Online Advertising Still Underused

One of the key factors in deciding where to place advertising is the size of the audience. You would expect a medium's share of ad spend to match its share of audience, more or less.

But despite the Internet's being a mainstream medium these days, and despite its ability to host increasingly sophisticated creative product, it is still not attracting as much advertising spend as its traffic would warrant. According to this article, in the UK the Internet accounts for 12 percent of media consumption, but nets less than 3 percent of advertising revenue. The mismatch is replicated in other countries. Arguably, the Internet is a less efficient medium, but not to that extent.

In part, this discrepancy may be because many advertising creative professionals and media buyers still don't really "get it". In part it is because it is so hard to target specific audiences. To many, Internet "traffic" is too much of a moving target, so they concentrate on the equivalent of outdoor ads -- buying keywords on Google or placing banners on portals -- in the hope of being noticed in passing by someone relevant. Others focus on pop-ups and pop-unders, in the hope of annoying people into doing business with them. Traditionalists will place context-relevant ads alongside targeted editorial in online magazines, newspapers, and (increasingly) blogs.

Another cause for the lower than expected investment in online advertising could well be the ready availability of detailed performance metrics relative to those available in other media. What was the ROI on that spot on TV last night? Hard to say. What was the ROI on that banner ad in the Washington Post Online article? We had a 2.7% click through rate and 0.3% conversion.

If you don't know how badly or well you are doing, you don't have too many reservations about staying the course. Poor performance is much more measurable online, so it can be a discouraging medium to invest in. Though I imagine if it were possible to accurately measure performance in other media the numbers might raise eyebrows.