The IAB Annual Members Meeting in New York on November 29 was jam-packed with exciting developments and upbeat forecasts. Not only did the industry record its first ever $4-billion quarter (story here), but ad revenues for the first three quarters of 2006 are nearly equal to the total for all of 2005. When the counting’s done, 2006 online ad revenues will exceed $16-billion, nearly triple the tally at the bottom of the dot-com bust in 2002.

Speakers offered many reasons for our good fortune, but they also worried about our ability as an industry to support continuing rapid growth with outdated systems and processes and without measurement standards.

On the upside, nearly every major advertiser will increase commitment to online advertising again next year. Online as a whole still commands less than ten percent of total ad spending, in spite of the fact that consumers spend more than 25 percent of their media consumption time online. Individual advertisers are accelerating their internet spending dramatically, however. HP, for example, dedicated more than 20 percent of its worldwide ad budget to internet this year, while more than doubling the number of sites bought. (more…)

(I start this post by disclosing that I do realize that I am dating myself and may even sound like an ol’ crotchety Internet executive)

As an internet executive who has been around long enough to see the ups and downs of internet business including “dot bomb” and the stock market plunge of agencies and stuck with it to see the rebirth of the internet in Web 2.0, I ask my Web 2.0 marketing and business posse this…Have we not learned anything from Web 1.0?

If we are truly a learning environment filled with Wikis, social networking and smarter spending habits, why are we not leveraging consumer buying power to its fullest?

In Web 1.0, companies failed because they were not fiscally responsible and they continuously gave away products, services and their audiences for free, even though consumers were willing to pay. It just did not work.

In Web 1.0, we found that there could not be free services, no free drives and more importantly no free entertainment. What makes interactive “professionals” of the Web 2.0 revolution think that free video can exist without advertising?

Has someone found a business model that allows companies to barter our products and services and then barter with the Internet service providers and electric company to keep our services running?

I want to begin seeing video sites that leverage distribution models that actually generate dollars for advertisers creating the content and publishers selling the space where the content and consumers are living.

I think we can all glean learnings from the mobile marketing space. The mobile marketing industry is making money! They charge nominal fees to consumers to access branded ring tones, videos and music, therefore making a viable business.

If you are going to offer free content, consumers are willing to sit though 10 seconds of ads to get what they want. Just as they have in the early days of radio, television and the current iterations of music sites, consumers will wait and get great entertainment at the nominial cost of their time. Consumers have shown us time and time again that if the content is good, relevant or worthy of distribution they will pay for it in an “on demand” model. Can you imagine getting an on demand video service without out a subscription to a local cable company? (I think that is referred to as Cable piracy)

While it is not the only way, it is a sure fire way to keep the lights on and employees fed. What I predict is a quick evolution from Web 2.0 to Web 2.0. 1.21, which will help agencies define the Pre-roll space, feed the starving creative mavens producing video content for the web and more importantly separate the girls from the women in this market place.

What are your thoughts???

In my quest to develop a panel of incredibly savvy movers and shakers from all facets of the interactive agency world, I am spearheading a digital marketing consortium. The consortium members will meet quarterly to discuss moving the needle for their clients in the areas of interactive websites, media planning / buying and content distribution.

The national agency consortium will discuss how smart interactive strategies combined with the right media exchange buying model can move big brand clients from old school buying models to passion building experiences that yield actionable data on consumers that interact with their programs.

To get more information or join “The Agency Consortium” email me at jpena-bickley@rightmedia.com.