Once Upon a time, Large Advertisers Pooh-Poohed Cable TV
There were a few sparks Thursday during the Dot Bomb 2.0? panel at OMMA (Online Media, Marketing and Advertising Conference and Expo) Global New York, dubbed “Platform Wars.”
Following several years of sustained growth, online advertising growth rates are starting to slow. What’s more, fledging online companies are burning through cash without adequately monetizing their traffic. So is the (latest) party finally over?
A consensus emerged that capital flow will slowdown because of the financial crisis on Wall Street, but it won’t be a repeat of the dot-com meltdown in 2000–2001.
Brian Wieser, senior VP, Director of Industry Analysis at MAGNA (Interpublic), sought to explain the thinking among ad agencies and their clients when it comes to investing online and pointed out that he wasn’t defending their behavior one way or another.
“Agencies need to break down (clients’) resistance to new technologies,” he said. “Or are [advertisers] being smart” not to shift too much of their media spending to online venues because many of them are unproven and still don’t offer a lot of scale. With online marketing, “distinguishing between cost and value is nearly impossible,” he said.
That was enough bait for Dennis Miller, General Partner of venture fund Spark Capital, which backs Akamai Technologies and K12, among other companies. “People said the same thing about cable,” Miller said, referring to skepticism among ad agencies and large advertisers about the Web. “They said it’s tough to monetize, ‘Let’s be wise and wait.’ [And] it took years and years of haranguing advertisers to join the platform.”
Cable, of course, has in the last decade or so been a growing force in medialand; the typical home now has access to more than 100 channels, many of them offering niche yet profitable audiences for advertisers to target. “Now it’s the Web” that large advertisers are pooh-poohing, Miller added, somewhat incredulously. “Social networks have to do more than a 30–second spot.”
(Spark is an investor in social network Twitter. While acknowledging that Spark didn’t know what Twitter’s business model looked like before pumping money into it, Miller said: “There are few companies that have the potential to become a verb, and at the end of the day, those are multimillion-dollar companies.”)
Porter Bibb, Managing Partner of private equity fund MediaTech Capital Partners, sided with Miller that agencies need to do a much better job of educating their clients “about what’s going on in the [media] world.” Bibb stressed that brand advertisers need to take a closer look at In-Store TV networks. Wal-Mart’s in-store TV network, for instance, garners five times more eyeballs “any day” than any cable network, Bibb said.
Satya Patel, Principal of venture capital fund Battery Ventures, addressed the Yin and yang of online advertising. “There are pockets of vision” among ad agencies and brand advertisers regarding the potential of the Web and social media. “The ones focused on media that can engage in conversations are leading the way,” he said. At the same time, he said, there are some fundamental flaws to the online ad model and there’s an “inherent difficulty” in making money off the Web.
Matthew Schwartz is Senior Editor of ScribeMedia.org and host of the WebTV series, From Print to Digital.
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