*****Fast Forward to 2013*****
A study by eBay Research Labs economists Thomas Blake, Chris Nosko, and Steve Tadelis — analyzed eBay sales after shutting down purchases of search ads on Google and elsewhere, while maintaining a control set of regions where search ads continued unchanged. Their findings suggest that many paid ads generate virtually no increase in sales, and even for ones that do, the sales benefits are far eclipsed by the cost of the ads themselves.
Barely anyone clicks on banner ads anymore
2009: With the recent historic news that the UK's advertising industry now spends more online than on print and TV comes a reasonably authoritative report from Comscore that 'barely anyone clicks on banner ads anymore'. The findings are breathtaking;
"The number of people online who click display ads has dropped 50% in less than two years, and only 8% of internet users account for 85% of all clicks, according to the most recent "Natural Born Clickers"
In 2006 academics reached this conclusion a while back, as far back as 2006 but Techcrunch picked it up earlier this year here. Their research is based on the analysis of large datasets from Youtube, Flickr and others and concluded that the current model is unlikely to survive, principally due to lack of trust. Forrester predicted this scenario as early as 2002.
Isn't it interesting that banner ads are really broadcasts. They don't speak with a human voice or meet a specific need. Despite all the warning signs, brands still broadcast while consumers connect and they continue to 'preach' to people whose attention is focused elsewhere. So the £1.75 billion size of the online ad market is a total waste of money.
So where's it going? There's a glimpse of the future of advertising here - Pick 'n' mix business.