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<<Does anyone have any real info on the actual effectiveness of online advertising?>>

I have no info on the psychology of this but I have long thought the same about TV and print advertising but it is still there and still costs a ton.

No hard information, but a couple of thoughts. Companies have tried to measure the effectiveness of advertising for a long time. They look at things like sales before, during, and after ad campaigns. Yellow pages ads were sometimes put in with phone numbers that didn't appear elswhere, so the company could tell how many leads it got from the yellow pages, etc.

Internet ads are different in that they are more measureable; you can count the click-throughs and adjust your targets accordingly. And they are more of the same, because you never know how many of those click-throughs ended up buying your product offline.

In my experience, the art of target advertising appears to be working. Over time, I see a higher and higher percentage of internet advertising for products related to what I look at. On TMF and Yahoo, I see almost all financial products ads and computer products ads. Okay, I'm not buying their stuff. But I'm a legitimate prospect for these services. Compare and contrast this with TV advertising. I watch some sports, see a lot of beer ads. Cute beer ads, entertaining beer ads, and totally ineffective (with respect to me) beer ads because I don't drink beer. I'm not even a prospect for their product.

Of course, there is some limit to how much the targeted eyeballs are worth. I don't think we're very close to determining what that number is, because both the nature of the online experience and the techniques used to target ads are constantly changing. At some point (when 30% or 60% of America is using the web), businesses will figure out what kind of sales they can expect out of 1,000 click throughs. Or out of 10,000,000 eyeballs, whatever. Once the expectations are known, you can look for ad rates to reach an economically rational level.

Or maybe not . . . those beer companies sure pay a lot to entertain me, given that I never buy their products.

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