Shares of Yahoo (YHOO) came under pressure last week. The giant Internet portal was downgraded by analysts who believe it will lose online advertising dollars from dot.coms struggling to stay alive.
The online advertising business model is under attack again.
The question now turns towards more traditional brick and mortar companies and whether they will put their ad dollars online to make up the slack. A new report from Media Metrix (MMXI) division AdRelevance shows that online advertising is dominated by dotcoms. The report says that online advertisers outnumbered traditional advertisers 2-to-1 for online ads.
Meanwhile, predictions for ad spending abound. Jupiter Communications (JPTR), for example, predicts online ad spending to jump to $5.4B in 2000 from $3.5B last year.
But important questions about advertising effectiveness have yet to be answered satisfactorily.
For example, it isn't clear that these online ads are a good investment. Click-through rates are still hovering around .51%. Does that indicate ad effectiveness? People on the web are not necessarily in a purchasing mood, so it's no wonder these rates are low. But is that the way an ad's effectiveness should be judged?
Should online ads be judged by traditional measures, such as awareness and attitude, or just sales? In the offline world marketing people have grown accustomed to looking at offline ads using these other measures.
But the brick and mortar companies are likely to see the net as the medium of instant gratification - online ads always have a hyperlink to the advertiser's site, so the ads better be clicked - and therefore expect more from the net than from traditional media where immediate action isn't expected.
Take the first step (it's free).
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