ValueClick announced a decline in revenue for the third quarter today -- a depressing sign that online advertising may not be as recession-proof as everyone says it is. A couple of weeks before the earnings call, BNET spoke to ValueClick's vice president of corporate strategy, John Ardis, about his outlook for the online ad biz. Here's our Q&A, which has been edited for flow.
BNET: What's happening in the web ad economy right now? Ardis: I see there's still definitely marketers who remain very interested in the online space primarily because of the accountability. At a minimum the dollars they spend they'll know what happened to it, versus less measurable forms of media. Having said that, budgets are shrinking. Of those, increasing amounts are being moved to online.
BNET: Are all areas of online advertising increasing? Ardis: No. If it's not a technique that has a good track-record in terms of return on investment, or not something they can get on a performance basis, such as cost-per-action, cost-per-sale. There's a definite interest and budget available for performance-based activities. Less so for some of the more branding types of programs.
BNET: Are there any types of clients who are drastically moving money up or down? Ardis: None that jump out at me. It's more across the board. I haven't heard of companies or industries that are just drastically cutting back, rather I sense companies are using this economic softness as an opportunity to revisit their marketing plans, and they're reassuring themselves as to what they're getting from the dollars they spend. It's an opportunity to recalibrate.
BNET: What's happening with web video ads. Are they taking off yet? Ardis: I think anybody telling you that is lying, honestly. Where video occurs, it definitely stands out and gets attention, but if you look at any analyst report out there, they're united in the opinion that the promise of video has yet to be fulfilled. 2007 was going to be the year for online video and it didn't happen. Then 2008, and here we are at the end. It's not an area we consider hot.
BNET: What is hot? Ardis: I consider behavioral marketing hot right now because it has display advertising but with a better assurance that your return on investment will be acceptable to you. Also retargeting, where you anonymously target a consumer who has been on a marketers' site. Say someone visits Target.com, the consumer is tagged, and when that person is recognized by display media on another site we serve them a Target ad. That's the most common, and highest return on investment.
BNET: That just sounds like marketers spying on people as they surf the web. How does it work? Ardis: It's an anonymous cookie, it's a piece of code not tied to the individual. All it basically says is "this computer visited Target.com."
BNET: What else is hot? Ardis: Modelling. Trying to predict other people who might want to go to Target.com but haven't yet. We're modeling their propensity.
BNET: Does it cost more than regular display advertising? Ardis: It tends to be more, the range is pretty broad, depending on the media buy. There is an upcharge but the return on investment is typically quite a bit higher. [It's so effective that] I wouldn't go with a media display based on a demographic if I can go with behavioral targeting.