Story from the Wall Street Journal
The rivalry between AOL and Yahoo is on prominent display this week, as the two struggling Internet companies compete for advertising dollars on Madison Avenue.They are pouring on the glitz as they vie for the attention of thousands of ad-industry professionals at the Advertising Week conference in New York.
Marketers typically don't negotiate specific deals to buy ad space or time during the annual event. But media companies use it to tout themselves to the many ad agencies and advertisers in attendance, including Coca-Cola, Procter & Gamble, Verizon Communications, Bank of America and MasterCard Worldwide. The aim is to establish relationships and secure business down the road.
"It's a fevered pitch," says Quentin George, chief digital officer of Mediabrands, a media-buying unit of Interpublic Group, whose major clients include General Motors, Microsoft and Johnson & Johnson. "Both Yahoo and AOL are in some kind of a turnaround, and what we are seeing is efforts on both sides to get a clear and compelling value proposition for agencies."
The stakes are high for the two companies. Their ad revenues have suffered steep declines during the recession, hurt by a pullback in ad spending and stiff competition from established rivals like Microsoft and Google, as well as social-networking upstarts like Facebook.
Both AOL and Yahoo are setting their sights on the hard-hit $20.8 billion-a-year market for online display ads -- those that include text and images and appear on Web pages. This year, they both hired new chief executives, who are scrambling to revive their businesses.
Early in the week, the two companies laid out the details of their business strategies. AOL Chief Executive Tim Armstrong, a former Google ad-sales executive, pitched the company's efforts to become a top provider of online news and entertainment. Yahoo chief Carol Bartz, the former CEO of software maker Autodesk, unveiled a $100 million global ad campaign to spur interest in the company's Web site.
But winning ad dollars is also about getting face time with Madison Avenue's heavy hitters, which means gimmicks and parties.AOL, which is being spun off by Time Warner this year, spent more than $250,000 to be a top sponsor for the conference and host the opening-night gala Monday in a tent in Times Square, according to a person familiar with the matter. The bright-yellow AOL running-man mascot popped up at several events during the week, and it won a vote to be inducted into the Advertising Walk of Fame, beating out 25 rivals, including Ronald McDonald and the Vlasic Stork.
Yahoo took more of a stealth approach, forgoing the traditional Advertising Week sponsorship for marketing stunts. It hired drivers in skinny purple Yahoo neckties to take attendees home from parties in Chrysler 300 sedans with purple stripes, and it sent teams into the streets in Yahoo T-shirts.
At AOL's gala, Yahoo ad-sales executive Joanne Bradford was overheard reminding people to join her at a private Yahoo cocktail party at Jean Georges, a tony Manhattan restaurant. Several ad executives say they had drinks and hors d'oeuvres at the Yahoo event, attended by Ms. Bartz, and then left to join Mr. Armstrong and his ad team for a private dinner, where singer Harry Connick Jr. gave a surprise performance.
Mr. Armstrong sent a personal email invitation to Curt Hecht, president of Vivaki Nerve Center, a unit of Publicis Groupe that buys hundreds of millions of dollars of online advertising a year for companies such as P&G and Wal-Mart Stores. Mr. Hecht says Mr. Armstrong spent an hour with him before the dinner started, asking about the agency business and his clients. Although no checks changed hands, Mr. Hecht says, "I'm going to invest back in that."
Some industry executives say the market for display ads is still up for grabs. "It's been a while since there has been a default 'must buy' property," says Jeff Lanctot, chief strategy officer at Razorfish, the digital-ad agency Publicis is buying from Microsoft.
Yahoo may be under extra pressure to dazzle executives, as some of them say AOL has started to resurrect its relationships with marketers and their agencies. Still, Yahoo draws more traffic to its sites
"Yahoo's a safe bet, for advertisers because it has such a massive audience," says Tom Bedecarre, chief executive of AKQA, an independent digital marketing agency whose major clients include Coke and Visa.
But with ad spending on traditional media like print and TV in decline, both AOL and Yahoo could be winners if they do a good enough job, ad executives say.
"In order for either or both of th em to prosper, particularly AOL, they have got to do more than play an intrachannel share game," says Rob Norman, CEO of WPP-owned digital-media firm GroupM Interaction. He said the traditional-media business might need to up its ante. "It's Advertising Week. Where is the TV business? Where is the magazine business?"
