Cybersuds is the name of the monthly social meeting organised by the New York New Media Association (www.nynma.org). But on a recent gathering on a hazy, hot, humid evening in New York, it seemed that rather than discuss the Internet, members were most interested in downing ice-cold beer.
Cybersuds is NYNMA's most popular event. Meeting at trendy locations, such as at the Irving Plaza concert hall, its purpose is to allow members and potential members to network, make contacts and exchange ideas. It is one of those organisations that seems to encompass all that is good about New York: hard work, youth, creativity and innovation.
Since its foundation in July 1994, its mission has been to galvanise new media in New York. Since then membership has grown to 2,700 individuals from 1,600 companies all with the same aim to find out what they can do with the Internet.
The association represents the breadth of the industry from programmers, designers and developers, to marketers and venture capitalists, in both entrepreneurial and established organisations. As a non-profit organisation its mission is "to serve the entrepreneurs, creative and business professionals leading the new media industry".
Some of these successful entrepreneurs spoke last week at one of its panel sessions called "Beyond the Buzzwords: Real Talk about the state of agencies, advertising and the Web." To put new media together with advertising in this city makes sense. Advertising is New York's home-town business and designing content for the Internet is its seedling industry.
The promotional material before the event urged: "Enough of the hyperbole, it's time for some honest insight and hindsight on why Web advertising hasn't become the billion-dollar solution." The panel brought together some Web publishers and founders of interactive agencies to discuss how the four p's (profits, partnerships, portals and publishers) will shape the online advertising landscape in the next year.
Chan Suh, president of Agency.com dominated the panel with his exuberance and brash ideas. His company is an interactive advertising agency which employs 375 people in the US and Europe and has become a $60 million (£42 million) business in just three years.
Greg Osberg, president of sales and marketing at CNET, an information content provider, said that advertisers are beginning to commit longterm to the Internet and this could lead to $2 billion being spent on Internet advertising this year.
But, he said, people assume they can take their brand and drop it onto the Internet. "Branding in this medium is different from branding on television or magazines. You can't expect the same results."
Most of the time, he said, people are going to search engines and content sites rather than to manufacturers' sites. But overall, he said, companies want to accomplish three objectives: to brand, to generate legitimate leads and to sell.
The Internet makes sense for traditional marketers, said Mr Scott Schiller, vice-president of advertising and sponsorship sales at Disney Online and the Buena Vista Internet Group.
He urged advertisers to make the transition from traditional media to the Internet and he likened it to the introduction of cable television in the 1980s. Then advertisers were dealing with three television networks and it was an uphill struggle to show that the business worked. Now cable is in 40 per cent of American homes and those households account for 80 per cent of purchases.
Another successful online ad agency, K2 Design, has become one of the first publicly-owned interactive media corporations in the US. Its CEO, David Centner said a lot of clients come to him and do not know what to do. K2 Design then develops a strategy for them to execute online.
DoubleClick, an Internet advertising solutions company, started with the merger of four people and has since grown to become an $800 million company. The advice from its CEO, Kevin O'Connor, is that people are playing too much to Wall Street. Instead they should concentrate on creating long-term value for their customers. "There is no shortage of advertising space on the Web. My advice to small companies is don't focus on selling advertising. Focus on creating a critical mass of audience that advertisers will find attractive."
The expectation is that Internet companies are going to rise fairly soon to profitability, said Mr Osberg. "The debt can't be carried on forever with all these mergers and acquisitions."
Mr Centner said acquisitions are sometimes needed to provide the best service. But the industry is growing so fast, it is hard to find good people. It is also "not so easy to do acquisitions when your stock is at $4". he said.
"We're buying a history of performance and a promise that value will accrue to us after the transaction," said Mr Suh, whose company, Agency.com, has made three acquisitions in the past six weeks.
Growth and market share are everything, said Mr O'Connor. But in order to achieve that, capital is needed. He said online advertising is better than most media and that's where dollars should be spent.
He gave two examples: 20 per cent of all car purchases are decided on the Internet but car companies only put .01 per cent of their advertising budgets towards the medium; a credit card company did a test and found that the Internet beats all other forms of direct marketing by 30 per cent.
One of the world's biggest advertisers across all channels is Procter & Gamble. In a few weeks it is organising a P&G Summit to which 400 marketers have been invited to talk about online advertising. "As a global company it is looking at the Internet and saying we are taking it seriously," said Mr Schiller. This is because "more advertisers are coming online, there are more users online and consumers' expectations are getting better".
