But many advertisers aren't budging. In the third quarter of 2000, the last period for which information is available, Internet ad revenue sank 6.5 percent, or $138 million, to just under $2 billion. This trend undermines the hoariest conventional wisdom in the business: Advertising always follows eyeballs. If you build a medium that attracts people, the thinking goes, advertisers will come. That hasn't happened. About 12 percent of media consumption is on the Internet, yet it accounts for 3 percent or less of overall U.S. ad dollars.
The folks who might actually buy advertising online remain largely unconverted. Traditional advertisers, it turns out, never really bought into this new medium. They were sold the Web on the basis of fear, convinced that if they didn't jump on the bandwagon, they would go the way of all dinosaurs. They were told that not only was it the greatest thing since sliced bread, but it was sliced bread - and it would replace traditional advertising. These extravagant promises are not easily forgotten - or forgiven. "The pendulum swung too far one way," says Mark Lazarus, who sells TV and Internet advertising as president of Turner Sports, "and now it's swinging too far the other way." Clients tell Lazarus that the Web may well be the future - but they're worried about the present. "People are saying that by the time they really have to deal with it, they won't be in the business anymore," he adds.
Clients, in other words, are acting like Internet advertising is some far-off possibility. "I've been in a lot of meetings with high-level people at [client] companies that are still wrestling with the basics, like what can this do for me?" says Roy Spence, president of GSDM (dossier), an Austin, Texas, ad agency whose clients include Wal-Mart and Southwest Airlines (LUV).
In some quarters, it's worse than that. "I'm convinced this is a dynamic new medium," says Rishad Tobaccowala, president of the new-media division of Starcom, one of the country's largest media-buying agencies. "But I'm still spending a lot of time convincing clients that this is not going the way of CB radio."
What's troubling these ad people? One answer is that some corporate marketing executives worry that the Web is all about "leaning forward" and not enough about "leaning back." In fact, they say, the Internet's interactivity is what makes it a crummy ad medium. "You're not sitting on a couch with a beer saying, 'Entertain me!' You are on a mission," says marketing consultant Scott Bedbury, who's held top marketing positions at two brand icons: Nike and Starbucks (SBUX). "Banner ads and pop-ups get in the way."
But the biggest problem may be the Web's presumed incompatibility with branding, which has been advertising's holy grail for several decades now. The goal isn't so much to inspire consumers to make a trip to the store, but to create a warm and emotional aura around your name. Witness the success of MasterCard's "Priceless" campaign, which links a credit card - certainly not a cuddly product - with the idea that "the best things in life are free."
As the world waits for broadband and various forms of "rich media" that promise to make Internet ads akin to TV commercials, many of the marketers holding the purse strings on big campaigns remain unconvinced. "Today, the Net is fine for a discount offer," says BBDO's Sann. "But nobody has figured out a way to build brands."
