The Drop in Online Advertising, And What It Means … to a Recent College Grad

Last week, the Interactive Advertising Bureau and PricewaterhouseCoopers reported that online advertising dropped 5 percent during the first quarter of 2009.  This marks the first time Web advertising has posted a year-over-year decline since the fourth quarter of 2002.

Given the recession’s impact on advertising in general, this news is not at all remarkable, but, as Steve Smith, editor at the Media Industry Newsletter, notes: “The deeper question is where online ad spending will be when there is an inevitable upswing. Is online branding and the display economy being hurt in a permanent way by the rush to performance-based campaigns? CPMs continue to plunge. Ad inventory continues to gush online from social media. Search advertising continues to attract the overwhelming majority of marketing dollars. The fundamentals of a long-term digital media economy that can support substantial content creation continue to be unclear.”

By placing a lesser premium on the value of brand advertising, Web publishers and the networks and technologies that serve them will have to deal with the resulting challenges. After all, those that live by the sword die by the sword.

My recent posts on the problems with online display advertising and media altruism articulate my belief that future success depends upon the ability of sales teams to sell the benefits of aligning with quality content.  This skill when combined with true sales altruism—caring for customers—is a formula that transcends generations and technology.  This is by no means an earth-shattering revelation, but I question how much attention the digerati are giving to what were once the basics of media sales.  

Smith’s comments, when inverted, give credence to the importance of quality content as the driving force behind revenue generation. A conversation I had this past weekend with a recent college grad—my nephew—was all I needed to hear to substantiate it.

A May 2008 graduate, he has had found this job market quite challenging.  Armed with a degree in communications, he has been busy helping market his dad’s automotive repair business, interning at a Web/TV enterprise and trying to launch a social network with a college buddy.  About three weeks ago, he got a call from an online ad network regarding a position in sales.  After a couple of phone interviews, he was granted a face-to-face with the network’s VP of sales.

On its face, the job seemed pretty cool.  The money was decent and the idea of getting paid to work in a startup environment was very appealing. What he heard from the hiring manager on the other hand left much to be desired.  He was told that it was expected that he would need to run through a brick wall for a sale. No problem with that from where I sit.  As my nephew probed for how customers felt about his potential new company, the VP said “who cares about what customers feel, as long as we get their money and they pay on time?”  Can you imagine? My nephew said he shut down the minute he heard that comment.  At 23, he innately understood this was no way to conduct business.

 “I want to make money, but there is no way I can work for a company that treats customers so poorly.  I don’t see how a business can succeed with that type of attitude.”  After picking up what he termed a similar vibe from a handful of sales “leaders” over the past 12 months, he has decided to pursue his social network dream full-time.  He hopes to build the type of company he can be proud of.  Whether or not he succeeds in his first venture is less important than the fact that he really understands the importance of true customer-centric behavior.    
 
The experience underscores the problem with online display. Selling brands on the benefits of associating with quality content in an altruistic manner is the key to long-term success. Technology and metrics will propel forward organically, but they no longer need to be front and center. Media companies will come to realize that the Internet is nothing more than a huge power grid. OMMA, IAB and the rest can have all the conferences and meetings they want about whether to “ad network or not” but such get-togethers will have little impact.

The decline reported by IAB was just the first shot across the bow in terms of whether digital advertising lives up to its great potential. Analysts of course say it is just a “blip” along the way to great heights the same way analysts said that sub-prime mortgages were the way to go. Take the so-called analysts with a grain of salt. They back horses upon which they’ve placed bets. New media is declaring itself king of the hill, but great content and great sellers will win when the economy rebounds regardless of the medium.

By Joseph Guerriero -- With close to 20 years experience in both b-to-b and b-to-c media, Guerriero has held top-level executive positions Crain Communications, HealthLeaders, Billboard—where he served as vice president of integrated sales and brand marketing—and most recently at Success magazine. Guerriero presently serves as VP, interactive media sales for DMD Mobile Holdings. He lives in New York City.

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