In web advertising, enemies turn friends

Mint
Advertising agencies and Internet companies once viewed one another as foes, but are now coming together to harness the potential for online advertising. As with many other segments, online ad spending has slowed from its previous breakneck pace during the deep slowdown, forcing companies to devise new ways to chase fewer dollars.

Last week, Eric E. Schmidt, chief executive of Google Inc., and Steven A. Ballmer, his counterpart at Microsoft Corp., for the first time attended an annual advertising industry meeting, the Cannes Lions International Advertising Festival. With consumers spending more time online, analysts say Internet firms and ad agencies have no choice but to work together to develop ways to make money from digital media. “There was an air of inevitability about it, because of the model not really working yet, and there’s so much content that will be dependent on it working,” said Paul Kemp-Robertson, editor of Contagious, an online magazine that tracks digital marketing trends.

Microsoft and Google, along with rivals such as Yahoo Inc. and AOL Llc., are looking for growth from new kinds of ads, including online video spots. But they need advertising agencies to persuade their clients to embrace these formats. Many firms are preferring to place ads linked to search engine results, whose effectiveness can be measured directly. Microsoft made it clear that it wanted to cooperate, announcing partnerships with two leading advertising firms, the WPP Group Plc. and the Publicis Groupe. Yet Ballmer expressed scepticism about the extent to which advertising could be used to finance an explosion of online content.