Working to help ad dollars catch up to eyeballs

John Shinal · January 29, 2008 · Short URL:

It’s been the lament heard often during the last few years from anyone who’s watched the surge in consumers' Web use -- especially as online video viewing skyrockets: when will ad spending dollars catch up to those eyeballs?

It was the question on the minds of many of the startup company executives attending the opening night reception of the OnMedia New York City event hosted by the AlwaysOn Network.

AlwaysOn founder and former Red Herring magazine editor Tony Perkins laid out the landscape by sharing these two facts: while surveys show that consumers spend about a third of their time online, ad spending on the Web, while growing fast, still accounts for less than 10% of total U.S. ad spending.

“What’s it going to take to close the gap?” Perkins asked the gathering.

Startup executives whose companies had been selected for the AlwaysOn 100 list had some answers.

John Edwards, CEO of Move Networks, said his company’s high-quality Web video platform is greatly increasing the average time consumers spend watching online content -- from the often-quoted average of two or three minutes to more than 50 minutes for shows on its high-quality platform.

By convincing people to keep watching, “we’re creating ad inventory,” Edwards said of Move, which has signed deals with most of the major networks to distribute their shows over the Web.

Other startups are working the ad side of the house.

David Kidder, CEO of Clickable, says the company has developed what he calls a “simple, elegant interface” that allows ad buyers to look across all the ad networks quickly to find where the best returns have come from -- and to help improve future click-through rates.

“It’s log in and go…analytics with recommendations – all the ways to groom and tune” ad buying.

The Rubicon Project is another ad-optimization service that helps publishers make more money from their ad space. The company has already signed up more than 3,000 sites just a few months after launching its beta product.

“The online ad market is $27 billion…80% of that goes unsold by Web sites directly, the rest goes to the ad networks," according to Rubicon CEO Frank Addante.

“We’ll see more ad dollars flowing online, in part because it’s more efficient,” Addante says. 

One bit of skepticism came from Henry Blodget, the former Merrill Lynch Internet analyst who is now editor-in-chief of Silicon Alley Insider, an online publication that follows the online ad industry.

Blodget asked whether online ad spending would be spared any downturn caused by a possible U.S. recession. 

"We've heard this before, we heard it in 1996," when people said it would save online companies. But then came the dotcom bust, said Blodget.

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