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The Future of Interactive Advertising

The face of the advertising industry has changed dramatically over the last few years, as the Internet has become increasingly dominant and has shouldered its way into the mainstream. Although advertising professionals are still inevitably grappling with the notion of how best to harness the power and peculiarities of the Web in order to tell their stories in the most effective manner possible, much of what is generating interest is where this dynamic, volatile platform is headed next.

The face of the advertising industry has changed dramatically over the last few years, as the Internet has become increasingly dominant and has shouldered its way into the mainstream. Although advertising professionals are still inevitably grappling with the notion of how best to harness the power and peculiarities of the Web in order to tell their stories in the most effective manner possible, much of what is generating interest is where this dynamic, volatile platform is headed next.

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At a panel yesterday at the Future of Online Advertising Conference in New York, several industry experts tossed around their thoughts on what the future of interactive advertising will be. While there was a spectrum of views on the issue, there seemed to be a tendency for the discussion to keep converging back to focusing on a few particular trends.

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A sizeable chunk of ad spending has shifted to the online arena in recent times. Is there really something to be said about the effectiveness of the Internet, or are advertisers just going with the latest fad because they are dissatisfied with the returns they are getting from television advertising?

Definitely the most vocal of the four panelists, Chan Suh — president and CEO of Agency.com — answered the question with a firmly pro-online stance: he explained that the Internet provides advertisers with clarity, measurement and increased accountability. Advertisers see the Internet as an opportunity to create a more “gauging relationship;” it provides them with multiple options to develop a deep relationship with, and a richer understanding of, their consumers.

But the consumer’s experience online often involves coming up a bunch of random ads that are not targeted at all and in fact having no personal relevance whatsoever.

The general response to this seemed to be that while more customized and targeted ads are the direction in which the industry has heading — this was almost unanimously acknowledged to be the next big growth market for online ads– there are also big problems.

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According to Alex Blum, CEO of KickApps, through data mining processes nowadays, agencies are aiming to easily and anonymously create and collect consumer profiles that can then be used to fashion advertisements that are targeted in a manner that increases their relevance and effectiveness.

Blum went on to add that the click method of tracking involves the inherent danger of engendering a sense of resentment in consumers, who often feel their privacy is being invaded. His suggestion: advertisers should harness the opportunities presented by social media — ‘scrape’ sites like MySpace and Facebook in order to make use of information that people make publicly available about themselves.

Suh was quick to knock the feasibility of this idea, arguing that the cost and time it takes to determine trends and figure out what people want through this method of scraping is not proportionate with the results. In an industry in which clients often demand answers immediately, scraping social media is simply too tedious. He went on to emphasize how useful it would be if ad prices could be determined using cost per influence rather than cost per thousand as their benchmark.

Jim Larrison, GM of Corporate Development at Adify, gave his take on the problem: he explained that the industry has to get smarter about getting hold of a rich inventory of consumer preferences that can then be sold to advertisers.

What will interactive advertising look like in 20 years?

Hilmi Ozguc, CEO of Maven Networks, thinks that it will be “interactively richer… consumers will have more choices regarding how they can interact and what they want to see.” Advertisers will be more adept at taking “short impressions and turning them into lasting relationships.”

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Chan Suh’s prophecies were the most eloquent, although perhaps the most hopeful: he explained that the face of interactive advertising will change to become “an incredible dance partner, who knows when you are going to take a sudden step, knows when you’re going to dip, and who knows what state of mind you’re in based just on your behavior.” His take on the future is that advertisers will be able to provide stories and ads based on what consumers want, and not just on what the clients want.

Can display advertising ever achieve the same levels of success as search advertising?

Alex Blum took this one, reiterating his stance on targeted ads — he explained that the only way to counter this very direct experience of conducting a search is to address the targeting problem, and this can be done through data mining.

With the advance of Internet advertising will the TV become less important?

According to Hilmi Ozguc it will not: he argued that television will continue to remain an extremely important medium, however the face of television will inevitably change, with internet TV coming to the forefront in a manner that blurs any and all boundaries that currently distinguish the internet as a separate platform.

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What do you think the future of interactive advertising is? Are there particular trends that are clearly emerging or that you foresee will inevitably emerge over the next few years?

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