The tone of last week’s Federal Trade Commission hearings suggest that regulation is coming, warned Randall Rothenberg, president and CEO of the Interactive Advertising Bureau, as he opened up day two of the Ad:Tech conference in New York City: “The state of the industry is excellent, yet it’s also at risk: while growth remains strong; growth up 26 percent in first half of the year, which we expect to continue. The online ad industry is on track to hit its first $20 billion year – that’s one-third of the tv ad space after about 13 years of internet ads started.”
He then warned the industry to keep on an eye on Washington and state capitals: “Anti-consumer advocates are out to stifle the industry, including the FTC, which wants complete regulation of cookies themselves and could require opt-in stipulations for all online ads. As last week’s hearings suggest, they feel the time for fact-finding is over, it’s now time to regulate.” Other highlights from the session focused on the rise of platforms and the search for the least disruptive forms of online advertising.
– Platforms: Rothenberg notes that Yahoo (NSDQ: YHOO) and AOL (NYSE: TWX) used to run portals. Now they run platforms. Is this a real transition or is this a fad?
– Suzie Reider, head of ad sales, YouTube: The word platform is just a descriptor. The success of these sites is that they lay out the framework, users fill it up.
– Matt Freeman, CEO, Tribal DDB Worldwide: It’s a concept of co-creating with users, as opposed to creating content for them. As barriers tumble down, production and distribution costs plummet, it’s a fair fifght. For advertisers and agencies, it ends the dominance of media companies.
– Michael Barrett, EVP/Chief Revenue Officer, FIM: help agencies finally make a buck in this space, as these are self-serve interfaces. But there’s a downside, particularly if you’re a mid-size publisher, you will really find yourself squeezed by the costs that are more easily absorbed by larger companies. It might disintermediate on the agency side as well.
– Privacy and regs: On the threat of stricter regulation of online ads by the FTC, which is being spurred by users’ privacy concerns, Barrett says the industry needs to better educate the public about what permission-based marketing involves: “When users find out that they’re not giving their name and address, just ‘Cookie-123,’ they’ll embrace it. The biggest complaint we get from MySpace users is that the ads aren’t relevant.” For Reider, the answer is in the ads themselves: “We have to stop thinking of ads as ads, and rather as ads as content.”
– Online video: Has online video lived up to its promise? Barrett: “The vast majority of online video is monetized by ads on the page, not on the video. We’re experimenting, but we really haven’t found the right model yet.” Freeman: Tribal DDB did a campaign for Volkswagon that reached its target by creating short videos and posted them on video sharing sites. We didn’t have to pay for media, which is unheard of for a major ad campaign.”
– Future of pre-roll: I don’t know when pre-roll will go away, Reider says, touting YouTube’s overlay ads, which launched this summer, as pointing to a possible direction, if not quite the final answer. “It’s not interruptive and the length of the video ad is what you need it to be.” After Freeman voiced his contempt for pre-rolls as a consumer, Barrett countered: How do you reconcile the cost? Is your agency willing to pay twice as much?” The answer was a reserved no.