Online Advertising - Banner Ads Dominate Online Advertising Formats, Ad Networks Offer Reach, Convenience For Advertisers, Online Advertising Revenue

Although the Internet economy experienced a general slowdown in 2000, there was a record number of online ad impressions—more than 172 billion—in the fourth quarter of that year, according to a report by AdRelevance, a subsidiary of Jupiter Media Metrix. Online ad impressions in December 2000 rose 21 percent over November to reach more than 65 billion ads viewed. The report predicted that Internet users in the United States would view 610 ad impressions per day in 2001. By 2005 the number was projected to reach 950 per day.

What is the purpose of online advertising? According to a Myers Report cited in the February 28, 2001 issue of eMarketer, some 85 percent of advertising and marketing companies in the United States believed the most important aspect of online advertising was to drive traffic to Web sites. The other principal reason cited for using online advertising was brand building and related opportunities for branding and sponsorship.

The same report also asked ad agency executives and marketers what obstacles prevented them from increasing their expenditures for online advertising. The major obstacles cited included budget limitations, low click-through rates, high cost-per-impression (CPM), inadequate research, difficulties in measuring return-on-investment (ROI), and a lack of faith in the Web's branding abilities. Other reasons given for not spending more on online advertising included lack of measurement standards, low conversion rates, market fragmentation, and bandwidth limitations.