Whoa there, Nelly. This report from Ad Age tells us that U.S. marketing-communications agencies are topping the charts out at $28.2 billion last year, which is the strongest growth ever. Okay, okay, just since 2002.

Take note that this 8.8% increase is mostly driven by the incredible growth (23.1%) of digital services from interactive agencies. Less than half (46.4%) of the overall revenue in the industry is coming from traditional advertising and media planning/buying. The majority – which in the political world is enough to put a Congressman out of a job – comes from digital/interactive, direct marketing, sales promotion, PR, and a range of other marketing services.

The crafty folks at Ad Age got this quote from Chris Weil, chairman-CEO of Momentum Worldwide: "Interactive is huge. If anybody in marketing is
not a big part of interactive, they won’t be around much longer." As they say in the Army: Shape up, or ship out.

The Wednesday morning keynote panel at ad:tech, moderated by Jon Fine of BusinessWeek, who fully admitted that he had aspirations of running
it like McLaughlin Group, included Jason Hirschhorn of Sling Media
Entertainment Group, Kourosh Karimkhany from Wired Digital, Caroline
H. Little of Washingtonpost.Newsweek Interactive, and Suzie Reider, from
YouTube. And amidst all the early morning blather – yes, 9:30 is
early – it was Reider who made the most newsworthy announcement: YouTube is
going to be rolling out the ads this summer.

There
was no dramatic gasp from the audience, no cheering, no boo-ing. In fact, the
announcement was met with the quiet hush – one that that can only occur in a
pre-caffeinated audience. Reider, possibly anticipating the never-arriving
reaction, was quick to gloss over the announcement, saying that it will be
approached thoughtfully, almost in an academic way, so as not to interrupt the
user experience but provide a revenue stream for marketers. We’re in no rush,
she assured us.

But
how exactly is this going to roll?

Reider
suggested a “very quick little intro preceding a video, then the video, then a
commercial execution on the backside of the content,” – and I started picturing
a big video sandwich, with extra mustard. (I was hungry!) But then
Hirschhorn jumped in, responding that long television-style commercials or “pre-rolls”
are not going to work and that a brand new model has to be developed, like
perhaps an ad placed between a first and second video.

He
concluded by saying that it’s all still up in the air, and that “Anyone who says they’ve figured it out is wrong. The
reality is advertisers need to be very flexible.” He started waxing optimistic
about hybrid models, overlays, interactivity, and display. I zoned out.

The rest of the panel was kind of a snoozer. They’d started
strong, with a chicken/egg scenario about aggregrators needing content, but
content needing distribution. And of course, the question: what exactly is content? Is it professionally created
material? The Internet has obviously pushed users to be way more creative and
productive, and the amount of talent that has arisen from the user-generated
revolution is something to be excited about. But there is also concern. It was
agreed that “major media” has been fighting it, rather than using that energy
to figure out how to control, track, and ultimately, monetize it.

And,
to take it to another level, what about all of the conversation that stems from
content. Dubbed the virtual water cooler,
the panel introduced the idea of this multi-tiered monster that has been
unleashed. Online forums and discussions that are all about what the users themselves have created have surged in
participation and popularity. So, they asked, “How do you make a dollar from an
online conversation?” TBD at the next ad:tech.

In the "fifth grade science class" ad:tech session entitled, "Tales
from the Bleeding Edge: The New Mobility," led by Lori Schwartz of Interpublic, a "leading, not bleeding" technology was introduced that had me intrigued – at least more so than the Virtual Army Recruiter and the GPS Coca-cola
cans.

Brand New World Chief Creative Officer
Alan Shulman talked to us glowinlgly of QR codes. Now what in tarnation is a QR code? Well,
Quick Response codes
are basically grown-up versions of the UPC symbol. Used to store large amounts
of data, QR codes are used all over Japan but have not made it here
yet – except, as Shulman admits, in the adult film industry. (Don’t ask.)

He
gave several examples of how they are used: a billboard in Tokyo that displays
the code for all the NWA flights leaving that day; a McDonald’s hamburger
wrapper whose code contains a promotion for the meal deal of the day, a Nike
poster that, when the viewer snaps a photo with their cell phone, is
immediately taken to the website or downloads a free wallpaper. Guerilla
marketing tactics in particular could take advantage of QR – imagine you’re
walking down the street and see a “code” that your telephone will interpret and
read for you. Isn’t that just terribly exciting?

But
hold your horses: mobile phones with this i-mode capability are a rarity in the United States and will probably be slow
to catch on. Marketers may be all in a tizzy about the potential of SMS, video,
and even point-of-sale consumer reach, but it will be a while before we’re all
point n’ shooting for information.  Alan, you’re such a tease!

It’s auditing season, and the IAB is beating the IRS to the punch.

CNET
tells us that the IAB “found noticeable discrepancies” between the
figures reported by ComScore, Nielsen/NetRatings, and those of IAB members’ own
server logs, and have submitted a letter to them requesting a third-party audit. Like most tax discrepancies, the problem lies in under-reporting the figures. See, web sites get grumpy when their traffic is under-reported because the
smaller the number, the less they can charge for advertising. The IAB wants the Media Ratings Council to blast in and save
the day. Yay!

They’re hoping that the audit will lend some transparency and shed some insight into the
methodologies of statistical measurement, which is essential when trying to
gain and maintain advertisers’ confidence in online media – especially now, as more
marketing dollars are moving into interactive.

Of course, these two measurement firms are not the end
all be all: Sarah Fey of Aegis’ interactive ad agency
network, Isobar, U.S.
remarks that “at the end of the day, their numbers are
used more as a directional tool rather than a holy grail for our decision
making." Well thanks for that. I would hate to see us depend,
ironically, on an inaccurate measure of a measurable medium. Oh no, now I’ve
gone cross-eyed.

Well, best of luck to you, IAB, in sorting out this whole
mess. And we hope you kindly “overlook” all the under-the-table payments we’ve
been making to these firms to over-report our own traffic. (Did I just say
that?)

It’s that time of year again, when rabble rousers in the
digital media sphere gather round the Moscone Center for three days of keynotes,
sessions, and schmoozing. Yes, it’s ad:tech San Francisco 2007, back and badder than ever. It promises – in fact, pinky-swears – to be a doozy.

Stay tuned to the blog for updates on the conference happenings, both on and off the floor. And, in some cases, on and off the table. Perhaps even under.

Last month TechPresident
came onto the scene with the goal of covering “how the 2008 presidential
candidates are using the web, and vice versa, how content generated by voters
is affecting the campaign.” They’re covering the whole kit and kaboodle – from online
advertising, email lists, postings on YouTube (like the latest John McCain “Bomb Iran” clip
that is so disgustingly boring and non-news that it needs to forgotten about
instantly if not sooner) to the MySpace and Facebook popularity contests. Though I
think in that space Kelly
has everyone beat.

In a DailyKos report
on how the presidential candidates are advertising themselves online, it was
found that Republicans are all about paid search, while the Democrats are more
likely to use blogs. They cite “ideological disparity in media preferences” to
explain this difference, but if more Democrats are getting their news online, shouldn’t
these candidates be the ones dominating? Maybe because the numbers tell us
something different: Nielsen//NetRatings
reported that 36.6 percent of U.S. adults online are Republicans, 30.8 percent are Democrats and 17.3 percent are
Independents. Oops.

A lot of the value of TechPresident, in my humble, apolitical opinion, is actually the comments about the content on each of the candidate’s campaign
websites. They’ve found that our boy Rudy is kinda sorta using his site in a generic, blah way to talk about issues,
and Barack is also throwing
some ideas out there, but it seems like Hillary
was too busy writing her biography to include her stand on major political
issues. (For some light reading perhaps you can explore Mitt Romney’s paragraph on “Defeating the
Jihadists.”) Organic searches on terms like social security, global warming, minimum
wage, and even the Iraq war returned no candidate ads. What is wrong with this picture?

A response to Alan Rosenblatt’s “No Issues?” post sums it
up well:

If I take the trouble to come to your website, it’s only because I’m
trying to decide whether or not to support you. And the only way I’m going to
do that is if you give me a really good reason. I want to know where you stand
and why–the why part gives me a good indication of what positions you’ll take
on issues in the future. I want to know who you are–not in the sense of where
you were born or went to school, but rather in what you stand for.

The overall conclusion is that they are sorely lacking in
pull – and I agree. There is truly a lack of positioning on the candidates’
sites, and moreover, a lack of passion and dedication to informing and convincing
the electorate. We’ve seen how effective online media can be, with the incredible amount of messaging options available through combinations of text, photographs, video,
and link resources. So why are they missing the boat?

As
Helen Margetts of the Oxford Internet Institute said of the candidates in this Reuters article: “They
haven’t been very innovative,” and the days of dedicated party members "tramping
the streets and persuading people are dead." In addition, it’s noted that in
order to be successful, they’re going to have to recognize that voters are no
longer satisfied with the “one-way traffic” that constituted campaigns of the
past and are going to demand interactivity and user-generated content. What,
Web 2.0? Thought I’d banned that word.

Here’s something I will condone: OpenSecrets.org’s new Flash tool
that “tells all” by making visual connections between each of the 2008
candidates and the biggest contributors to their campaign. Now that is a good use of IT.

An article
by Jason Pontin, editor in chief and publisher of Technology Review, in the
Sunday Times was the first mainstream media coverage of Twitter, the hot new
web-based communications service.

But how hot is it really? Pontin labels it “the
fastest-growing phenomena on the Internet” – as of March there were 100,000
registered users, though founder Evan Williams has since become secretive about
numbers. No matter – we’re not counting anyway. Tweets, or what most normal people would just call instant
messages, can be shared with your network of friends & family, and also
left on the public timeline
that, at the exact time of writing, contained such goodies as, “Day of yardwork
has ended, firing up the grill and yes! Meat’s back on the menu boys!” and “Cat
hopes felled by a wind and a prayer.” No, I don’t get it either.

But I suppose that is what Twitter is all about – the
banality of language as it is used to express spontaneous thoughts and
emotions. Aesthetically, I much prefer Love-Lines
and We Feel Fine, imaginative projects
by Sep Kamvar and Jonathan Harris that “harvest human feelings” from a number
of weblogs and then showcase these expressions of love, hate, and other human
desires in a searchable database. It’s enormous, and it’s inspiring.

Enough about art. What’s the purpose of Twitter? It’s
certainly not about making money – no ads, no self promotion, nada. Just a
seemingly innocent service that combines all the things we dig about AIM,
GoogleTalk, and of course our beloved mobile text messages. Oh yes, have I
mentioned that you can send tweets from your phone?

So I wouldn’t say I’m "skeptical" about as Pontin is, but then again, I’m not particularly fired up about it either. All I can say is, it’s certainly an upgrade from the ‘two tin cans on a string’
system we used in 4^th grade to alert the neighboring treehouse of an
enemy attack.

This has gone too far, I thought yesterday. It was all over the news that media outlets like The New York Times, The Washington Post, CNN,
and Fox News were buying Virginia Tech related keywords on major search
engines. Some called this the modern-day equivalent of hiring a barker to yell
“Extra, Extra! Read all about it!” on street corners. Some called it downright
tasteless. My initial reaction was to side with the second camp.

But wait a second. Believe half of what
you hear, I could hear my mother saying. So before I got all upset
about this, I thought I’d check it out for myself.

Like Kaiser Soze – poof – they were
gone.

Nothing on Yahoo, and the only sponsored
result I found on Google was from a news organization in the U.K. called The First Post. Argh, Brits! At first I thought they purposely removed
it because so many bloggers
had pointed it out as “crass” or “tapping in on a business purpose on a tragedy.”
However, if it really is a business-driven action, maybe they’re down because
it’s no longer a front-page headline?

Social networks like Facebook are also creating
online bulletin boards as a method of keeping friends and classmates up to
date both on their whereabouts and thoughts on the tragedy.  Poof! Faith in humanity – and compassion – restored.

“Focused,
brand-driven” ad network Adify has received
$19 million in Series B financing, led by US Venture Partners (USVP) and joined
by OI (Original Investor, not quite as cool as Original Posse) Venrock
Associates. With a partner list that includes The Washington Post Company,
Comcast, NBC Universal and Time Warner, and being recently named to the Business
2.0 Next Net 25, these guys are flying high.

Let’s figure out why. Take a project like their recent
partnership with Washingtonpost.Newsweek Interactive to create a Sponsored Blogroll program, which allows the publisher and selected
high-quality blogger – much like this one – to share ad space and
thus reach a broader audience in a single media buy. Vertical advertising
networks, you do realize, is already the norm in the offline world, and it’s
about time it was brought to ours. You accomplish much more and with less
effort – and isn’t that what modern man is all about?

Aggregation. Niche Marketing. High-Quality Content. Customized
Vertical Networks.

If that doesn’t turn you on, I don’t know what will. How
about this term: Build Your Own Network™ which is fortunate enough to be acronymed as B-Y-O-N. Just the sound of it is
rousing fond memories of B-Y-O-B nights back at school. Jugs of Gallo, cases of Corona. Now, gross, but back then, such a good idea!

Speaking of things that seemed
like a good idea 8 years ago, let’s go back to the matter at hand: VC funding.
Some peeps are getting a little nervous and starting to whisper the word, "bubble" under their breath. Maybe this is because funding hit $411 million in online advertising and marketing business alone, up from
$164 million two years ago (according to Dow Jones VentureOne and Ernst & Young). So
it seems that the money is once again streaming in. This time around, however, Madison
Avenue is not going to stand by and watch it happen right under their noses. Publicis,
as we all know, has joined in the game and buying/funding digital start-ups as
a protectionist measure “against
their own obsolescence.” Tim
Hanlon, the SVP of Denuo, their ‘futures practice’ consulting unit, even admitted
that most of the industry’s innovation is coming from
entrepreneurs in garages who ‘may not have the appreciation or nostalgia for
how media and advertising has been done historically.’

Translation: “Let’s not leave it
to the chumps.”

Hot action from the Web 2.0 Expo live in San Francisco: an
attempted square-off between an angels and VCs. David Hornik reports on VentureBlog:

Mike (Arrington)
tried hard to get the traditional VCs (me included) to fight with the angel
guys (Josh Kopelman and Jeff Clavier). His thesis was that angel
investors will ultimately get all of the returns because there is so little
money required to build a big internet business these days. While it isn’t an
unreasonable assertion, I obviously disagree wholeheartedly. As I’ve said
before, while it is certainly the case that it takes less money for a web
startup to demonstrate traction, I believe it still takes significant capital
for a successful internet startup to scale.

Nonetheless, the entertainment value was high (which was
likely Mike’s real intention). And we had a great time agreeing with each other
and disagreeing with Mike.

This is what conferences are all about, aren’t they?
Agreeing and disagreeing, sharing a theory and an ironic chuckle, and going home even
more assured of your own expertise. I mostly just love the controversial nature
of the title of the sessions, that last one for example was called Venture Capital 2.0: Bright Future or Broken
Forever. C’mon, that’s just asking for a fight!

Other session titles that I find
just plain ballsy in their ability to provoke:

Web 2.0:
Show Me the Money
How to
Make 27 Million People Hate You
PR 2.0:
Dead as a Doornail, or Still Alive & Kicking?
Social
Networking Winners & Losers: The Good, the Bad, and the Ugly
Built to Last or Built to Sell: Is There a Difference?

and my fave:
Ten Ways
to Run a Startup Like Genghis Khan  Great. Just what we need.
More Mongols.

But perhaps all is saved by the Moscone Center’s
proximity to the Japanese sweets at Beard Papa. There’s
nothing like sharing in a scrumptious vanilla bean cream puff to soothe a soured tongue and restore a battered friendship.