.

MODIFY THE GAME PLAN

In addition, P&G has recently launched new Web ventures including ParentTime at Work on the PointCast Network, in partnership with Time Warner Cable Programming, and PHYS (www.phys.com), a Web site focusing on women's health in partnership with CondeNet.

Mr. Herbold's lessons from the speech: Don't blindly believe long-term predictions about technology. But do accept the more important point that the new media realm is changing the marketing game, and be prepared to modify the game plan continually.

"If you talk to professional forecasters," Mr. Herbold said, "the secret to forecasting is to forecast often."

What will be the buzz of new media in 2000? "Who knows," Mr. Herbold said: "We

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