Geoff Ramsey: While video and social networks are among the hottest new ad formats today, they will account for only
$2.9 billion, or about 10% of total online advertising dollars projected for
2008. I believe that these trends, while important, are superseded by three deeper,
more fundamental transformations taking place in the media world.

Geoff Ramsey—CEO, Co-Founder

Business statistics can
often reveal a great deal of information about a market or trend. A single
number, like a picture, can be worth a thousand words.

Take 9.3%. That figure
represents eMarketer’s prediction for the share of total US media spending
going to the Internet this year (in 2007, the share was only 7.4%).

In absolute terms, 9.3%
translates into $27.5 billion being spent on various forms of Internet advertising in
2008, according to eMarketer projections. That number, in turn, reflects a
variety of trends and industry developments that are expected to take place. For
example, advertising on social networks and online video are both projected to
grow at double-digit rates this year.

But while video and social networks are among the hottest new ad formats today, they will account for only
$2.9 billion, or about 10% of total online advertising dollars projected for
2008.

I believe that these trends, while important, are superseded by three deeper,
more fundamental transformations taking place in the media world. These
transformations aren’t so easily captured by numbers.

The first of these
transformations starts with media fragmentation, which, because of the Long Tail
effects of the Internet, is expanding exponentially. However, we are now
learning how to harness media fragmentation to serve the needs of advertisers,
publishers and, yes, even consumers.

Over the past year, we have seen
significant consolidation and simultaneous expansion among the online ad
networks. Ultimately, as these ad networks continue to grow and become more
sophisticated in their ability to target specific consumer groups, they will
allow advertisers to reach large audiences that are stitched together from
hundreds or thousands of diverse Web sites. Eventually, advertisers will be
able to have their cake and eat it, too: They will enjoy precise targeting of
ads without sacrificing reach.

As Adam Gerber of Quantcast
has said, in the future, online media buying will be about "the
re-aggregation of a fragmented audience that’s actually watching
different things."

The second transformation is
that the Internet is becoming the central hub of most media and marketing
campaigns—and for good reason. Not only is the Internet now used extensively
by every major demographic group, and for a variety of purposes including
information, communication and entertainment, but it also allows for a two-way
interaction between consumers and marketers that is not found in any other
medium. Just as important, the Internet can provide a wealth of measurement
metrics to help marketers justify and fine-tune their integrated media plans.

But it is the third
transformation that will have the greatest effect since it transcends the
Internet and affects all media.

For decades, the ad industry was built on the
interruption-disruption model. Consumers understood that if they wanted to
experience free content—in the form of television shows, music on the radio and
magazine articles—they would have to put up with ads, most of which were
perceived as irrelevant, boring, annoying or all three. In this standard
construct, ads were seen as a “necessary evil” to support the content
consumers really wanted to see.

But the
interruption-disruption model is dying out, thanks to shifting consumer
trends. Consumers are increasingly in control of their media content
and can
easily eradicate ads they don’t want to see. They also have less trust
in
advertisers and their messages. Further, consumers are creating their
own
content with the help of blogs, social networks, wikis and other
digital-communication platforms.

As a result, advertisers and
their agencies who want to engage with today’s consumers will have to start
turning their ads into content. Ultimately, they will need to be able to
produce content that is so compelling, relevant and entertaining that consumers
will seek it out and want to share it with others. The new ad model is about
creating great content and finding clever ways to embed it in the fabric of
communities and content platforms where consumers are hanging out and actively
participating.

Via eMarketer