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I have a suspicion that the value of internet advertising is much lower than net mavens would have you believe.

The basic problem is that people just mentally tune out net banner ads. They just do not register in their consciousness.

People are beginning to find out that the ratio of clickthroughs to eyeballs is very small. If my suspicions about the advertising efficacy of eyeball counts is correct, the value of many internet stocks which are based on advertising business models are overvalued.

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



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As a user of the web to obtain technology info. I find that the time I read banner ads is just after I have clicked on the next link and am waiting for the page to change. Of course its now (usually) to late to follow the ad link. This is why I to think banner ads are overrated.

Don
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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.
An interesting thought here is the package that Barry Diller is trying to put together-you might remember his abortive deal to buy Lycos-he came damn close to stealing that one-His whole thought process is that advertising revenue isnt enough without leveraging it. He wants to use the internet "hits" on his city sidewalk sites for instance to lead the person who looks up a movie or concert schedule to his Ticketmaster site to buy tix for those events, then to his HSN (home shopping network) to buy related merchandise. He is now looking at a venture to accumulate ISPs and added to his production facilities and other assets he is really building a vertically integrated group that will maximize the profits to be gained by every single eyeball-the effectiveness of the data farming and redirecting viewers to related sites will be the key-but it does leverage each hit-as you are suggesting that banner adds do not
food for thought
David
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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.

Patzer
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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.


DCLK is doing much cooler forms of ad targeting than this. With bandwidth expanding so fast soon you won't notice banner ads slowing down your connection. They will make new ads of course. With new forms of targeting banner ads are simply links paid to be in front of you. You are probably looking for the stuff. Advertising can not be cut out of a mass media, its part of its core.

Pwei

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No, but:
a) the authors of Gorilla Game were also sceptical of it, as an unproven model (as I recall, but correct me if I am wrong;maybe they were sceptical of transaction services model like AOL; check Appendix); or maybe it was the book "Residential Broadband - insider's guide to the last mile", commenting on 'Net business models and advetising...I'm confused); I will follow up if I can; and
b)the June(?) issue of Business 2.0 (the one on 'Net billionaires), and a good magazine, has an interesting article on how these things are measured, and how the metrics have become more sophisticated since the early days of counting hits. Should be avail on-line.
Personally, I tend to agree with you, and I am not trying to confuse anyone.
George
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