How Does Online Advertising Become Better Than Advertising On TV?


Photo: Deutsche Bank AG via Flickr

With more than a third of media consumption now online, great progress has been made in moving traditional content channels onto the Internet. But while we have come a long way from the days of the first banner ad, the reality is that online display advertising has yet to unseat the king of brand advertising – TV. Marketers remain hesitant to move dollars online, where customers are spending more and more time.  While consumers spend roughly 36% of their time online, Fortune 500 CMOs’ digital (display and search) spend is only about 10-12% of their overall budget (North American Technographics® Benchmark Survey, Q2 2010).

In fact, this year, we will see the largest gap between audience and advertisers ever – to the tune of $50 billion dollars. To begin closing that gap and taking advantage of the momentum that online advertising possesses, we need to take advantage of new devices, sharper analytics, and forward thinking about measurement to create a “better than TV” inflection point.

New devices create new relationships with advertising

With tablet use becoming more widespread, for example, we’re presented with the opportunity to create experiences for a device where advertising becomes as engaging and indistinguishable from content.  Advertising here will have TV’s impact coupled with the actionable nature of online. 

Moreover, these “aware” devices know the time of day, who’s reading what story, and even what type of story is being read.  They privately and securely know where you are and where you have been.  This level of awareness redefines analytics and personalisation – in advertising, just as in any other type of content – further aligning advertisers with the right audience at the right time and in the right place.   Tablets also allow for innovate ad placements, along with rich HD experiences, and interactive “touch, shake, twist, and turn” experiences which lift the brand off the screen and into your life.

The industry needs better analytics

Over the next three years, the industry will need to move to a form of modern reach/frequency model that illustrates the impact that online advertising has on driving consumer preference and engagement. This will involve paying greater attention to consumers earlier on.  We’ll also need to begin our research into performance earlier and have the capacity to repeat it reliably.  Thus standardized, this more scientific experimentation will allow us to better understand ad views versus conversions to really move the needle. 

Measurement needs to shift from hindsight to foresight

Today, the online ad industry still operates on a “tell me what happened” mentality when it comes to online advertising, an inheritance from the early days of the Internet.  We measure impressions and clickthrough rates (CTR), and 90% of our ad optimization is based on CTR.  But by now, we know that the number of impressions doesn’t mean much to advertisers.  CTR don’t fully correlate with online sales, offline sales, nor brand awareness for most campaigns.  And, most importantly, we are told that the metrics that our advertisers really want to optimise are based on new categories such trustworthiness, offline sales, or some other measurement which relates directly to their brand. 

What we should be doing is measuring multiple points to tell an advertiser what works and what doesn’t.  A holistic solution, this will allow us to opine on “why,” telling them what works best for “x campaign” or how it moves “y metric.”

As an industry, we’re ready to close that gap.  We have access to new form factors which allow us to build advertising that is content and content that is advertising.  We can capture the imagination of the consumer with rich, tactile, and emotive imagery before taking them down a measurable journey all the way to action – right there at their fingertips.  Yahoo! was instrumental in creating standards for the Web and now, we’ll be working with the IAB on the next-generation of standards for in-app ads, and in the process, we’ll further distinguish our advantages over TV advertising. 

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at