• Size of deal remains an issue. In a marketplace where agency commissions are low single digit for network TV, due to the fact that millions or tens of millions can be committed in a single order, the Web has a long way to go. There are bigger deals out there, sure, but they take a long time to consummate. Even the terms and conditions apply only to deals of one year or less. It would be hard to guess at the average size of a Web deal today, but suffice to say that across the Web, most deals are still under $100,000 and many deals are under $10,000. The result is that the agency has to make many more deals to make for each $1MM of spending.
• Technology is our greatest blessing and also a curse. We would not have interactivity without technology. And the exciting thing is that new, intriguing technologies continue to be deployed all of the time. The hard part is keeping up with the new technologies. Ad serving, rich media, metrics-both front end and back, email, search, contextual tools, outside the browser and more. Some of these offer real solutions. And some are way overpriced for the value. It takes time, people and money to sort through all of this and find the next great thing for our clients.
• Tracking and optimization are most often used as the quick answer as to why Interactive costs more to service. This rationalization is valid. It is not unlike DR TV for which the average fee is double or more vs. traditional TV due to the tracking, optimization and reporting. For DR on the Web, the intensity of these tasks are sometimes overwhelming. Weekly reporting, optimization on the fly, and not enough time to think about the business when you are in a constant reporting loop are common complaints.

Bringing the purchasing department into the equation generally costs the agency money. After all, their reason for being is to reduce costs. Both client marketing and agency management are frustrated by this standoff. The client wants to bring all communications into their lead agency but the agency doesn't have enough horsepower. The agency won't fund the horsepower and won't go back to the client as long as the specter of the purchasing department looms. They would rather pass on the business, despite the fact that the client wants global solutions and integration.

Going in-house is purely a defensive measure and not the best long-term solution, yet clients do it so that enough resources are placed against Interactive. Why is going in-house a bad idea? It seems great when short-term gains are made. But there is a reason for the agency model. Agencies have process that has been honed over a long period of time. They have the ability to apply elasticity to staffing. They can put more people on a job to get it done without a long-term commitment to those people on the client. In this way, the client can have their base team but get extra help whenever and for whatever purpose. Then there is the issue of cross training. Good agency people learn to solve problems in many areas. And they are especially good at coming into a client situation and applying learning from other clients. When a client is in-house, none of these benefits accrue and the thinking often gets stale.

The difficulty of the tasks in Interactive can be overwhelming at times. Short lead times (because we can), quick turnaround on changes (because we can), weekly reporting, understanding the latest technology, continued lack of standards (although we are making improvements) all make this business hard.

• We need open dialogue between all parties. Agencies that have separate silos for financial reasons need to remember that it was the client who brought them to the dance. And that the client wants integrated solutions.
• Agency management needs to understand that their Interactive people are under great pressure to understand clients, media, creative AND technology. They need support to accomplish these tasks. This comes in the way of resources. And a dedication that all personnel in an agency will learn to deal with Interactive. If Interactive for all media is the future, agency management and those at all levels need to get on board and learn.
• Clients need to find a way to meet the agencies half way and work together for an adequately compensated package. After all, we remain "in process" relative to the reworking of media and messaging. Commodity pricing cannot work here.
• And Interactive people, whether in account service, media, creative, production or technology need to be up front with their management about their staffing needs and the barriers they need to overcome to meet expectations. After all, many of those in management have not worked hands on with the technologies you deal with every day. They don't realize that pulling a regular report is a lot more than pushing a button.

		David L. Smith is President and CEO of Mediasmith, Inc. David L. Smith is a nationally known expert in the areas of new media application, media strategy and media planning. A thirty-nine year veteran in the advertising media management arena, Smith has a major involvement in national committee work to establish and refine standards in metrics, business practices and financial issues for Interactive advertising with organizations such as the AAAAs, IAB, OPA and the ARF. He currently chairs the Online Media Council for the ARF. A University of Washington graduate, Smith is married with a twelve-year-old son; plays guitar; and is a gourmet Chinese cook. He is an active member of the Board of Directors for the San Francisco Boys Chorus. You'll find him at the office early most mornings unless he is traveling with his family.
	Karen T. McFee is Executive Vice President of Mediasmith, Inc. Karen T. McFee has twenty-five years of experience in advertising media management with Foote, Cone and Belding, Ketchum Advertising and Hawk Media. As Executive Vice President of Mediasmtih, Inc. Karen has become a recognized expert in optimizing the execution of media to secure the best of what's available for the client. Her account experience includes retail, food, business-to-business, apparel, travel, entertainment, media and technology with broad expertise across all media categories. Karen is a graduate of Northern Illinois University, is married with one child, and enjoys travel and photography in her free time.