Stefano Hatfield On Advertising

We ignore at our peril the money now being made on the internet

For the second quarter of this year, revenue totalled almost $3bn, again 26 per cent up on last year, and over six per cent up over the first quarter. The fastest growth is seen in the search and rich-media (dynamic or motion) categories. The chief driver behind this is the continuing explosion in the growth of domestic broadband connections.

This genuinely does mean the end of the "world wide wait" phenomenon that so inhibited the initial growth of internet ad revenues. In the bad old dial-up days, internet users consumed banner ads in the way they would an ad say in a magazine, passively, but without the creativity and flexibility that had evolved in magazine and other print and poster advertising. This all changed with broadband. There is no more waiting for banners to load. Instead there is the type of interaction that some other advertising media simply cannot offer, and thereby allowing the type of unique relationship between medium and consumer that had been so touted since the original dot-boom days.

Having said all that, it would appear that this growth is being enjoyed by the very few, as the pieces of the internet pie continue to get larger and fewer. According to the IAB, 74 per cent of the revenue is controlled by the top 10 websites, and an astonishing 97 per cent by the top 50. These are startling figures that point to the inexorable increase in power of the likes of Yahoo and Google - and, more quietly perhaps, reveal that hundreds, if not thousands, of sites really are not pulling in much advertising at all. Internet power is consolidating at an astonishingly accelerated rate.

For all those people in advertising and the various media industries who still somehow believe if they pull their jackets high over their heads and scrunch up their eyes tight enough, the internet might go away without them having to figure it out - well, I have some news for you. It ain't gonna happen!

So, if you haven't already done so, order broadband at home, turn on your screen, tune out your fears and drop in on some of the sites you have more than vaguely heard of but were afraid to ask about. They aren't going away, but if you don't get wise to the web soon, you might.

IPG FINALLY revealed its long awaited figures for 2004 on Friday (2000-2004 to be more accurate) and grim reading it was. These are the extraordinary figures: earnings reduced by £291m, and a £20m equity adjustment.

What on Earth are we to really make of such numbers? Was it incompetence or was it party due to "employee malfeasance", as IPG (Interpublic Group) had itself previously suggested? One thing that's for sure is that if we were reading these figures about some company, of which we knew next to nothing, outside of the advertising sector we would all rush to judge far more negatively, and not be prone to giving the benefit of the doubt.

Clearly, over the past year, IPG clients have been punishing its constituent agencies for this muddle. But why? The mess that the IPG boss Michael Roth has to sort out in his ivory tower on forty-something floor on Manhattan's Sixth Avenue is a long way away physically and practically from the hard-working account team on - say - Lowe London's Stella Artois account, or McCann-Erickson's Walls sausages business.

The likes of Sir Martin Sorrell have successfully created the "super-agency"-style pitch, where the entity pitching is a holding company like WPP, and uses a pick'n'mix approach to its subsidiaries. The downside of this is an ever closer association between the operating agencies and the holding company. Accounts end up switching between agencies for reasons far removed from whether or not agency X is or is not doing a good job on account Y, and ever more closely associated with the politics in Farm Street or Manhattan. Perhaps I'm being naive, and it was ever thus. But I don't think so.

AFTER SLAMMING the hypocrisy of the advertisers who dumped Kate Moss last week, it would seem perverse to criticise and advertiser for standing by Croydon's finest, but Rimmel's ultimate decision to stick by Moss raises a question or two.

Would Rimmel really have pulled back from dropping her if it had not just shot an ad featuring the supermodel partying all night only to catch a taxi to work in the morning, looking fresh as a daisy thanks to Rimmel's recovery foundation product? Unsurprisingly, Rimmel is thought to be rushing to get this commercial ready for airing, and will inevitably succeed in turning Moss's personal misfortune into a publicity coup for itself. And, I guess, with Moss now in rehab, that is still better than dropping her, but she really has been taking method acting too far.

YOU'VE GOT to love this story. Last week was the second annual advertising week in New York City, an attempt to raise the profile and standing of the advertising industry among both the wider business community and the general public. In addition to all the worthy platform debates from industry big cheeses, and cocktail parties and stunts at places ranging from the United Nations headquarters to the Nasdaq stock market, the headline event is a parade of famous advertising icons down Madison Avenue, the Manhattan thoroughfare that was once to American advertising what Fleet Street was to British journalism.

Sadly however, the NYPD wouldn't allow the much trumpeted Budweiser Clydesdales to lead the procession, and many of the advertising characters like the Geico Gekko, the Doublemint Twin, the Energizer Bunny and those irritating M&Ms ended up shunning the hired double-decker buses in favour of convertibles that sped away from Times Square too fast to allow the massed throngs to make sense of the freebies being handed out.

It all turned into a bit of a Benny Hill caper. Only the ad industry couldn't organise an advertising event in Times Square, a cathedral to electronic billboards. As with so much about the much-hyped week, perhaps the organisers were trying just a little too hard, and underestimated the chaos that is Manhattan on an average work-day morning.