Most Online Advertising Functions More Like Classified Ads than TV Spots

The IAB just released their annual advertising report and shows healthy year over year growth in the category.  Online Advertising grew by nearly 22% in 2011.  It would be easy to characterize this as further evidence of the Internet’s inevitable dominance over other mediums.  


In the report and handful of data point jumped out and further cement the primary use of the Internet as a direct response medium.  2 data points in particular:  

–  65% of all Internet Advertising revenue came from performance pricing (cost-per-click, cost per acquisition, etc.)  That is up from 62% in 2010.  

–  Search spending grew by 2 points to 47% of the total dollars spent online.  Everyone talks about online video and mobile as the big movers and search grew faster that video and kept pace with mobile!  

As an industry, we are still struggling to move much money online for demand creation.  This remains the single biggest opportunity for the industry.  

Perhaps the problem is people like me keep calling it brand advertising. This is all about creating demand.  When we get better at proving the effectiveness of the internet at building demand, then the long predicted shift from TV advertising to online happens.  

2 Responses to “Most Online Advertising Functions More Like Classified Ads than TV Spots”

  1. 1 Jay Garmon June 7, 2012 at 4:01 pm

    Mostly because it doesn’t work. My current employer has a huge demand generation problem and every time we try to spend against it, the ROI (assuming you can even remotely track it) is AWFUL. Online ads as an educational medium just aren’t effective, especially for a highly technical and/or niche product. We’ve had far, far more success in content creation and public relations than we have with straight-up ad placement.

    Ads that convert against intention — search ads — have worked for us, to the limited amount of existing demand there is to be harvested. But when you’re in a new market space, and we are, we’re too far ahead of the demand curve to rely on harvesting existing demand.

    Believe me, if awareness ads worked, we’d be spending boatloads on them.

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