• by Dave Morgan , Featured Contributor, January 25, 2007

It's hard not to get caught up in the online ad market's optimistic frenzy these days. Online ad spending continues to grow at an extraordinary rate. More and more of the largest brand marketers, who were slow to the party, are embracing online campaigns. Offline competition continues to take body blows as they struggle with audience fragmentation and newly forceful demands from their advertisers for more accountability and a better return on investment.

However, as well as the online ad market is generally developing, we also need to remain acutely aware of the many areas where we are not doing a very good job. That's the reminder that I got loud and clear earlier this week responding to an audience question while participating on a panel at the DLD (Digital, Life, Design) conference in Munich, a thought-provoking gathering of folks involved in digital media, design and the arts that was a stopover for many of the folks headed to Davos and the World Economic Forum later in the week.

The multipart question was: When will the online advertising industry actually deliver on its outstanding promise of the last decade to present the right ad to the right person at the right time? When will we finally deliver a consumer experience where the vast majority of ads that we deliver are meaningful, and not junk and clutter on Web pages?

The questioner was someone who knows something about the consumer's online experience -- Walt Mossberg, personal technology columnist for The Wall Street Journal. His point was that the online ad industry is always touting its extraordinary technical capabilities to target relevant ads -- a point that I had just been emphasizing -- but from his perspective, we are still giving consumers a terrible experience when it comes to the vast majority of ads that we place on their Web pages.

It doesn't take much research to recognize that he is right. You could ask almost anyone you know who surfs the Web whether or not they think that the Web ads they see are relevant, or you could look at the research that's been done in this area. According to a 2005 Roper Public Affairs study, only 21% of people said that advertising adds to their enjoyment of the Internet, versus 47% for magazines and 47% for newspapers. Whether we want to believe it or not, we have to accept the implied criticism as valid. Consider:

The online ad industry has been investing billions of dollars to create systems to improve the relevance of ads -- but in fact, the total volume of ads that are truly relevant to users is probably less than 20% of all of the ads that are served, and most of that is targeted to editorial adjacency. Outside of search, which represents less than 2% of all Web pages viewed, precision targeting, where ads are truly targeted by user data or user behaviors, probably represents only a few percentage points of all online ads.

We have too many ads on most of our pages. Too many Web sites still look like Times Square at night: lots of crazy colored ads all shouting at once. While many of the top content sites have dramatically improved in this area, far too many sites are addicted to just adding another ad unit every time that they have a new revenue opportunity. We have to learn how to say no more, and make pricing better reflect share of voice and share of audience.

While rich media has certainly made many of the ads that consumers see more robust, they also have a long way to go. Ads with images that move constantly and distract the eye are annoying to consumers, and most rich-media ads can be so much more informative than they are today. Clearly, one of the reasons that consumers like ads in magazines and newspapers is that both of those media have done a great job presenting valuable information in their ad spaces.

I am confident that we will resolve these issues. To put things in perspective, we as an industry were almost left for dead only five years ago. Only three years ago, you couldn't use the word "optimistic" to describe how most folks in the industry felt. We've come a long way since then. And I think that several key trends over the next few years will bring solutions to these problems.

More marketers and advertisers embracing the Web will mean a wider variety of ads designed specifically for different kinds of people, Web sites and content. Just increasing the available pool of ads that we have to deliver will make a big difference in improving the ad experience for consumers.

Technology will start to fade into the background. I am sure that when radio and television were new, much of the focus was on the technology that powered them, from the transmission towers to the tubes in the sets. Over time, the technology disappeared into the background as the listening and viewing experience became better and more central to the consumer experience. That will happen here as well. Someday soon, we as consumers will look back and find it hard to believe all of the time and attention we gave to issues like browsers, media player plug-ins and powering up.

Creative units will dramatically improve. This is coming. I know that it is slow, but it is happening. Online ads in general are getting better.

When will we get to the point that consumers will find online ads as enjoyable as magazine advertising? I believe that this may happen as soon as the end of 2008. Why? Because I see so much progress going on behind the scenes in the core organization and processes of how we plan, create, deliver, measure and optimize online media and advertising; I see so much new competition coming into this space; and, most important, I see so much focus now on the consumer experience, that I am confident that this will happen more quickly than most would probably expect.