Staying alive in online advertising

Analysts continue to worry about the profitability of companies that depend heavily on online advertising to pay the bills. In this struggling economy, advertising budgets have been cut, and many companies no longer up the ante with wacky ads designed to get brand recognition. While jobs for both producers and consumers of online advertising are on the outs, most ad-dependent sites have made efforts to pump life into plummeting ad sales.

Of the companies that were listed in the top 10 annual gross revenues in Advertising Age's Interactive 100 for the year 2000, one firm, MarchFirst, is completely defunct, causing 1,700 workers to bite their nails as they rework their resumes. And five other once-prominent players have let go a substantial chunk of their incredibly talented labor force, putting another 3,000 people in the unemployment line. That's a 60 percent limp for the top 10 nationwide producers of tech-related public relations, marketing, and advertising. And we're just halfway through the year.

While no one's yet tabulated how few dollars companies have spent on advertising this year, figures from Q4 2000 were even lower than expected, and Q1 2001 numbers are expected to be equally lackluster. These predictions add poignancy to the fact that the last six months brought about 5,000 really--I mean really--talented people with good agency experience out of the trenches and into a labor market that can't afford to pay them. And again, that's just from the top 10 agencies alone, a mere sampling of the closed doors and layoffs that the industry has seen. If you've been looking for work in advertising, it's no wonder that you've had such difficulty finding a job.

However, many people working in new media advertising remain optimistic, despite layoffs and low budgets. If you're one of the lucky few who's still employed in the glitter industry, it's quite likely that the nature of your job today is different than it was six months or so ago, and you're probably busier than ever before. You could be doing anything from leading workshops to database marketing to researching to fetching lattes. It's a glass half-empty or half-full proposition: you have a job, but you are saddled with work that you never had to do at this time last year.

"I can't tell my boss to just f--- off if I disagree," says Amanda DeHaan, working hard as a copywriter for full-service ad agency Ad-Lib Creative in San Francisco. She describes her current workload as doing more base marketing than advertising, writing more e-mail direct marketing, writing quick newspaper ads rather than glossy magazine spreads, and, for the first time, using several versions of the same promotion to test consumer response. And she produces this new work at a more accelerated pace. Her company, which delivers quick turnaround and low cost, enjoys the unique position of having an ample supply of clients. She says that Ad-Lib Creative charges less than many Web-only houses, a very attractive magnet at the moment. And Ad-Lib Creative picks up work from clients whose agencies have closed down.

DeHaan also reports taking on several tasks that have nothing to do with writing, such as tech support, strategizing, and market research. "I nod my head, and I agree to do these horrible pieces with four exclamation points and the company name in red." She says, "It's absolutely no fun. It's not going in my portfolio, and it's not advancing my career." Still, she stays in her position because, "I know people who are a lot better at what I do who are still unemployed."

Jason Throckmorton, one of three cofounders of LaunchSquad, a PR and marketing firm that specializes in start-ups, also embraces new ideas to stay in business, and he remains optimistic. Lately he's been working on business development and networking, as well as creating more affordable one-day workshops for young companies that can no longer take on the fiscal load of a full PR campaign. He offers day training for a few hundred dollars, far less than LaunchSquad's usual $15,000 to $20,000 monthly retainer. And in the last few months, Throckmorton's company has also been willing to take on larger projects in exchange for equity, rather than cash.

Throckmorton recalls a very slow period this year from January until April. He says that the number of client inquiries has decreased, from about 30 calls per month down to 5 or 10, but he maintains that the quality of interested clientele remains the same. He proclaims that less-cluttered advertising spaces, fewer page counts, and reporters with more free time make this a very effective time to spend money on spreading the word. "Some of the best results we've seen have been in the last 6 months," he reports. Recent client mentions in the news, he says, have generated more leads and widespread interest than he ever saw 18 months ago when the market was booming.

Even in a slowing economy, people with jobs remain busy, and reports on advertising effectiveness remain positive for several reasons. Old-school companies have just started to catch on to advertising with banner ads and beyond, says Rob Norton in an extensive report on online advertising that he wrote for the May 2001 issue of eCompany. He believes that slow-moving corporate types will likely double their budgets for online expenditure in a couple of years. He also aptly points out that while 2000's figures for online advertising tapered off at $8.2 billion, that's still more than outdoor media sales, which generated only $5 billion, and no one's Chicken-Littling over the demise of billboards, blimps, and bus stops.

And the big brains at PricewaterhouseCoopers couldn't agree more. They're predicting a 14 percent industry growth to the tune of $38 billion in annual revenues in just five years, making online the fastest growing advertising sector, not just to date, but also in the future, beating out promotion dollars spent on sports, TV, movies, and theme parks. And in addition to U.S. companies jumping on the bandwagon, PWC predicts that worldwide companies will start dumping their dollars into Web media.

So in short, the news is good, but there's going to be a bit of housecleaning. For those patient enough to ride out this pinch, the permanent changes in your workday, agree everyone involved, will endure far greater accountability. Throckmorton notes, "Companies are more judicious about evaluating PR and what the ROI will be. They're selecting more carefully. That rational thought wasn't present two years ago. Now they want to know what they're getting when they write the checks." Gone are the days of the free-flowing cash pump, agrees DeHaan. She adds, "[Clients] are concerned with sales from the Web rather than just having it be a general ad tool."

If you work in advertising, you'll continue to wear many hats until matters level out. And from now on, your clients will want to know what you're doing, why you're doing it, and how you justify the expense. You may even be asked to do some things that you never thought you'd do. But on every level, from tech hasher to creative to account executive, the hard times will soften. And for those working in the industry for the long haul, the outlook may not be an immediate bed of roses. But the opportunity for continued growth is there, and it smells a lot sweeter than it looks.