2001 Year in Review and Predictions for 2002 Yet again, Dickens is correct – “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way…”

Only this time, it is not the French Revolution or the inequities of British Industrialization – it is the tumultuous post dot-com era of disaster and earnest reconstruction. Those who have survived the onslaught have been steeled in the forge of capitalism and are stronger than before, while the others have been buried next to the sock-puppet dog in the ignominious graveyard of failed new economy business models.

Amidst the dying and wounded, the online marketing industry has struggled to its feet and is wobbling about incoherently – not dying, but certainly not convalesced. The perfidy and cupidity, previously so prevalent throughout the industry, are now gone. 2001 is the year where the industry began to evolve beyond its pimply adolescence into a maturity that will lead it into sustainable profitability.

The industry has made some strides in the right direction, but has remained conservative, revising weak models rather than abandoning them in favor of new ones. For example, the Interactive Advertising Bureau (IAB) announced new voluntary interactive advertising unit size guidelines in February. These guidelines, although readily embraced, were met with a mixture of glee and sorrow. Many critics, including myself, contended that the new standards were too little, too late.

The initial results did indeed indicate higher click-through rates and greater returns on investment, but what would happen once the novelty wore off – would the audience begin to subconsciously ignore them just has they had long ago learned to do for the 468×60 banner? Study after study has since indicated that click-through rates have dropped, but still remained significantly higher than for the standard banner of yore. Sounds great doesn’t it?

Unfortunately, these reports, invariably commissioned on behalf of a major industry player, fail to discuss the return on investment. These larger advertisements are much more expensive on a CPM (cost per thousand) basis, so is the premium charged for these units worth it? The results that we have observed for our clients indicate mixed results. Although the click-through is significantly higher than that of traditional banners, the cost per click is very similar due to the price premium. The branding effects per view are also higher, but this is generally offset because advertisers can afford less inventory. So what it to be concluded from all of this? There is no substantive difference between the 468×60 banner and the new units, per advertising dollar.

Another questionable trend that has arisen over the past year is the proliferation of pop-up and pop-under advertisements. A pop-up advertisement appears in front of the Web page you are trying to view, in a separate window. A pop-under ad is exactly the same, except that it loads behind your current browser window, so when you close your browser it is right in front of you.

Who has not been inundated with the X10 camera pop-under ads? The pop-up / pop-under has been around for years, especially in one of the Internet’s most successful sectors – adult Web sites. Should we really follow the leader in this case?

The pop-up / pop-under ad receives a surprising click-through rate, but like many medicines, the side effects can sometimes be worse than the affliction. Article after article, in trade magazines and mainstream media alike, the response was the same – users simply find the advertisements annoying, and the brand image of the advertiser is often tarnished because of this – which is not a real concern for adult Wed sites.

Do they work? It sure seems like it, if you are trying to drive traffic and generate sales leads – but if you are trying to develop your brand or promote a message, idea, or position, these formats cause more injury than good. 2002 should see pop-ups / pop-unders lose steam and fall out of favor with all but a few less-than-scrupulous advertisers.

What generated the loudest buzz this year? Hands down, it was rich media. These two little words were heard everywhere this year, from online ad agencies, to interactive marketing magazines, to possibly even your twelve-year-old daughter. Rich media was in, and everything else was out. Just like the mystical Segway, it was supposed to change the world, even though we were not exactly sure how.

Rich media, best defined as an interactive piece with dynamic graphics and/or video, and in some instances an audio component, has met with some great successes, but on average has generated mediocre results. What appears to be holding back rich media, and by extension the online advertising industry, is not technology or the reluctance of the various Internet properties or direct e-mail marketing firms, but a lack of clarity regarding how to employ it. The technology is sound and presents great opportunities – but it simply a tool, and without better creative design, execution, and placement, these advertisements will not succeed. I am looking to mid-2002 as the time when we start to see improved and consistent results from rich media advertising.

There have been a number of experiments with using rich media in “out-of-the-banner” advertisements, perhaps the most famous of which is 2002 Ford Explorer advertisement that ran on Yahoo. This advertisement was wildly successful and is still regularly mentioned by industry insiders and eight-year old boys everywhere. There have been some other high profile follow-ups over the past year (pizza anyone?), but none have garnered the attention that the Explorer advertisement has. You may think that it is simply because it was the first major use of out-of-banner advertising, but that is not the whole story. The Explorer ad was better creatively and more compelling than the others. Why? Ford spent a relatively large amount of time and money to develop and test it before it went live. Advertisers take note – the old rules still apply to this new medium.

Quietly moving behind the main scene in 2001, direct e-mail marketing came into its own, and is now commanding a larger portion of advertising budgets and offering a greater return on investment than most other online options. E-mail marketing has become the unsung hero of the year, playing a significant role in moving the overall online marketing industry forward with barely an acknowledgement from anyone. If the current trend continues, e-mail marketing in 2002 will move to the forefront of all major interactive marketing campaigns directed towards generating sales, and even begin to become an integral component of campaigns aimed at promoting ideas and positions rather than profits.

Concomitant to the success of direct e-mail marketing this year, we have seen a rise in personalization. While personalization is useful for many marketing efforts, both traditional and online, it is especially well suited for e-mail marketing. Dynamics Direct led the way this year offering both personalized text and audio in e-mail – but considering the premium cost of their services, look for many imitators offering cheaper, and probably inferior, products in 2002.

Finally we come to what I feel is the greatest success story of 2001 – paid search engine placements. Search engine marketing has been a major part of most online campaigns for some time, for many reasons, including their ubiquitous use and their ability to reach a finely targeted audience. Search engine marketing includes such efforts as search engine optimization (where a site is prepared in such a manner as to perform very well for a series of key terms), paid review (where you pay to expedite the process of considering the site for possible inclusion in a search engine’s index), paid inclusion (where you pay to ensure that your site is included in the index, although it may not perform well), and paid placement (where you pay to ensure that your Web site ranks in the top results for a set of define key terms).

Paid placement has been available from the industry leader GoTo for several years, but this year it has morphed into Overture, and has steadily increased its reach, with its results appearing within the top results on AltaVista, AOL Search, Excite (recently acquired by InfoSpace), Dog Pile, Go, HotBot, Lycos, MSN Search, Netscape Search, and Yahoo. Other notable services exist, including Find What and a unique program from Google called AdWords, but Overture is by far the largest and most widely used. Examining the results that we have achieved for our clients over the past year, I also believe that it offers the best return on investment. I predict that in 2002, Overture will continue to extend its reach, and Find What will either fold or be acquired by Overture.

Looking back, we bid the year 2001 a fond adieu and welcome 2002 with open arms. May next year be as fruitful, or hopefully more so, than the last.