The big move of advertising budgets online will come when there is content to draw the consumers, and then the consumers will drive the advertisers. That’s the big issue. Until then, the Internet will be primarily direct marketing and search ad formats. Today, search is the most popular type of online ad format.

Partially, the problem is related to the content developers. The big broadcasters that develop the television shows usually see the Internet more as promotion vehicle that directs traffic back to their shows. They don’t see it as a whole new distribution channel. And trying to shift consumers from one media to another is very difficult. When someone is already online, it is much easier to get him go somewhere online, then to get him to turn off the computer and move, possibly, to an entirely different room to turn on the TV.

But the content providers have a legacy business model. So a major problem for the industry is the lack of recognition that now there is an entirely new industry that requires a different business model. And that shift depends on both content developers and advertisers because if there is no content to distribute online, there is no advertising to put in front of it.

As a result, Internet advertising is linked primarily to direct response. That’s why we see massive growth rates for a company such as Google, which offers a direct response ad format via sponsored search.

On the positive side, I believe that Google changed the model for many advertisers, and helped them to understand their return in a new way. Given the market share of Google of 56% in the U.S., and its leading position in many countries internationally, I think the company has a secure position as long as search advertising continues to be popular and growth rates exceed other online advertising formats.

Yahoo! is in a position where it sells everything from search through TV-like video ads. It has the largest audience of unique users online, and I believe that Yahoo! is prepared for the occurring shift in a meaningful way. This year it has monetized its search platforms through Project Panama; it has relationships with Comcast, EBay, and a consortium of newspaper publishers. Above all, Yahoo! has very loyal audience with the highest number of unique users in the U.S. So it’s more a matter of time and ability to manage the company’s internal issues.

Q: What features of this space would you point as very unique or outstanding, in your experience?

A: Google, Yahoo! and MSN are all doing things that have never been done before. In that sense, every day is a unique day in the life of these companies. Microsoft definitely has to be followed given its acquisition of aQuantive. Many analysts are intrigued and puzzled about Microsoft’s plans for this company and the plans to compete with Google. I would say that the acquisition of aQuantive was a very strategic reaction to Google’s acquisition of DoubleClick, but there isn’t much visibility of what’s happening behind the scenes for both of those acquisitions.

I would say that the company to watch right now is Microsoft, given its recent acquisition and the amount of cash it has on hand. Although it has never been a leading player in this space, I think that it is definitely worth following.

Q: There has been a lot of talk about the move from the large movie theaters to the TV screen, and then to the computer screen, and now, to the mobile screen. Do you see opportunities for mobile content development?

A: Yes, but consumers need to increase their demand for and purchases of mobile content. And before that, the content providers have to start distributing content on the mobile platform.

This information provided by Denise Garcia of A.G. Edwards & Sons, Inc., Member SIPC, and is believed to be accurate but is not guaranteed. Additional information available on request, opinions are subject to change without notice.