Friday, October 2, 2009...2:32 pm

Online advertising: there's good news and bad news

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So – spending on online advertising has just outstripped spending on TV advertising in the UK.
Figures from PricewaterhouseCoopers (one of the most irritating company names in consultancy, by the way), show online advertising now makes up 23.5% of UK ad spend, as opposed to TV’s 21.9%.
TV has been top dog for half a century now – but it’s kind of old hat. So although this is a landmark, it’s not the shock it might seem to be.
But although this seems to back everything that I and everyone else has been saying about online sucking the life out of “old media” such as TV and print, there’s a big problem.
No one is clicking on the online advertisements.
Yes – in the same day, comes the news that clickthrough rates for online ads have plummeted in the past couple of years.
Only 16% of US web users click through to the ads they see online. And most of that clicking comes from a hard core of 8% of web users. This is down from 32% clickthrough just two years ago.
So where does this leave us? Advertisers are deserting print and TV partly because they are so unaccountable. The internet promises a paradise of trackable usage – allowing brands to see exactly how users react to their advertising and putting a clear value on it.
But if no one is actually clicking through to the ads, that benefit disappears. Leaving online advertising in exactly the same place it was when 19th century Philadelphia retailer John Wanamaker famously said “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
It’s a thorny problem. After all, if the web doesn’t really deliver trackability, why use it? We’re back to trying to interpret consumer buying patterns from other data, just as we do in the offline world.
Before the printies get too excited though, my money is on things getting more difficult rather than less for traditional kinds of content such as newspapers and magazines – whether online or off.
I’m betting brands will keep moving into the kinds of web content that we don’t think of as journalism. It’s happened with Facebook and The Gap already, and this probably won’t be the last example.
And I reckon brands will also spend more money and time interacting with consumers directly – out in the real world where they can build a personal relationship.

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