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Online ads face change

DO you click through?

That is the funda-mental question facing the future of online advertising, as click-through rates fall and ad revenue plunges at most content sites around the Web.

It is also the question that a lot of advertisers and agencies must be mulling over right now.

The most recent statistics show that click-through rates are down to between one-tenth and two-tenths of 1 percent. Clearly with this kind of return, advertisers are questioning their return on investment.

While this is a global issue, the situation in Australia is even more perilous due to the much smaller pool of advert-ising funding available. A recent research report estimates that about $10 of online advertising is spent on each member of our population, compar-ed with $84 per person in the USA and $21 per person in Europe. In Australia, of that money, more than 90 per cent goes to the top 50 sites.

The online advertising also suffers due to its own measurement of success, or metrics in the industry jargon.

Most advertisers measure their investment in terms of “eyeballs” in the short term, rather than sales activity in the medium to long term.

In many ways it is what happens beyond the first click that counts and the people who are critical of online advertising fail to take into account the bottom-line effect.

For there has always been a fundamental disconnect between those people who see online advertisements as brand-building expend-iture and those who want a direct response in terms of the click-through rate – which can be easily measured. Most advert-isements do not get instant results, and it is hard to see why Web ads should be any different.

Advertisers will have to reassess their online advertising goals.

Increasingly the branding function of online ads will take precedence. Online campaigns will be closely integrated with television and print advertising, building on existing brand recognition.

It’s time we moved beyond the click-through to assess online advert-ising as part of an overall business strategy.

n Richard Keeves is managing director of Internet Bus-iness Corporation Ltd.

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