Highlighted by unquestionably successful and exciting online advertising campaigns for Bailey's, General Electric, and Intel, MediaPost's annual Forecast 2004 conference held yesterday in New York with 250 or so attendees left one overall, indelible impression: this is an industry that has weathered the dot.com bust wiser and healthier than ever.

Put another way, the industry finds itself looking at the future with a lot more tried-and-true options. Granted, with some new or greater problems (what to do about spam and scams being first on the list; see related story on MediaPost today).

But, in the main, the conference, which featured a Traditional Media Day as well, clearly demonstrated that the online industry has become a vitally important part of today's media mix. Statistics in related stories on the MediaPost Web site today clearly back that up--with online ad spending projected solidly upward for this year and on into 2004--but the mood of the online-day conference was just as telling.

Media agency legend Gene DeWitt, a panelist during the first day of the conference, said at the start of the online day's activity, "I'll be here all day. This stuff is not going away."

Media planners and buyers of all sorts were joined by agency creatives, publishers, technology specialists, and a wide variety of companies that serve the online media services.

Mindy Pickard, Vice President New Products & Consumer Marketing at Showtime Networks, a Viacom company, said she was at the conference to bring herself up to speed on the latest developments in online advertising and consumer marketing so she would be better able to manage her online staffers.

One of the liveliest debates of the conference arose over the issue of whether you can get your online transactions and have your branding rewards at the same time.

It's tough, of course, but it can be done.

Witness the wild world of Orbitz, the online travel and hotel site.

"If you drive a lot of traffic to good product," observed Geoffrey Silvers, Director, E-Marketing at Orbitz in Chicago, "at the end of the day millions of impressions will reinforce your overall brand."

So, too, if in the pursuit of transactions you become known by Net users for something memorable at your site, brand recognition gets enhanced. The memorable, and unexpected, experience at Orbitz' site was a game that started out more interactive promotion rather than actual game.

"Customers want things that are fun and engaging," said Silvers, who set up the interaction marketing promotion that turned into a full-fledged game. "What we found was that many of the visitors to the site were playing the game for a half-hour or an hour at a time. Naturally, they received branding messages as they played the game."

The result? "Transactions are up, conversions are up," said a satisfied Silvers.

At classmates.com, which only advertises online, "We don't do branding per se with our online advertising," said Aaron Finn, Vice President, Acquisition and Analysis. "But we do create awareness." The fact that classmates.com, with its ubiquitous Internet ads, has become an online household name, has led to some fruitful off-line joint ventures, Finn said.

David H. Martin, a media planner at Ignited Minds in Los Angeles, weighing in on the direct response/branding debate, said: "We should be less afraid of a clickthrough sometimes being low, because we need to price our inventory in accordance with our marketing objectives. A buy shouldn't be based just on CPM. Until that happens, and I think it will happen in the next couple of years, you won't see many online campaigns that were created solely to raise brand awareness. Why should I do a brand campaign for the same cost of a call-to-action campaign?"

At Forbes.com, James J. Spanfeller, President and CEO, is under no illusions that he can make major changes in the way a consumer thinks or acts. "Anybody who thinks they can control user behavior online is kidding themselves. We want to make it clear and easy for people to go where they want to go on our site," observed Spanfeller.

Toward that end, Forbes.com works closely with its advertisers to help them target the location on the Forbes site where they are most likely and most effectively able to meet the visitors they most want to reach.

Spanfeller is so confident of his site's approach that he offered a money-back guarantee to 25 of its advertisers if specific objectives weren't met.

"All of them worked," said Spanfeller.

In the realm of search and contextual marketing, discussion was all about search advertising, text or otherwise. While at present nobody seems able to resist key-word specific search advertising, more than a few conference attendees, representing varying vantage points, suggested that in fact search marketing may be growing too much, too fast, with the likelihood of big players piling on a true threat to bidding wars that put prices out of reach of many marketers. Beware a backlash akin to that taking place under our feet against spam, pop-ups, pop-unders, and other forms of truly intrusive online advertising, they warned.

On the other hand, GasPedal's CEO Andy Sernovitz reminds us, Americans do love their advertising; they do love to be kept abreast of "the latest," even if that means putting up with a little more intrusiveness than they might prefer.

Noted Patrick Keane, in charge of advertising sales strategy at Google: "We're in the business of selling conversions. Not now, but I think the industry is going in that direction." Concentrating on contextual advertising is the name of the game at WhenU. "The beauty of a contextual message is that you have limited inventory so it almost forces you to very carefully target the consumer."

On the rich-media front, for now suffice it to say that its expansion into a major force in the online advertising world seems inevitable.

"We've seen rich-media advertising more than triple in the past six months," said Lorne Brown, Founder and President of New York-based Trafficmac, which handles rich-media work for a variety of publishers and other clients. "There's been a lot of talk about when rich-media content is too much at a site location. But what it should come down to is what the user wants to see."

Advertising veteran Richard Hopple agreed, and, admitting prejudice, said he believed third-party vendors can best handle the complex and technology-challenging demands of rich media. Hopple, Chairman and CEO of Unicast in New York, observed: "Third-party vendors, if they've made the proper investment, can add a great deal of value through their technology innovation alone. At Unicast, we have what we're confident is a truly unique technology for handling rich media. It cost us a lot of money, but that allows us to have a true competitive advantage--to rise above commoditization."

And so it goes.

By Masha Geller

During a rich media discussion at MediaPost's third annual Forecast conference in New York on Thursday, Jupiter Analyst Nate Elliott presented a set of stats that show how poised the rich media landscape is for expansion.

Elliott presented the numbers, which are based on an executive survey of 579 online marketers and the numbers on which rich media ad formats advertisers use, and those numbers are encouraging.

According to the survey, rich media ads are projected to grow to 8% of total online spend in 2003, up to 11% next year and up to 25% by 2008. Streaming media, which Jupiter tracks as a separate category, is set to grow much faster than the rest of rich media, and reach 3% of total online spend this year, 4% in 2004 and a promising 14% by 2008.

In the survey, Jupiter also asked marketers, "Which of the following rich media and streaming media advertising types does your company plan to use in the next 12 months?"

According to the findings, marketers plan to increase their usage of on-page ads - banners/skyscrapers/rectangles using Flash, Java, Pointroll, Enliven, video, etc. - from 56% this year to 67% next year.

Over-page advertisements, which include Eyeblaster, Shoshkeles, Ad4Ever, DHTML, as set to grown from 15$ to 22%.

Marketers also plan to increase their usage of Between-page advertisements such as Superstitials, Ultramercial, and interstitials from 11% to 19% and Pre-roll video advertisements (video ads that play before, during or after user-initiated video content ) from 9 to 17%.

By Paul J. Gough

Online ad spending will rise 14.5% to $6.9 billion in 2003, according to research released Thursday by eMarketer.

Geoff Ramsey, chief executive officer of the New York-based research and analysis company, made the prediction during his keynote address to more than 200 new-media professionals who attended the second of the two-day Forecast 2004. Ramsey said the predicted growth would be higher than the average 4.9% growth expected for all media for 2003.

Thursday's event, which was sponsored by MediaPost Communications (publishers of MediaDailyNews and MEDIA Magazine), was held in New York City. It featured experts and leading practitioners in the field of interactive advertising, who discussed issues like search and contextual marketing, rich media and regulation's impact on spam.

Ramsey's spirited opening presentation discussed trends in interactive marketing and gave a glimpse of where the industry is heading. Online ad spending rose from $700 million in the first quarter of 1999 to its high-water mark of $2.1 billion in the second quarter of 2002 before the fall and, in the most recently available data, stood at $1.7 billion in the first quarter of 2003.

There are about 140 million active online users in the United States, with the number still growing but at a slower rate, 4.5% in 2003 compared to 8.5% in 2002. The Internet has a household penetration rate of about 58%, compared to radio and TV's 98%, magazines' 84% and cable TV's 67%. The Internet's household penetration may soon reach cable TV and is already above newspapers, Ramsey said.

One of the drivers of Internet growth - the penetration of broadband - continues to grow. Data released by eMarketer shows there were 17.2 million broadband users online in March 2003. Broadband is poised for growth of at least 34% in 2003 and soon, Ramsey predicted, 22% of the nation's households will have access to broadband.

America Online this year has had mixed success trying to stem subscriber losses by offering such nuggets as sports clips, anti-virus protection services and exclusive music samples.

Now, the struggling unit of AOL Time Warner (soon to be just Time Warner) is taking off the gloves. The family-oriented service is taking aim at perhaps its subscribers' biggest soft spot: their children.

AOL on Monday will roll out KOL, its first service designed for kids ages 6 to 12. To be sure, AOL offers a kids' channel today that is among the Internet's top such sites, drawing 3.3 million children with chat rooms, pop-culture content and homework help. But it's a fairly static miniversion of the flagship AOL service.

KOL marks a dramatic makeover as it creates a sort of online amusement park for children, complete with video gamelike navigation, interactive bedtime stories, exclusive cartoons and comic strips, a radio show, dozens of games and even a dose of good-natured bathroom humor.

In charge of its creation was Malcolm Bird, vice president of AOL's kids and teens areas and a British children's TV veteran. ''This is a unique immersive experience for kids,'' he says. ''I want this to be something kids want to go to every day, something that makes them go the playground and say, 'Did you see what was on KOL?' ''

Meanwhile, he says, parents will be drawn to KOL's ''safe environment,'' made possible by parental-control features.

Some compelling numbers back AOL's courting of pre-adolescents. Forty percent of kids under age 12 are online, a figure expected to be 57% by 2007, Jupiter Research says. And a Roper ASW report says kids are playing an ever-bigger role in parental purchase decisions, such as picking an Internet service.

''Kids are a huge retention tool'' for AOL, Bird says.

AOL has lost more than a million subscribers this year, many to the broadband services of phone and cable companies. In that period, it has gained just 450,000 broadband subscribers -- who mostly pay an extra $10 to $15 a month to get AOL content on top of a broadband access service.

AOL officials and some analysts believe the kids' offering can boost that number because much of the animated content requires broadband. ''My feeling is it's going to help them hold on to a very key audience for them, which is the family audience,'' says Forrester Research analyst Charlene Li.

But Jupiter Research analyst David Card was more skeptical. ''It looks like a really good offering with a lot of rich programming,'' he says. He says it surpasses online kids' content from rival services such as Microsoft's MSN and EarthLink, as well as children's content sites from Nickelodeon, Disney and Cartoon Network.

Noting a Jupiter survey showing less than 5% of online users would pay extra for kids' content, Card says, ''There's no pent-up demand for this kind of service.''

But Bird hopes he's concocted such a dazzling online world that kids won't let their parents turn it off. Youngsters choose personal desktop themes, such as ''space,'' ''ocean'' and ''jungle,'' and navigate by clicking on objects or characters in the elaborate settings.

Other features include a live daily radio show hosted by British TV and radio host Rick Adams in a small studio next to Bird's office; homework help from ''Brad the Robot''; an exclusive Batman comic strip; toy reviews; about 50 games, including Booger Bowling and Gross Golf; an animated series called Princess Natasha; and a ''big red button'' that unleashes surprises when pressed.

For ad revenue, Bird has set up fairly subdued corporate sponsorships, rather than banners.

Bird says the content is rooted in months of focus groups with kids, as well as his own experience in children's programming. He helped launch Nickelodeon UK, headed kids' programming for USA Network station WAMI in Miami and led international programming for Cartoon Network. AOL Chief Jonathan Miller, formerly Bird's boss at Nickelodeon, hired him for the AOL job last December.

His approach: ''How can you do something new, how can you make it better, how can you make it unique. I don't patronize kids. I've done it for many years, and I know the sort of programming kids like. I know some of it (stretches limits), but I don't go too far.'' The twist to online programming, he says, is to be interactive. The storybook, for instance, has ''Easter eggs'' -- hidden content morsels -- children can find.

A cherubic-faced, 36-year-old Brit who wears plaid suits and suede red sneakers and visits toy stores just to play with the latest products, Bird seems like a big kid himself. His office is brimming with toys and dolls. And a jungle of stuffed monkeys, spiders and other creatures hovers over his staff's cubicles. At about 4 p.m., each day, Bird picks up a slingshot and launches the daily Nerf ball battle.

''When you walk in here, I want you to know this is the kids' department,'' he says.

Real numbers ahead, folks -- the Online Publishers Association has been busy. Today, the group released two reports, both of which focus on paid content and are sure to spark some water cooler conversations if only because the surveys are based not on self-reported consumer surveys, but on actual observed purchases of content.

The OPA and comScore say that consumer spending for online content in the U.S. grew to $748 million in the first half of 2003, an increase of 23% over the same period last year. The first study - Paid Online Content Demographic and Usage Report - shows that purchasers of paid content online tend to be younger, more upscale and from smaller households than Internet users overall.

Nearly 25% of online paid content consumers have household incomes of $100,000 or more, vs. only 20.5% of the total Internet audience, data show. In addition, paid content consumers tend to be more heavily concentrated among households headed by persons 25-44 (49.6%) than the total Internet audience (44.3%). Interestingly, one- and two-person households comprise 39.2% of the online population, but represent 45.3% of online paid content purchasers. Paid content consumers also are 14% more likely than the average user to have broadband access, suggesting that increased penetration of broadband will be a driver of increased paid content consumption.

Which categories are going to benefit the most? The second report shows that the top three paid content categories are Personals/Dating, Business/Investment and Entertainment/Lifestyles, accounting for 65% of online content spending in the first half of 2003, up from 61% in 2002.

Online Personals/Dating remained the leading paid content category, accounting for nearly 30% of all paid content spending. U.S. consumers spent $214.3 million on Personals/Dating content in the first half of 2003, up a robust 76% from the first two quarters of 2002. This percentage increase, however, was eclipsed by the Personal Growth category, in which spending nearly doubled from $20.8 million in the first half of 2002 to $41.4 million in the same period this year.

It seems that of late, so much more support is bubbling to the surface to support the assertion that the Web is a critical conduit or catalyst in the process of driving sales. Period. The recent XMOS Study on behalf of AstraZeneca’s Nexium further underscores the persuasive role that the Web plays in the process of getting “more people to buy more stuff” (which Sergio Zyman argues is the essence of what marketing is all about). In fact, the Web emerged from this study as the premier medium in terms of convincing respondents to ask their Doctor about the famous purple pill. The lift associated with this derivation of “intent to purchase” increased by as much as 5%. And finally, the Web was found to be the most cost-efficient medium of the existing alternatives in the mix. Now if that doesn’t alleviate marketing heartburn, I don’t know what will!

Most marketers are firmly moving beyond the point of needing to be convinced that the Web is a leading contributor in their efforts to sell more stuff. The “why” is rapidly being replaced with a “how” or “how much” imperative – the latter being addressed through XMOS and the former through this very industry initiative.

Another “to-do” on the convincing list is to help marketers better understand the difference of a Website versus online advertising as a means to drive offline sales. Now there’s a research initiative begging to be adopted. Any takers?

Read more on how the Internet is a pivotal cog in the complex inner workings of the multi-channel conversion process but needs to be measured by its role in conjunction with other pieces:
http://www.imediaconnection.com/content/features/012703.asp