Digital Media Buzz > Online Advertising Moving to TV Model

Online Advertising Moving to TV Model

By Thursday Bram

Google’s main revenue source is its advertising programs. According to Google’s 2008 annual report, 99 percent of the company’s income comes from Google AdSense and other advertising products. But consumers’ online behaviors are changing, especially in relation to advertising.

Maggie O’Brien, marketing director of Internet advertising technology provider, SilverCarrot.com, points to the ongoing decline in clicks as proof of a shrinking level of interaction between consumers and ads. “In the past five years, the click rate has gone from 5 percent to averaging between .06 percent and .17 percent, depending on the industry,” she says. “And those that are clicking tend to be of lower education and economic levels.”

The most profitable demographics of consumers (who happen to often be the most web savvy, as well) are the least likely to click on an ad and make a purchase. The declining rate correlates with the timeline as these consumers moved online and learned to navigate effectively. They experience certain levels of ad blindness, easily ignoring the similar ads and layouts on many sites they visit. It doesn’t help that the more than 400 ad networks working with larger companies have little incentive to discourage click fraud. If online advertising were simply a question of click rates, this situation would be a crisis. O’Brien does see numerous bright spots in the field, however. She points to a move from volume to quality, listing the Online Publishing Association’s efforts to break standard size constraints with new ad formats, a growing focus on quality content, the consolidation of ad networks and the advertising budgets shifting from offline to online.

The OPA, in partnership with comScore, released a report last week that pointed to values for online advertising beyond simply generating clicks. The organization’s research shows that one in five consumers exposed to display advertising will conduct searches related to the advertised brand, while one in three consumers exposed to the same display advertising visit the sites of the advertised brands. Those consumers are spending money as they visit brands’ sites as well.

These numbers match O’Brien’s view of online advertising, creating opportunities to take advantage in the shifts of consumers’ interaction with ads. Content, in particular, provides a chance to move forward: “Advertisers are demanding better understanding of what their dollars are buying — how long does a visitor spend on an individual page? Don’t give me the site stats, give me page stats. Advertisers are insisting that not only is their ad served, but the user is engaged on that page and are going to see their ad. This is moving the business from buying space to actually buying time, more of a TV model, which I think will put emphasis on frequency and not just the shot-gun reach achieved with ad networks.”

There are changes in the future for any business that relies on online advertising for revenue, especially those with formulaic formats like Google AdSense. Despite those changes, however, there are opportunities to be found with ads and content that engage consumers, whether to encourage a consumer to visit a brand’s website or to build brand recognition.