Insight Analysis: Does The Obsession With Click Rates Blind The Ad Industry To The Benefits Of The Internet?

In some ways the internet has suffered from the kind of over-hype that is often bestowed on the latest rock ‘n’ roll band of the day – the ‘build ’em up and knock ’em down’ syndrome. Five years ago the web was heralded as the key not only to an information revolution but also, in some circles, a new economic order. Media companies were seen to be desperately behind the times if they had no new media division and were often forced to start such operation if only to keep the share price afloat. Indeed, many traditional media groups that adopted Net development at an early stage saw their market value take a healthy upward turn.

Since the heady days of the dotcom boom, there has come the almost inevitable dotcom fallout. New media spend was decimated and digital divisions disbanded. For advertisers, who never really quite got to grips with how to use the medium anyway, the failure of many online business and lack of obvious revenue have contributed to a general lack of interest in the web. The PPA recently said that low demand from advertisers is preventing the widespread adoption of auditing for the online media industry. A bit of a chicken and egg situation, given that the survey also revealed that 84% of advertisers are in favour in the widespread adoption of audits, but only 20% currently audit certain websites.

Meanwhile, a survey from internet optimists Jupiter MMXI claims that the return on investment from online advertising is at least 25-35% greater than most marketers believe. The benefits are not to be found in a direct marketing type analysis, but rather in terms of branding and awareness, says Jupiter.

Unfortunately it seems that the public is embracing the internet just as advertisers are losing interest. The ITC has found that web access in the UK has risen from 24% in 1999 to 34% last year.

A study from Starcom IP reports that consumers feel increasingly comfortable using the internet on a daily basis, but are disappointed at the lack of sophistication and invention displayed by advertisers. The collapse of the dotcom boom and the widely-reported decline in banner click-through rates have led the online advertising market to grow at a slower rate than expected, leading to profits warnings from leading dotcom companies like Yahoo!. Echoing Jupiter, Starcom says obsession with the click-through rates has made the industry blind to the opportunity represented by the continued growth of internet usage.