The seminal event in 1998 that propelled the Internet advertising industry forward was without a doubt Procter & Gamble Co.'s Future of Advertising Stakeholders summit.

The Cincinnati summit, engineered by the package-goods giant to jump-start the Web as an effective advertising vehicle, succeeded in bringing together key groups to solve some of the thorniest issues facing the industry.

P&G's tremendous influence in leading the industry--along with its own real commitment to the medium in ad spending and creation of innovative, successful campaigns--combine to make the consumer goods company Advertising Age's Interactive Marketer of the Year.

"The interactive world is where consumers are going, where it's happening, and we need to be there," said Denis Beausejour, VP-global marketing and VP-marketing, global beauty care and North America at P&G. "We are trying to get all of our top management involved in [interactive] and I think we're making terrific progress," said Mr. Beausejour, who announced the historic FAST summit during the spring @dtech show last year.

FACING UP TO KEY INDUSTRY ISSUES

P&G, as it's done in the past, is using its clout as the world's largest advertiser to address key issues facing the industry. These issues--gaining consumer acceptance, standardizing measurement, defining ad models and making online media easier to buy--have been holding back advertisers from spending more on the Internet.

At the summit, marketers (including P&G rival Unilever), Web sites, ad agencies and technology providers formed FAST Forward, a trade group dedicated to breaking down these barriers to effective Internet advertising.

While the first solid results from FAST are just now being seen, such as ad-model recommendations and measurement guidelines, the outcome is sure to have a positive impact on the medium this year and beyond.

"You couldn't come up with a better prototype for industry leadership than what P&G did [with FAST]," said Rich LeFurgy, chairman of the Internet Advertising Bureau and chairman of the FAST trade group.

"Their fundamental business is not

e-business," he added. "For a company to rally the industry and to work diligently to figure out interactive marketing for their business, to me that is real leadership."

Leadership is one key criteria in selecting an interactive marketer of the year. Others include online spending, innovation and successful ad campaigns. P&G has excelled in all of these areas.

'98 INTERNET SPENDING DOUBLED

P&G would not disclose its Web ad budget, although it said it doubled Internet ad spending in fiscal 1998 compared with 1997. In the fourth quarter of 1998, ended June 30, P&G spent $3 million on online advertising.

According to InterMedia Advertising Solutions, P&G spent $4.4 million in measured Internet advertising in 1998. InterMedia does not measure America Online advertising, which accounts for some of P&G's ad spending. Of the top 50 Web ad spenders in 1998, P&G was the only package-goods marketer and No. 30 overall, another sign of its leadership.

200 INTERACTIVE ADS

In addition to increasing its Internet ad spending, P&G has dramatically boosted the number of brands participating in interactive marketing. While P&G had a dozen brands involved with interactive advertising at the time of the FAST summit, it now has 33 brands doing some form of Internet advertising, many of which are being funded by a P&G program called `Incent' that provides seed money for Internet marketing.

"We've come a long way in terms of our brands supporting this area," says Vivienne Bechtold, associate director of interactive marketing at P&G.

She notes digital brand managers used to call P&G brand managers to urge them to use more interactive advertising; now, brand managers are calling the interactive team to ask questions.

"While you can have a central group leading the effort, there has to be accountability and leadership taken on the part of the brands, so we get more integrated throughout the organization," she said.

" `Incent' opened the floodgate for new brands to come in," adds Pete Blackshaw, digital brand manager at P&G and chairman of the FAST summit.

SHIFTING INTERACTIVE BUDGETS

`Incent,' part of P&G's interactive budget, awards funds to brands to test and run online ads. While P&G now has a separate interactive budget, the company goal is to move all interactive funding to individual brand budgets by 2001.

"Investment will follow the opportunity," says Mr. Blackshaw. "We're in a high learning mode; we truly want to understand what works."

P&G's interactive team created and ran 200 interactive ads in 1998, and bought media against all of them. It doubled the number of technologies in use from roughly six in 1997 to a dozen in 1998, including Thinking Media's Active Ads, @Home's Enliven expanded ad format and other rich-media formats from Unicast Communications and Macromedia.

P&G is also using the Web to launch new products. Last month, P&G agency Leo Burnett USA, Chicago, started a TV campaign for the new Noxema Skin Fitness brand, aiming to drive traffic to a Web site to let users request samples before the product hits the shelves in June.

"This is the first campaign where we're leveraging the Internet as an integral part of a product launch," says Mr. Blackshaw.

One of the most successful interactive campaigns, for which P&G won an award from the Coalition for Advertising Supported Information & Entertainment for best interactive ad, was the Scope e-mail kiss, created by interactive agency Blue Marble, New York, sister agency to D'Arcy Masius Benton & Bowles, which is the mouthwash brand's traditional agency of record.

KISS CLICK-THROUGH HITS 20%

The Scope e-mail kiss garnered an average click-through rate of 20%, with an even higher conversion rate for pass-along e-mails. P&G declined to reveal the conversion rate.

P&G is now taking findings from its interactive testing and applying them into new campaigns, where online media makes sense.

For example, in February it ran the Scope kiss campaign on AOL, this time using AOL's instant messaging service to send the kiss. It declined to disclose campaign results, although Mr. Blackshaw says it was "encouraged" by the program.

Through its testing, P&G is trying to figure out whether established ad measures, such as impressions, are truly effective.

"One of the challenges of interactive advertising, given that consumers are in a very active mode, is we have to ask ourselves whether the impression is the best metric for getting the brand message across," says Mr. Blackshaw.

'SEQUENTIAL MESSAGING'

In an online campaign for Bounty, created by brand AOR Jordan McGrath Case & Partners, New York, P&G created a new ad format called "sequential messaging," in which it broke down the message into four units and delivered them in different areas of the site where the user was interacting. P&G found that sequential messaging increased purchase intent, although it declined to say by how much.

As P&G experiments with new ad formats beyond impressions, this raises a key question: If the unit is not impression-based, how do you pay for it?

"We're trying to answer that," says Mr. Blackshaw. "We have to figure out what is effective and then we have to figure out how to buy it."

For now, P&G will say only that it is pursuing a portfolio of pricing options, including cost-per-thousand impressions, sponsorships, performance-based and hybrid models.

While P&G is launching new ad models, it is taking its time with electronic commerce.

PUSHING AGENCIES

So far, it's only selling limited products, such as Hugo Boss Fragrance and Millstone Signature Blend coffee, online. In October it launched Store Link, which links users to retailers' sites.

"We will not meet most consumer needs by selling direct," says a P&G spokeswoman. "For most of our brands, it does not make sense."

P&G is also encouraging its agencies to integrate interactive throughout their organizations. Ms. Bechtold notes shops with integrated interactive operations, such as Jordan McGrath, have been among the most progressive in developing interactive advertising consistent with the overall brand message.

P&G is also using the Internet to communicate internally, and is bringing in fresh perspective from youthful employees who have a passion for the technology.

"We are trying to leverage this interactive marketing phenomenon to reinvent our company's culture," says Mr. Blackshaw.

Copyright May 1999, Crain Communications Inc.