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how Online Advertising Will Recover
Slate Publisher Says It Will Work

By Scott Moore

Online advertising. What will it take to make it work better?

For advertising to thrive online, these characteristics of television, radio, and print media must apply:

1. Critical mass in terms of audience size, quality, and engagement.

2. Standard ad specifications that vary little, if at all, from vehicle to vehicle within a given medium.

3. Measurability of audience and ad effectiveness via proven, accepted third-party methodologies.

4. An established ad-agency "eco system" for creating, buying, and selling ads.

5. A historical basis for pricing norms.

Today's Web fulfills No. 1 and partially fulfills No. 3. Millions of Americans are increasingly turning to the Web for news and information. Jupiter Media Metrix reported in August that 12% of media consumption happens online, while only 2.5% of ad spending is online. The UCLA Internet Report found that 72% of Americans are online an average of 9.8 hours per week (up 4% from 2000) and are spending less time with books, magazines, and newspapers. Significantly, their TV consumption was 37% lower than that of non-Internet users.

Marketers can't afford to sit idle. Web consumption is growing at a much faster rate than other media.

But there are holes. First, we haven't settled on a set of ad standards. Ad Relevance reports there are thousands of ad types in use. Imagine if this were TV. "Oh, you have a 30-second spot? Sorry, we only accept 26.5-second spots on 8-track."

Next is the issue of third-party measurement standards. Nielsen//Netratings will merge with Jupiter Media Metrix to establish a clear industry leader, which creates a single standard. But we also need standardized demographic reporting on the Web users in the Nielsen/Media Metrix panel tied to the sites they visit. Also, ad-effectiveness research by Dynamic Logic and others has begun to prove the efficacy of building brands online, but more is needed.

Third, agencies are gun-shy. Web ads require multiple executions, the creative palette is limited, and media budgets are small. As an industry, we need to do a better job reaching out to resolve these problems.

Finally, firm pricing norms for the Web haven't been established. The industry is young, and supply has outstripped demand, dropping prices. This problem will recede as we validate the online impression and establish criteria for comparing CPMs from site to site and against other media.

The patient will recover. Why? Because the Web continues to exhibit robust health and growth. Annual Web advertising has become a $6 billion business in only six years. Cable TV took 10 years to reach scale and profitability even with relatively well-established ad standards, methods of audience measurement, an advertising ecosystem, and pricing norms.

It will work. One hundred million Americans can't be wrong.