.COM 2.0
By David Fishman

Is this .com2? It feels like all of the press being reported for the online advertiser is extremely positive. The numbers look good and the general impression about advertising on the internet is also positive. Certainly there are some bumpy patches, but in general, there is a sense of value for companies who want to advertise on the Internet. However, there is not enough branding based advertising occurring on the Internet from major corporate sponsors.

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Since last year the US financial services giant has conducted a series of ambitious experiments in online marketing that have involved some of the highest-priced talent in entertainment.

Jerry Seinfeld, the comedian, appeared in two long-form internet commercials - dubbed "webisodes" - directed by Barry Levinson, the maker of Rain Man.  A website was developed to show Amex ads featuring Robert De Niro, the actor, Martin Scorsese, the director, and Ellen DeGeneres, the US talk show host.

The effort by Amex and its advertising agency, WPP's Ogilvy & Mather unit, could hardly have been more high profile, except that the expenditure is unlikely to be captured in any third-party estimate of online advertising spending - and therein lies a problem for internet marketing.

Estimates of internet advertising spending by authorities such as the Interactive Advertising Bureau typically track payments to big media companies. But many uses of the internet for marketing - such as the ads run by Amex - are bypassing those companies, making them difficult to measure.

“The lack of third-party data is of more than academic interest. Executives of some of the world's leading marketing services com-panies say the lack of accurate spending figures is making it difficult to persuade corporate clients to take a chance on more adventurous forms of internet promotion.”

One of the problems of tracking accurately the amount of money being spent on internet advertising is that the tools used for tracking this information, have not kept up with the technology on the internet today. For example, when a medium size online agency generates sales via a private affiliate network for an advertiser, the number of sales that are being paid for and the amount for each sale are not precisely recorded by any agency that can put together a report to show accurate spending. This is a void that television and print media do not have to overcome. The result has been a consistently low amount of money being spent by corporate clients that is  shown by the few internal or external sources of information available.

The irony is that understatement has not been the traditional problem for the internet. Indeed, online advertising revenue has been subject to exaggeration on a grand scale. Last month, Time Warner agreed to pay $510m in penalties to resolve US investigations into the possible overstatement of revenue at its AOL online unit.

There is little argument that internet advertising is growing and improving. Search advertising is booming as advertisers spend money to have their names featured in the results produced by companies such as Google. Broadband connections allow advertisers to offer more creative display advertising - replacing annoying pop-ups.

The difficulty for companies that measure online marketing spending is that the internet is an interactive medium which can often blur the line between advertising and other forms of activity. A website, for example, can be seen as a form of infrastructure, similar to a shop. But it can also function as a tool of communication, in the way an advertisement does.

Industry executives say it is not unusual for companies to spend millions of dollars on websites with the explicit intention of using them as advertising. But this spending tends to remain a proprietary matter, making it unlikely to be included in third-party estimates.

The anonymity of the net is another factor making it hard to document how much advertisers are using it. Marketing services companies, for example, are being hired by companies to "seed" internet chat rooms and web logs with their messages. The idea is to create "buzz", positive word-of-mouth promotion, which is often the best way to increase sales. But the furtive nature of this activity suggests that it will remain tricky to track - and therefore difficult to promote to potential clients.

With many companies like blockbuster, General Motors, and Starbucks all offering their brands to the web there will be an increase of corporate sponsors to the internet. Hopefully we can help other corporate sponsors by developing a format that will allow them to see the dollars being spent by corporations on their own propriety web sites, along with the money being spent on private affiliate programs in promotion of those brands, sites, and services.

Even then, some companies resist. It's a Catch-22 familiar to many big organizations. In general advertising is herd oriented. If large corporate clients start seeing more branding occurring on line, there is a very high likely-hood that others will follow.

David Fishman
dfishman@wrpmedia.com