Working out the bugs: Portals try to improve reputations

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As two of the three top Internet portals unveil splashy marketing campaigns this week-AOL Time Warner's AOL launches AOL 8.0 on Oct. 15, and Microsoft Corp.'s MSN debuts MSN 8 on Oct. 24-digital marketing and media experts and the clients they serve are paying close attention.

An Advertising Age survey of online media executives last year found the three portals-AOL, MSN and Yahoo!-received mixed reviews from the ad community, but MSN ranked the lowest in key areas: responsiveness, willingness to negotiate, flexibility, ability to customize ad programs and its understanding of the ad business ( QwikFIND aam87z).

Since that survey, all three have worked to improve relations with agencies and win a place in media plans.

most improved

The low rating lit a fire under MSN executives. "MSN has improved the most by far. We've seen a huge improvement in terms of active outreach, customer service, and the quality of proposals are much more creative," said Sharon Katz, VP-media, Modem Media, Norwalk, Conn. Ms. Katz, whose clients include Intel Corp., Delta Airlines and Kraft Foods, said while she's pleased with the progress, MSN needs to improve its ability to target by demographic.

"MSN has made significant improvements on agency focus with room to go," said Adam Gerber, partner, director of media strategy for The Digital Edge, New York, a unit of WPP Group's Mediaedge:CIA. "They were coming off a very low rating but I think the team they're assembling understands what has to be done and they're doing their best within the confines of the Microsoft organization," he said. Yum Brands' KFC and Pizza Hut, AT&T and Campbell Soup Co. are among Mr. Gerber's clients.

After last year's scathing report card, Joanne Bradford, MSN's then newly installed ad sales chief, set out to confront the problems and change MSN's brash image among agency folk. Among ongoing strides, MSN works with agencies to build creative solutions for marketers and now offers two third-party rich-media ad options. It also has aggressively promoted industry research touting the benefits of online media in the overall media mix and hired a director of agency relations: Rich Stalzer, a former E-Trade sales executive. "His big mandate is to be solely focused on our interactions with advertising agencies across the country, drive the MSN strategy, work with our marketing organization and drive industry initiatives," said Jed Savage, general manager, MSN Sales, to whom Mr. Stalzer will report.

Shrinking media budgets, marketers loath to spend and ongoing debates over the efficacy of the medium have meant that the portals must try harder to please with customized digital programs tailored to marketers' needs. "I would suggest that [online publishers and portals] listen to what our marketing needs are and not just sell us media," said Brad Smith, manager, Internet branding and advertising, General Mills, speaking recently at the iMedia Brand Summit.

Marketers like Mr. Smith are in the driver's seat these days. They want to know that portals and other online media partners actually understand their business challenges. Agency executives say there is plodding progress but glaring problems as well. AOL, which posted a middling performance last year, has been pummeled by an array of inside and outside forces.

"The people at AOL are good people. I believe Bob Sherman [president, AOL Interactive Marketing] will fix the issues if he is able to, but they're caught in this web of circumstances that makes it really difficult," said Rishad Tobaccowala, exec VP, Bcom3 Group's Starcom MediaVest Group. "It's very hard for them to move inventory around, they can't move a campaign back by less than three or four days ... there's no nimbleness or flexibility," Mr. Tobaccowala said.

lack of dynamic targeting

"They are jumping through hoops to be a solution, but their technology sucks and they're not easy to work with," said one media executive. "They have a lack of dynamic targeting and a privacy policy that's limiting and doesn't allow them to do any customer relationship marketing," the executive added.

However, some changes at AOL are working. "AOL has improved on giving us one central point of contact, that's been wonderful," Modem's Ms. Katz said. "AOL has individual people calling on us now, " said Jonathan Adams, senior partner, director of portal strategy and negotiation, WPP Group's OgilvyOne. "The individual agency-by-agency focus is probably more effective in convincing people to do business with AOL."

Yahoo!, which garnered the top rating, continues to hold its own even as it struggles with growing pains related to its vertical business strategy. Yahoo! last week reported its marketing-services revenue, including advertising, grew to $147.4 million from $120.7 million last year. Results were boosted by growth in subscription revenues in its personals and services. "Yahoo! just continues to hit them out of the park," said Tim McHale, CEO, Underscore Marketing, New York. "Yahoo! continues to be the most sophisticated, most service-driven and the most creative ... and it has a strong demographic targeting tool," Mr. McHale said.

Jeff Lanctot, chief media strategist, Avenue A, Seattle, believes all three portals have upped their client service. "All three have embraced third-party ad-serving," he said, adding that AOL, fraught as it is with internal challenges and under the microscope of an SEC probe into allegations of improper accounting of advertising revenue, "is a great value for the advertisers but it can be difficult to find success there." AT&T Wireless, Best Buy Co. and Weight Watchers are among Mr. Lanctot's clients active with AOL. "The biggest challenge for AOL is in rich media execution. We are working with them to make it a little more attractive to advertisers," Mr. Lanctot said. AOL has incorporated Viewpoint technology as a rich media offering on its service.


"[AOL] has a huge audience but it doesn't have a good ad-delivery platform ... It's not an advertiser-friendly service," Mr. Gerber said. Digital Edge clients have done daypart advertising tests with AOL.

"The dayparting is interesting," Ms. Katz said, "What we like is being able to actually divide, [ads for Kraft's Philadelphia Cream Cheese] in the morning, and target teen snacking in the afternoon," she added.

Yahoo! receives high marks from agency executives for the depth and breadth of its data and analytics. "They continue to deliver above-average focus on the agency, their pricing and programs are good and that doesn't mean cheap," Mr. Gerber said. "They build programs the way media programs should be built."

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