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Web ad agency sees obstacles in Internet advertising formats

Web ad agency sees obstacles in Internet advertising formats

Promising new channels for the growth of Internet advertising, from mobile phones to social networks, still face substantial challenges in 2008 when it comes to persuading marketers to invest in them, an executive at the Avenue A/Razorfish Web ad agency said.
Jeff Lanctot, senior vice president at Avenue A, described mobile advertising, social media and Web video as "not ready for prime-time," "a work in progress" and "a ways away" from standardization, respectively, in an interview with Reuters.
Each of these channels represents a major gamble for the world's biggest Internet players, particularly as investors show concern over how Web search and other established formats will weather a possible U.S. recession this year.
Avenue A is part of the aQuantive online marketing company bought last year by Microsoft Corp for US$6 billion. Microsoft has since launched a US$41 billion unsolicited takeover offer of Yahoo Inc to better compete against Web search leader Google Inc.
Avenue A, in an annual report on the state of the digital advertising market released on Sunday, said current trends will make it difficult for major Web publishers to increase ad revenue in 2008, as marketers divide their budgets across more sites.
The agency handled US$735 million in advertiser budgets in 2007, up 36 percent from the previous year. In 2008, it could direct nearly US$1 billion in spending, based on industry estimates.
It spent client money on more than 1,800 sites in 2007, compared with 863 the previous year. The shift comes to the detriment of large portals like Yahoo and Microsoft's MSN.
On the flip side, large online advertising networks that help marketers navigate through so many Web sites and place ads are gaining ground. The top ad networks have been acquired by Yahoo, Microsoft and Time Warner Inc's AOL.
"The data says it's probably the right strategy for them," said Lanctot. "Not unlike search, the ad networks benefit from scale."
While search advertising continued to gain a larger share of advertiser budgets in 2007, a U.S. recession this year could take a toll if consumers are searching and shopping less, according to Avenue A.
Google has sought growth in new outlets, particularly its YouTube video sharing site. It introduced small ad overlays on YouTube, adding to several video ad formats used on other sites that include television-like commercials within a clip, or a video player embedded within a sponsored area on a Web page.
"You're going to see a lot more investment in all those different types of video ads but I think we're probably a ways away from standards being adopted," Lanctot said. "They may be announced; I just don't think they'll be widely adopted."
Microsoft made a US$240 million investment in social network Facebook, which faced criticism over an effort to publicize products or sites favored by its users.
"For marketers it was reasonable to expect that there would be and probably continue to be a rocky road to finding out what the right ad models are on Facebook," Lanctot said.


Updated : 2021-04-15 05:20 GMT+08:00