While the feeble status of Net advertising can largely be blamed on the dot-com bust, some of its lingering problems hang on the disconnect between ways of measuring the performance of offline and online media. For example, ad buyers steeped in the vernacular of print, outdoor and broadcast media still don't understand how to reach a specific audience on the Internet.
"The data traditional planners use to allocate funds isn't there yet," said Greg Stuart, president of trade group the Interactive Advertising Bureau (IAB). "Our industry will not move forward if we don't get this fixed fast."
After years of double-digit growth, online ad spending has posted consecutive declines in the three most recent quarters for which data are available, according to the IAB. Spending peaked in 2000 at $8.1 billion but dropped to just $5.5 billion in the first nine months of 2001, with some estimates for that full year coming in near $7 billion, the IAB said.
To help reverse the trend, online ad sellers are busy negotiating standards and creating research tools that will allow buyers to compare Internet inventory to traditional media such as television.
In most media, advertisers seek to reach a percentage of a set audience a specific number of times, measured in terms of "reach" and "frequency." For example, a brand manager for Tide laundry detergent may want to reach 50 percent of an audience of female homemakers three times over the course of a month.
Advertising buyers use planning tools to determine how to fulfill such a goal in television, print and outdoor media. But the Internet has yet to be thought of in the same way or make an appearance on such tools.
Several groups are working to remedy that. On Tuesday, Internet researcher NetRatings introduced a collection of media planning tools that calculate reach and frequency online for traditional advertising agencies. NetRatings launched the tool, called WebRF, in partnership with Interactive Market Systems (IMS), one of largest international providers of data systems for the ad industry.
IMS provides planning data and tools on traditional media to more than 1,500 agencies and advertisers worldwide. NetRatings' reach and frequency tools initially will be offered separately to interactive planners, but later in the year the two companies plan to offer a tool that allows people to compare various media including the Web.
"The first step is to build a knowledge and understanding of the Web, and the second step is to understand it in relation to other media," said IMS Chief Executive George Wishart.
Meanwhile, the Advertising Research Foundation (ARF) and the IAB are evaluating ways to calculate reach and frequency and are working on setting industry standards for measurement. The partnership, called the Digital Media Measurement Council, held a major powwow in April to discuss current methodologies, with plans to eventually come to agreement on a standard. Even companies such as Yahoo are trying to use reach and frequency metrics in selling traditional marketers on their Web properties.
Much of the problem these groups are trying to address is that of elevating the Internet to a standing on par with traditional media.
When advertisers have something to sell, they find potential buyers reading magazines, watching TV and listening to the radio. The Internet population is considered an ugly stepchild to many media planners. That's largely due to a language barrier between traditional and interactive media. Interactive media companies sell ads by the number of times they're viewed, or by impression. Print, outdoor and broadcast media sell ads by the size of the audience.
Many media buyers believe that when they buy an ad in a magazine, they are reaching the entire demographic of that publication at least once. But on the Web, it's less clear who is seeing an ad.
"The challenge has been matching up server log files; ad servers tell you how many people you reached and how often, but they don't tell you who those people are," Stuart said.
To address this issue, ad-serving companies including DoubleClick and Avenue A have come up with technology to calculate reach and frequency. But to date, a single technology has not been accepted by the industry.
Jim Spaeth, president of New York-based ARF, said that during the April meeting, a vote concluded that both user-centric measurement, from panels such as NetRatings, and server-centric measurement, from publishers' or ad servers' log-file counts, are inadequate on their own. Methods for counting reach and frequency combining both are the best solution, he said.
In traditional media, the thinking goes that if reach and frequency goals are accomplished a product will be sold.
"If we're going to get in the game, we have to come up with a combined reach and frequency," said John Keck, interactive media director for San Francisco-based advertising firm Foote Cone & Belding. "The day traditional planners bring the Internet into their considered set of media is when it's going to take a big leap forward."