This approach to Wall Street’s woes overlooks the real place where the rubber meets the road – consumer spending. Spending decline leads to reduced revenue, which leads to budget cuts, which generally means marketing and advertising are among the first budget line items to get slashed…you know the story. So yeah, ad spending could decline. But the online advertising industry sits in a unique position to provide just the technological solutions that could not only stem the tide of reduced online ad spending, but create an increase. Perhaps it’s time for our industry to take a good hard look at what it’s actually providing to advertisers – to go beyond impressions, clicks, and conversions.

So, how do we respond to the online advertiser who’s stuck in that all too familiar scenario of a declining budget with increased performance expectations? For starters, we know that more consumers are shopping online, and, specifically, shopping for deals. Logic would dictate that the successful advertiser should optimize each and every online engagement point, find and nurture their best customers, and then make ongoing media decisions based upon which buys are actually furthering their business’s Key Performance Indicators.

But even with all the latest online technologies like engagement mapping and behavioral targeting, does an advertiser actually know if he’s got a relationship with the person seeing his online ad? Can he know if that user has already been to his site and purchased a toaster oven? Probably not.

What if the advertiser could tie his internal KPI’s to his media buys’ performance? What if he could actually build a customer relationship with every ad served? Online advertising spend currently represents 8% of all advertising, but the medium enjoys 17% of all viewership. Do you think advertisers would move more ad spending online if the technology could keep up with the needs of their companies’ key business metrics? These are the technology shifts to look for in the near future. The kind that put the advertisers’ and consumers’ needs first – creating a truly personalized advertising experience for the consumer, which, properly translated, turns into sales and brand loyalty for the advertiser. And the advertisers’ success, you guessed it, equals our success. I think we’re up to the challenge.

Most of us would agree this is the right thing to do, but too much of the dialog stops there. We all know consumers don’t navigate the Web in a tunnel, consuming each discrete piece of content or ad separately from the others. Interactions affect each other. Frequency builds on a message. Once a user recognizes they are “in-market” for something, they begin to consume advertising and navigate Web sites differently. The time has never been better to devote some effort to this. Consider these two facts about behavior during economic downturns: 1) Consumers have a tendency to shop more and buy less and 2) Advertisers aggressively seek even more efficiency in their media spend.

David McKenzie of Stanford University and Ernesto Schargrodsky of the Universidad Torcuato Di Tella wrote about changes in consumption patterns during a crisis. Their conclusion was that consumers cope with an economic downturn by working harder to find the best value for their dollar.

The current economic downturn is the first opportunity for us to see how the Internet will change the way consumers cope. Never before have so many consumers had broadband access to the Web, and never before have so many merchants possessed powerful e-commerce platforms able to conduct end-to-end transactions online.

eMarketer’s recent study on Multi-Channel Shopping concluded that U.S. consumers are increasingly using multiple channels to shop and buy. They predict that between 2007 and 2012, Web-influenced in-store sales are expected to grow at a 19% average annual rate. Online shopping used to be essentially an electronic version of a catalog. But today, you surf the entire Web researching and shopping flat screen HDTVs, then go to CircuitCity.com and have it shipped to your local store. No burning $4-per-gallon gas driving from Best Buy to Costco to Wal-Mart just to find a TV.

The second opportunity: advertisers are squeezing every drop of blood from their media dollar. Last week TNS Media Intelligence reported that display was up “only” 8.5% in Q1 whereas TV was up 1.7%, newspapers down 5.2% and radio down 4.5 percent. Advertisers are voting with their wallets that interactive is more efficient than traditional.

That gives us in the industry a chance to put up or shut up.

All this tells me that now more than ever we must consider the entire consumer experience from awareness and consideration (display) to shopping (search) to purchase (Web site) and back again to close-the-loop. Think of the process as a cycle, not a “path to conversion”. During a recession, your best customer is a current customer.

Retention and re-targeting have to be critical components in the mix. Try this – navigate to sites where you’ve purchased banner inventory. Then take some copy from the ad and enter it into a search engine where you have purchased search terms. See what comes up. Keep going by clicking on a (cheap) search term and landing on your Web site. Shop around the site and if possible buy something. Go back out to the Web and find more of your banner inventory and search media. Go through the entire process again and see what changed. If the answer is nothing, then you can expect to continue to get the same results you’ve been getting. If that’s good enough, then maybe there isn’t an economic downturn.

Despite what you may be thinking, I am not delusional nor am I in denial about the facts surrounding consumer preferences and online advertising. I am simply reacting to how consumers prefer to be treated by businesses with which they have a relationship. For decades, the mantra of the one-to-one marketing industry has been “know me,” and that is just as true online as offline.

Since the dawn of time, consumers have frequented merchants they have come to know and trust, and that have come to know them. In fact, they not only become loyal, they pay premium prices for the experience. This is how companies like Nordstrom, the Ritz-Carlton and even Amazon have become so successful. I had an experience at a Ritz-Carlton hotel that illustrates this well. On my second visit to this particular Ritz, seconds after checking in, the bellman escorted me to the elevator and said, “As you recall from your last visit, the business center is located on the main floor.” He could have been guessing I used the business center and got it right, but the fact he keyed off the conversation at check-in and used that to personalize my experience is what left the impression. Selfishly, we all like to be remembered and reward businesses that tailor our experience to fit our preferences.

Assuming the above is accurate, then why has interactive advertising and behavioral targeting become the whipping post of consumer advocates and the subject of renewed interest by both U.S. and Canadian governments as well as the European Union? The recent consolidation of several large online players has certainly catalyzed renewed interest, but the bulk of the negative reaction is simply due to the fact as an industry we have pushed the limits of what consumers consider appropriate. Online we have shrouded the identity of those collecting the data and the intended uses of the data to the point that consumers have become suspicious. Remember those two questions – who and for what purpose – as they are the pivotal component to getting consumers to be comfortable with online advertising once again.

When we trust the party with whom we are dealing, we will share more information. When that information is then used to provide a superior product, service or experience, we reward that party. In fact, when we share information and a merchant fails to use it to enhance our experience, we actually get upset. Again, let’s use an example.

Let’s say I see an ad for Crates of Couches on local broadcast television and go to the store. I tell the salesperson all about the size and location of my home; the fact that I have three kids and a dog; my wife’s taste in décor — and even when I’ll be home from a bike ride to accept delivery. My new couch gets delivered, but now the coffee table looks ratty next to it, so I head back to the store. The salesperson doesn’t recognize me and greets me as a stranger, and I am miffed.

Take this simple scenario and mirror it online – I see an ad and visit www.cratesofcouches.com and similarly provide information and order a couch for delivery. I return to the site to order the table and sure enough, all of my information is retained in my account. I even get “Bonus Bucks” as a frequent shopper. But after that second purchase, I notice how specific offers regarding furniture start to appear in ads I see across the Web. Tables, carpeting and interior decorating services I’ve never heard of suddenly appear to have me fingered as a prospect. Creepy. I intended to share information with www.cratesofcouches.com and no one else. I wonder who has information about my furniture preferences and how’d they get it? I make sure to clear my cookies before heading out for another bike ride.

I am in the business of ad serving, so how can I consider this a problem? Isn’t targeting the way I differentiate our company and grow the business? Of course it is, but consumers want to know that if they enter into a relationship with a known and trusted merchant, any information derived from that relationship stays with and is used by that merchant — and no one else. That’s the flaw in our industry and the reason we’re under scrutiny once again. Online advertisers and their agencies have a wealth of information provided by customers that is a fantastic source of targeting dimensions. I’m not bothered by viewing targeted offers from www.cratesofcouches.com because I told them to “know me.” I want to learn of invitation-only sales and 0% financing promotions. But what I don’t want is to feel as if someone else is following me around from store to store with a clip board recording my every move.

So why is this important? Consumers have not abandoned the Web because of concerns about behavioral targeting. In fact, the 18-25 year-old cohort seems enamored with brandishing a wealth of personal information on MySpace and Facebook pages. But we need consumers to trust the medium even more as it matures. The Internet has evolved from simple email and news portals to an integral part of how we live. We are being offered the chance to interact in whole new ways online. This goes beyond stock trades and ecommerce. Confidential physician consultations are being conducted through new models. Divorce counseling and even driver’s education classes are offered online. Continuing to make the Internet enhance our daily lives will depend on the trust and confidence of every day consumers.