Category Archives: Rich Media

Rich Media Trends, 2002

(Originally published in ClickZ, March 2002) by Eric Picard

In August 2001, I predicted a significant shift in the trend of rich media in the online advertising space. My theory was that we were going to see a change in the way things in the industry had “traditionally” been done — which was that ad agencies were driving the rich media technology development. My thought was that publishers were about to step into the lead. I was right, and this trend is continuing.

So, as the development of rich media progresses, let’s talk about various shifts I see going on right now and what these trends mean to all the parties involved — advertisers, agencies, and publishers.

Trend 1: Publishers are productizing rich media ad solutions.

As I stated in the aforementioned article, publishers are responding to a number of market pressures.

First, publishers have significantly “streamlined” their operations by cutting staff. This means that they have fewer people (with less experience) to implement complex campaigns and must simplify the way they integrate rich media campaigns. As a result, only the simplest implementations of rich media will be accepted as part of normal media buys.

This has had a chilling effect on third-party rich media providers, since many solutions require the publisher to jump through a series of hoops to run the creative types. The broad winner here is Flash, which has become the de facto standard for rich media advertising online. (See Trend 3, below.) The losers will be any rich media technologies that are complicated to implement and are targeted toward cross-publisher media buys.

Second, publishers have greater need than ever to differentiate themselves to advertisers by offering exciting and effective ad solutions. This means that they don’t want to focus on being part of a cross-publisher media buy. Publishers want to get media dollars that are uniquely allocated to them. This is driving publishers’ launching of customized “products” that their sales forces can offer to advertisers.

Great examples of this:

 

 

    • Eyeblaster, Ad4ever, and United Virtualities all license their products to publishers, whose sales forces can then use them as a point of differentiation.

 

 

    • Bluestreak has licensed its video products to AOL (a Bluestreak investor), which sells them to advertisers on its Moviefone property.

 

Trend 2: Agencies want to use standard design tools to build rich media ads.

Creative teams within agencies are billed out at an hourly rate. Agencies don’t want to spend extra time (read: money) getting their creative teams up to speed on the specialized tools needed to build an unusual rich media ad.

To add to this problem, designers demand an incredible amount of flexibility when building solutions. They hate working within constraints, and online advertising is all about constraints. If designers are going to build specialty rich media creative, they want to use tools they’re familiar with — Photoshop, Flash, Fireworks, and so on.

If a designer must use a custom specialty tool to build a special rich media type, the tools has to be either wizard-based and extremely simple or robust and very powerful. The problem is that the simple tools often don’t give designers enough flexibility and the powerful tools take too long to learn.

This has led to some major shifts in the industry. A few years ago, everything in rich media ad technology was Java-based. Today, everything is Flash-based. The long-standing rich media firms have all released Flash solutions, from Enliven to Bluestreak to Unicast. And most of the new rich media technology that has hit the street in the past year is some combination of Flash and DHTML.

Trend 3: Advertisers are not pushing agencies and publishers on which rich media technologies to use.

There was a time when advertisers tended to be extremely involved in pushing agencies to use specific third-party rich media solutions, and they leaned on the publishers to get that technology approved. Those days are nearly over. The market has matured to the point where the technologies available can meet advertiser demand without requiring a lot of extra work.

Solutions from all the veterans are very robust and meet most customer needs — Enliven and Unicast have been providing Flash-based solutions for years. Bluestreak just launched a new Flash solution this week that captures tracking information from Flash creatives and reports on it. Between Eyeblaster, United Virtualities, and Ad4ever, there are plenty of off-the-shelf solutions available for layers-based advertising. Point·Roll’s technology has been implemented often enough that it has achieved good penetration in the rollover space.

Advertisers don’t care so much what’s under the hood — they care about results, and the agencies and publishers have solutions that can easily be employed without twisting any arms or performing “unnatural acts.” This makes the position of new players in the medium rather tenuous, since they have a lot of ground to cover in a tough climate. It isn’t impossible, just difficult, because there are many mature solutions on the market.

This leads back to Trend 2. The newer technology vendors are discovering the lay of the land very early and are mainly focusing on offering solutions to publishers.

These trends may or may not be long-lived. It will be interesting to watch what happens over the next six months as the market (if the analysts are correct) continues to stabilize and advertiser growth on the Internet increases more quickly.

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Technology Partners, not Vendors

(Originally published in ClickZ, December 2001) by Eric Picard

The online advertising industry requires technology to exist. More than any other ad medium, we’re technology-driven.

Recently, my colleague Tig Tillinghast wrote a mind-expanding article about the inefficiencies of the Web as an advertising medium. In it he states: “Newspaper can print a whole 32-page tabloid with 250 ads in it for $0.20 each, but it costs a Web site 25 percent more to serve the same number of ads.”

This may be true, but let’s analyze why it costs more. We’ve been printing (and advertising in) newspapers for literally hundreds of years. That’s plenty of time to figure out what the economies of scale are and to enable printing 250 ads for $0.20 each. The technology is relatively simple. Any changes over the past 50 years have only made it cheaper to produce a higher quality product.

You can’t compare the delivery of 250 online ads with that of 250 print ads, any more than you can compare print with TV ads. It’s apples to rhubarb.

The real world of online advertising requires certain technologies. Therefore, you need to forge relationships with your technology providers.

There’s a difference between viewing a technology provider as a vendor (weak relationship) or a partner (strong relationship). Dictionary.com defines “vendor” as: “One that sells or vends: a street vendor; a vendor of software products on the Web.” “Partner” is defined as: “One that is united or associated with another or others in an activity or a sphere of common interest.”

This should apply to your approach to tech providers. You can relate to them as a utility, like the electric or gas company. You can view them as a mission-critical service provider, like the phone company. Neither model suffices. You both have the same interests. They succeed if you succeed. Grow your business, you’ll have more need for their services.

Even services such as ad serving, often referred to lately as a commodity, are not mature enough to treat dismissively. There are not enough providers to choose from (and fewer after this year). There’s too much volatility, too much change, and too many issues for you to make that mistake.

Here are some basics about partnering with technology providers:

  • Yes, the economy sucks. No, you can’t beat up your tech partner on pricing to the point that it can’t turn a profit. It’ll go out of business, and that doesn’t help anyone. 
  • Find ways to pay your technology partner more by having it help grow your business. Tie your businesses together to gain the most from your partnership. Don’t slip into a valueless “paper partnership.” Apply resources and watch the relationship flourish. 
  • No company has every feature or widget you need. Product development (or customization) is required before you’ll be happy. A technology company will meet the needs of partners before worrying about customers who treat it like a vendor. 
  • Partners often participate on advisory councils and are involved in product research and development. This leads to measurable benefits, such as accessing new features before anyone else. You’re not likely to get that level of service from a mere vendor. 
  • Choose technology providers with upside potential and whose values match your company’s. Ask hard questions about service expectations, commitments to quality, and what the plan is when problems do arise (they always do).

Work from a common set of realistic expectations. There’s been so much over-promising and underdelivering in our industry that most customers are wary of committing to deeper relationships.

If a tech provider makes claims that set off your “spidey sense,” have it explain exactly how it’s going to live up to the claims. If high expectations are set by sales or marketing, ask to speak with a senior product or engineering rep to ensure the entire company is in alignment.

Make sure the company knows you want to partner with it. Be clear about expectations you have from a partnership as opposed to weaker relationships it might have with other customers. Make the opportunity attractive. Sell the company on your value as a partner. Expect and demand more. Be willing to cooperate. You’ll both come out ahead.

I hope your holidays were wonderful, and you and your family are approaching the new year with great expectations. –Eric

Rich Media: Damn the standards, full speed ahead!

(Originally published in ClickZ, August 2001)

The Interactive Advertising Bureau (IAB) released its new rich-media standards a few weeks ago, and a number of articles in the industry trade pubs have disparaged the new standards and reprimanded the IAB Rich Media Task Force.

I’m not going to recap what’s been said elsewhere too much — after all, I wrote an open letter to the IAB Rich Media Task Force months ago, outlining my concerns. I believe that they took such concerns seriously and addressed many of them in the final released version.

Bill McClosky summed up my feelings quite well in his recent article on Media Post. I just feel deflated. As for the rest of the rich-media technology providers, I think you can get a sense for the way things are going from Pamela Parker’s excellent article in TurboAds.com last week.

Given that plenty has been written about the new guidelines and their benign affects, I’d rather take this opportunity to talk about the real state of rich media in this industry: What kinds of things we have seen — what you can really run — and what seems to be the trend among publishers and advertisers.

Publisher Trend: Pay Up or Get Out

There is a definitive movement on the part of the major publishers to cater to a smaller group of highly valuable advertisers, shuffling all others to the side. I can’t give any specific examples, because all the discussions have been prefaced by people saying, “Don’t quote me on this,” or something similar. But here’s the trend.

Several of the major publishers (there aren’t too many left that fit that category) have said virtually the same thing to me:

We aren’t trying to attract advertisers who run one or two $10,000-$20,000 campaigns a year with us. We want high-profile, high-paying customers to make bigger commitments to us — and then we’ll pull all the stops out for them. The rest of the advertisers will get “standard” service from us. The days of advertisers running us ragged for a small piece of their media budgets are over. Rich-media campaigns must be either lucrative or very easy for us to absorb.

Luckily, Bluestreak, Enliven, and others offer rich-media solutions that are easy to implement from all sides — agency, advertiser, and publisher. But this trend will change the way the industry works. If you’re planning to build a complex edge-pushing rich-media campaign that requires extreme effort for the publisher to implement, and if you’re planning on spreading a smallish media buy across many locations, good luck.

This will have two effects:

  • The publishers will drive use of new rich-media technologies more than the advertisers and agencies (which was how this had been happening). 
  • The new IAB standards will be marginalized or used as a lever to apply higher prices to more cutting-edge campaigns.

Another example of this new approach is the trend toward publisher-specific rich-media offerings. For the first time, publishers are working directly with the rich-media technology providers to build custom offerings that ignore the standards in place. They are differentiating from each other — and it has nothing to do with running campaigns across channels. They want to keep your media dollars with them. Publishers want top dollar for very effective and innovative special promotions.

These publisher-specific formats will require custom creative work by the advertisers who make use of them, with the payoff being better results. This actually follows the online sponsorship model, not the online advertising model. I predict that you’re going to see a trend that blurs the lines between sponsorship and advertising in the very near term.

The good news about all this is that there are fantastic partnership opportunities for advertisers out there — and publishers are more willing to work with you.

Advertiser Trend: Publisher Partnerships for Highest Value

We’re going to see, along with the change in policy by publishers, a change in practice by advertisers. Major advertisers are going to choose a small group of publishers to partner with — and we’re going to see big innovations from them. This already started with Yahoo running those well-publicized Ford Explorer ads a few months back. Publishers will be doing far more of these deals — and they’re going to be much more open to innovation.

I predict that uninitiated video will be all over the place in the near future. It makes a lot of sense: With online publishers who have offline properties, they can cut cross-media deals to run video ads online without any difficulty. Advertisers have always wanted to run their offline videos on the Internet.

The “traditional” thinking of online advertising strategists has been that running offline video commercials is a terrible idea; the thinking has been that effective ads on the Internet must be interactive to elicit a response. Given the recent data on branding effectiveness of online ads, there is a lot of value to running video ads online just for branding.

We’re going to see a lot more of the kinds of deals that got press recently for LifeSavers when the “O” in About.com’s logo was replaced with a LifeSaver. I would guess that the advertiser or the agency came up with this idea, not the publisher.

In the end, money talks and everything else walks. Advertisers are finding ways to get more value from the online space. And publishers are showing that innovation comes from necessity — and that the realities of making the business run in a post-bubble world require thinking outside the box. How are you going to fare in this new world? Let me know what you’re doing to shake things up. If it’s interesting, I’ll write about it.

Protecting yourself from exploding Ad Technology partners

(Originally published in ClickZ, June 2001) by Eric Picard

As you might have heard, AdForce closed its doors last week. CMGI shut it down after failing to find a buyer. What a strange world we’re living in. It makes you wonder whose balloon is going to pop next, doesn’t it? It wasn’t so long ago that these companies were awe inspiring to many of us in the industry. How quickly things change.

So what is an agency or advertiser to do? If you make decisions about or manage the relationships with your technology partners, maybe we can come up with some guidelines for you on how to judge a company’s stability. The world is a dangerous place right now, and getting caught unprepared if your ad-serving infrastructure suddenly goes up in smoke could really hurt.

Public Companies

Let’s start by looking at the public companies. Once, you could assume that if a company was public, it would most likely be around in a few months. Not any more. Being public actually works against most companies in our space these days.

A very well-known industry analyst once told me that any company with a stock price of under five dollars is focused only on appeasing the investors, not on doing business, and certainly not on innovating. At the time, he said he didn’t even pay attention to those companies. I have to wonder if he still operates on that principle. Today, companies in our space with stock near or above five dollars are like superheroes.

I just looked at the list of 43 stocks I’ve been tracking for the past three years. It’s made up of companies either active in online advertising or peripheral to it. I noticed that 34 are trading under five dollars or are no longer trading at all. Of those 34, 12 are trading under one dollar, and 17 of them are no longer actively trading. Some have stopped trading because of merger or acquisition, but most are just out of business.

So how do you make sure you’re safe?

  • Look at the makeup of your technology partner’s customers. And I don’t mean its “portfolio” — since this often contains customers no longer working with the company. I mean active customers.
  • Ask your contacts for active customer references. This might be a tough play, but at least you’ll be able to judge the stability of the company. If a company doesn’t have one customer willing to say something good about it, you might want to reconsider.
  • Find out how much operating capital the company has. DoubleClick is an example of a public company in our space with lots of operating capital. 24/7 Media is an example of one without any operating capital.
  • Make use of the fact that the company is public. Look closely at its public disclosures. Read quarterly reports. Read analyst reports. Judging which companies are in trouble is mostly a clear and commonsensical act.
  • Check if the company traded as an over-the-counter or bulletin board (OTC:BB) stock. If so, you should be especially wary, because the regulations about reporting here are much less clear. Since there is less regulation, companies trading as OTC:BB are often seen as stock scams at worst and as a little shady at best.

    The main change these days is that since many companies have been de-listed from the Nasdaq, as victims of the times, they have ended up on the OTC:BB. If the company is a real business, you should be able to tell pretty easily. One quick test is to verify that its “gallery” or case studies are real, not mocked up. Be direct and ask — even ask for real customers you can talk to if you feel uneasy.

    One of the first questions I ask a company is if it is public or private. If it’s a small company and it’s public, I immediately ask if it’s an OTC:BB.

Private Companies

Now that we’ve looked at public companies, we should review how to judge the stability of a private company. It’s not so different, but some of the information isn’t available publicly.

First, make sure that the general items are covered from above — and especially focus on customers. Since public companies are accountable for things that they say in public, they usually are relatively credible (minus the marketing spin). Private companies are not so tightly regulated, so make sure to do your due diligence.

Usually, private companies’ financial health is the hardest point to establish. And today, this is the most critical factor to review. There are, usually, some indicators:

  • Private companies generally start up through bootstrapping or venture financing. If it’s the latter, you’re in luck. It’s a huge win to get investment from a venture capital (VC) firm, and the general response is to issue a press release.
  • Review the company’s press releases, and try to figure out how much money it’s raised.
  • If it has been growing and hasn’t raised any money in the past six to eight months, your warning bells should go off. The only situation in which that shouldn’t worry you is if the company is bringing in lots of revenue. This is tough, given the market right now.
  • Next, you should figure out how much time it has to get profitable. Once you do (explained below), feel free to ask the company directly how it plans to achieve profitability. Again, you may not get an answer, but it doesn’t hurt to ask.
  • Get a general idea of the company’s burn rate by using the following guidelines:
    • How many employees does it have? Usually, the company will tell you.
    • Where does the company have offices, and how many people are in each?
    • What kind of capital expenditures might it have? If it’s an ad-serving company, how much is it spending on server farms?
  • This is closely held competitive data, so a company is unlikely to just hand it over, but you can make some educated guesses about these things:
    • Figure that a company with 30 employees is burning $150,000 a month for salaries (if it’s aggressive).
    • If the company is in New York, figure that it’s paying big-time rent (even with some of the new deals opening up). An office for 30 people will run roughly $35,000-45,000 a month, depending on location and other costs beyond rent.
    • That gives us close to $200,000 monthly without even getting to hardware or server infrastructure.
  • When you look at (a minimal) server infrastructure and costs for setting up and maintaining the business, we’re talking about $250,000 monthly, or about $3 million a year.
  • That gives a company of 30 about two years of life if it’s raised $6 million. You can work out the various scenarios for different sizes and funding.
  • I’m being quite conservative here, and this is based on a whole lot of assumptions. For instance, if the company happens to have offices in New York and San Francisco, you can imagine that the costs are a lot higher.
  • If the company is too large for the amount of funding it has, it will burn out fast. If it’s too small for the amount of business it has, you’re going to get horrible service.

So now you’re an expert in evaluating those companies you’re working with. Go out and look at them. There’s no time like the present.

IAB Rich Media Task Force: One sided?

(Originally published in ClickZ, April 2001) by Eric Picard

As many of you may have heard, the Internet Advertising Bureau (IAB) has undergone some interesting changes lately. First, it changed its name to the Interactive Advertising Bureau. Second, it changed its focus to support the publisher community specifically — to the exclusion of all other parties.

Additionally, the IAB has formed the Rich Media Task Force to set industry-wide standards for rich media. The team is large and composed of some of the luminaries and unsung heroes of rich media in the industry — like Bettina Fischmann from CNET, Gary Hebert from Disney Interactive Group, Nate Elliot from DoubleClick, and Chuck Gafvert from AOL. This is a pretty smart group of people and I have the greatest respect for them.

But since the IAB has excluded rich media technology companies from participating — which is sort of like forming a group focused on fine cuisine but not allowing any chefs to participate in the forum — I’m writing an open letter to the task force here. After all, its members are about to set industry guidelines that profoundly affect my ability to feed my family, and I’m a little concerned.

Luckily, Emerging Interest seems to be stepping up to the plate with support for the rich media technology providers — but I won’t steal Bill’s thunder.

An Open Letter to the IAB Rich Media Task Force

While I have the greatest respect for many of the individuals participating in the task force, I have some concerns about the kind of standards that publishers might come up with, given the history of the industry. It would be tragic to take a step backward from where the existing rich media technology providers have gained acceptance so far.

As I said before in an earlier ClickZ Advertising Technology column, publishers have been too protective of the user experience for too long. They’ve taken feedback from early adopters and used that feedback as guidelines for the way the Web should work. Early adopters are the loudest group of users; they’re notoriously fickle and hard to please — and publishers have bought off on this group as their audience.

The Web is now a mass medium, and the expectations of the masses differ from those of the early adopters. Marketers and creative teams working with agencies want more flexibility to get their message across and to elicit a direct response. Rich media producers can provide them with this need without alienating users.

If the IAB Rich Media Task Force is hoping to make a real difference, it is time to step up to the plate and knock the ball out of the park. Make a bold statement with these standards — don’t just agree to a set of minimum standards that are more prohibitive than the widely accepted rich media formats today. As an industry, we should be forging ahead, not lagging behind.

This group has a powerful opportunity. Advertisers have complained repeatedly about the restrictions of online advertising. Let’s take this chance to challenge and change that mindset.

Here are my general recommendations for all formats:

 

  • Make sure your guidelines are for interactive advertising. Don’t use television models to restrict these ads. It has much less to do with limiting the time an ad runs than capturing interactions with users. Restricting run times will actually frustrate and anger users who are interacting with an ad — and user interaction is the goal of the medium.
  • Remove loop limits. This is the most prohibitive and most outdated of all requirements that are widely accepted. The biggest concern about looping animations is that continuously looping animations are annoying. Perhaps they annoy the members of this forum as users — mainly made up of early adopters, like me — but you are not the target audience of your customers (the advertiser). And in most cases, neither are the very vocal early adopters who complain about continuous looping.
  • Allow audio upon mouseover of rich media ads. Unsolicited audio is generally prohibited, which I agree with in principle. BUT, if a user rolls over an ad, and a sound plays, that’s a different experience.
  • Don’t limit file size. The metrics used by publishers to allow or disallow content are not correct for the medium. File size is a relative thing when discussing rich media because most technologies have built-in mechanisms to address this issue. A more proper metric would be something like this: an initial file load of 15K, total file load per page of 50K — unless content streams.
  • Permit advanced technology. Flash can be built to stream in content. Audio and video are virtually always streaming. Enliven uses the built-in streaming of Director in its standard product and can make use of Flash streaming in its Flash products.
  • Sequential or polite loading. Bluestreak’s Java technology uses a sequential loading methodology with load priorities — never overloading the user’s connection with too much of a content dump. This doesn’t slow down the page load by competing with the page content. Unicastmakes use of the “polite download” of its interstitial technology, which loads content only when a user’s connection is free. The savvy technologists in this industry will continue to innovate new ways of getting more content to users without slowing down the connection.
  • Bandwidth detection. Reward technologies like bandwidth detection by loosening restrictions for those who employ it. Additionally, publishers should start enabling their ad servers with bandwidth-detection technology to alleviate some of these issues.

Respectfully,

Eric Picard

Analytics: Beating Ad Clutter

(Originally published on ClickZ, March 2001)

The outlook for online advertising is good; we just need to fix the problems. A typical Web site publisher runs an ad on every single page of the site. If it has unsold inventory, it either runs a public service announcement or it runs a house ad.

Jupiter Media Metrix just released the report “Online Advertising, Market Perception vs. Reality.” It was very enlightening.

While growth has slowed since online advertising’s meteoric rise over the past few years, the industry is still developing at a healthy clip. And as I’ve been saying since first noticing this dip, it’s not like people have stopped going online: There was a 22 percent increase in the number of unique users online between 1999 and 2000. More important, the amount of time users spend online went up 31 percent in that same time period.

With the consolidation of sites as dot-coms fail and the resultant concentration of user traffic, we’re going to see more value placed on those sites that survive this dip. This is very good news for the long term.

Information Overload

One point made by Marc Ryan, director of media research at AdRelevance, really caught my attention. He said, “Publishers should run house ads more sparingly, surgically, to reduce clutter and allow clients’ ads to have more impact.”

Publishers are selling less inventory, and the inventory devoted to house ads on their sites is increasing. One of the greatest problems online ads face is user information overload. Ads appear over and over in a site’s design in exactly the same static ad space. The theory is: If we leave it empty part of the time, it will draw more value out of those ads that do appear.

This notion hit me pretty hard; it’s basic stuff, but I hadn’t thought about it this way. And as is my wont, I started thinking about the problem from a technology standpoint.

The first step is to validate this theory — it sounds logical, but so have lots of things that haven’t been proven to work. So how would we validate our theory? If publishers can figure out what the effect of NOT running house ads is, then they can make intelligent decisions about best practices. But…

Optimizing Inventory

The majority of publishers and even agencies haven’t invested in analytics solutions — and I’m not talking about a roomful of people looking at campaign stats. That kind of analysis isn’t helpful without a good tool to sort the vast amounts of data before the human eyes start looking.

Part of the problem is that these solutions are extremely expensive and require a staff of people who are experienced analytics specialists. Virtually no agencies have this kind of staff. And the scary part is that the vast majority of publishers don’t have this kind of staff, either.

Yet analytical tools would solve many problems for publishers. They would be able to quickly and easily see value across their properties — and they could actually optimize their inventory differently. They could build new pricing and inventory plans. Imagine what would happen if publishers could show a value proposition to media buyers that leads them through their buys, AND the end result shows a greater ROI.

For example: Traditional media planners are used to buying broadcast media in time slices for specific channels, whether it’s a radio station or a television station. For the most part, we haven’t done this online, partly because of technical reasons and partly because of the absence of a value proposition showing that it works. If the publishers could make this work technically and run some tests, they could analyze the results and see if there’s a business case to be made.

Without analytics capabilities, publishers can’t possibly know what works and what doesn’t. Essentially, most have been flying blind.

So what’s the answer? Publishers need to dive deep into analytics over the next year. It isn’t a critical issue yet — but expect it to start looming soon. And they need to start doing research into what kind of questions they need answers to.

My advice: Please don’t make the mistake of thinking it’s about click rate. And do include rich media ads in the mix when doing the analyses. This is another reason tools are needed, because if you can’t figure out what’s happening with GIFs, how are you going to figure it out for rich media, with exponentially more data to crunch through?

While the industry is not doing nearly as poorly as some fear, it’s time to start cutting through theGordian Knot to solve some of the problems that clearly do exist.

Rich Media: Time to pay the piper

(Originally published on ClickZ, February 2001) by Eric Picard

Editorial note: As announced last week, the Rich Media column has been renamed Advertising Technology to broaden its scope. Eric Picard and Jeremy Lockhorn will cover rich media, as well as technologies for ad serving, analytical tools, wireless, interactive TV, and other intersections of technology and advertising.

We’ve all watched with horror and fascination as some of the established leaders in the rich media industry have driven into the financial guardrail lining the information highway. From my perspective, it’s been an incredibly strange ride as companies I’ve sparred with have ended up in the rearview mirror.

So the question is: What happened? Why do we see companies like ePod shutting their doors andEnliven’s future in question? The real answer is the quiet little secret being kept in this industry. The biggest reason these companies are failing is probably… you.

Advertisers and agencies alike have done a lot of complaining about the poor performance of banner ads, and they’ve taken advantage of the soft market — demanding favors of rich media providers and pressuring them to accept lose-lose terms in order to win business. This has kept many rich media providers from gaining traction as businesses and, eventually, has driven them out of the marketplace.

I’ve had numerous conversations in the past year with people who consider themselves forward-thinking about online advertising, then turn around and “prove” that mindset by demanding free tests of technology and services. I’ve had people gleefully tell me, “It’s easy to get a free test of rich media, so why should we pay for it?” This is a dangerous cycle — one that’s hard to break, not only for the rich media provider, but also for the advertiser and agency. New players in the market are always going to offer some free tests to get some leverage. Established players can’t afford to fall into the trap of competing strictly on price.

Over the past six months, as some established providers got closer and closer to that guardrail, they responded to this pressure by giving away technology and services to win business. But as we’ve all seen, a deal can’t be a winner unless all parties win. And while it might be easier for a provider to swallow this practice when dealing with a large advertiser, it’s a trap that’s very difficult to exit. There may be some value to having a showpiece created for a top advertiser, but it isn’t so easy to move beyond that free test, even when you significantly surpass all of the client’s goals.

I’ll tell every advertiser and agency right now: It ain’t free — and it never will be. You’re going to pay one way or another, either with cash or with the time and energy it takes to learn how to work with a partner — and that’s time and energy wasted when this partner subsequently goes out of business. This is not good business, and it isn’t good for the online advertising industry.

And, frankly, you shouldn’t expect it to be free. Rich media has proven value that needs to be recognized by all the players involved. In times of tougher accountability, it’s beginning to be the only kind of campaign that makes sense at all. Of all the things in the world your company has to pay for, you should spend wisely on those that have proven effective at increasing ROI.

And let’s not forget that it’s taken incredible market pressure to force publishers into providing new rich media formats — and they’ve finally done this only as they neared desperation. Some publishers have been proactive — testing and accepting new technologies, working with rich media providers to make sure we’re compatible. While accepting a proven rich media technology in the banner space is a fairly safe bet, until recently there has been very little willingness to provide more innovative and higher-yielding formats.

The hurdles are understandable on the publisher side — irritating ad formats certainly can drive users to other venues. But there are many ways to balance higher returns without negatively impacting user experience. Usually the biggest roadblocks to providing more advertising value for advertisers are at the lower levels, where a junior person is strictly following the written policies of the publisher. It takes someone higher up to agree to go forward with anything out of the norm, but often the culture in these groups breeds a sense of superiority, making it difficult to reach the decision makers.

So publishers take note: Since your implementers are often not willing to step outside the boxes you’ve carefully laid out for them, put a process in place to enable these special deals. Reward your team for being proactive — sometimes very large potential deals go stagnant simply because the person in trafficking bounces back anything unusual. Listen carefully — not only to the advertisers but also to the rich media providers out there. Some of us have good ideas.

So there you have it — yet another lesson in traditional business that the Internet economy forgot or ignored. No deal works unless all involved can gain from it. Leaders on all sides of the industry need to start making command decisions and stepping up to the plate. Unless you invest in success, you and all of your partners are bound to fail.

The good news is that publishers are finally coming around and actively experimenting with rich media and alternate ad formats. Major advertisers who have — up until now — merely dabbled with online advertising are starting to get serious. There’s nothing that will motivate performance among the rich media providers like a major competitor failing in a public way. And there’s nothing to motivate advertisers and agencies to adopt technologies focused on ROI and accountability quite like cold, hard market reality.

Looks like a perfect setting for success.

Embracing the Promise of Interactive Advertising

(Originally published in ClickZ in January, 2000) by Eric Picard

The explosion of rich media advertising in 1999 was just that, and it forced many traditional advertising agencies to evaluate how they could offer this exciting, dynamic interactive medium to their clients. While some successfully made the leap to rich media, too often the alleged limitations of the technology – or simply a fear of it – prevented people from tapping into the wealth of experience they had accumulated through ad creation in broadcast and print, as well as in GIF banners.

When I taught photography classes in graduate school, I once had a student who felt she couldn’t comment on her classmates’ work because she wasn’t a “photographer.” This woman, a talented fabric designer, had a powerful sense of contrast and texture, and was certainly qualified to comment on just about any visual media.

But she ignored her extensive knowledge of design and all her proven design skills because she found herself on uncertain ground. I pointed this out to her, and over the length of the course, she ended up consistently giving other students extremely insightful commentary on their work.

Rich media advertising holds the great promise of increasing both click rates and conversion rates, but only if advertisers consider it as an evolution of advertising solutions, rather than an offering that exists in a void.

In the past year, the underlying technology has evolved and become an easy-to-use solution for creating attention-grabbing, interactive campaigns. The technology now enables advertisers to choose how, when and where to use the medium, depending on the objectives of the ad campaign.

However, the real success of rich media advertising rests squarely in the hands of the creative team that conceptualizes and creates the banners. Currently, very few agencies have figured out how to tap into the full power of rich media to use it for creative, effective ad campaigns.

Simply overlaying GIF-creation mentality is not enough. Creative departments need to approach this new medium with the same vitality and energy that they brought to traditional ad campaigns and standard banners. By doing so, these teams can quickly begin creating rich media campaigns.

Three things advertisers should keep in mind when working with rich media:

Draw on your experience, but don’t allow yourself to be shackled by it. Innovative and unexpected use of the technology is the most important aspect of building effective rich media. In the same way that you begin to ignore the “to do” notes you’ve plastered on your monitor, users stop clicking on ads that use certain “tricks” once the novelty and excitement wear off.

Therefore, you need to continually tweak an ad to keep it fresh and interesting. The most effective way to accomplish this is to tap into previous experiences and put a new twist on them. Do something unexpected. For example, if you’ve gotten great results with dark backgrounds and light text, keep on doing what works, but include a subtle (or not-so-subtle change) to grab the viewer’s attention. Maybe make the shadows move, or create some call to action that invites the viewer to interact with the ad.

Don’t rely on your competition to figure it out for you. Your competitor may have a successful ad campaign, but don’t simply copy what they’ve done. At the same time, don’t ignore their success. Push yourself to experiment with the medium and don’t limit your ideas because no one else has done it. Rich media is still in its infancy, and we will continue to see methods and practices prove themselves over time.

Keep an eye on the future. While so much of the click rate is dependent on great creative, our team at BlueStreak.com has been running experiments to learn methods of improving click rates that are non-specific to the messaging or creative. Basic issues like effective colors and messaging are already well-documented in varying studies of banners. But things that we are learning now will allow us to make automated improvements to any ad – regardless of creative content – in the near future.

In the end, a powerful combination of proven techniques, innovative approaches, scientific methods and new advances will determine what works best with rich media.

In the meantime, advertisers need to take advantage of the great new technologies being developed. If agencies with no rich media experience want to make the move to offering this medium, I would recommend the following: Remember everything you’ve learned creating broadcast, print and GIF banner campaigns. Bring to the new task all your vitality, creativity and well-honed skills. And fully embrace the possibilities of rich media.