Ezra Klein comments on the ineffectiveness of online advertising:
What always interests me about this observation is the implication that offline advertising is similarly worthless. There are certain types of advertising that get treated as content: People scan the newspaper for department-store sales, for instance. But an ad for Tide? Or Intel? You notice it, but you don't care about it. But everyone placed those ads so everyone kept placing those ads. And hey, having your brand noticed was worth something.
Online, however, that "not caring" has become too undeniable. The tiny handful of click-throughs, most of them accidental, are almost an insult to the advertiser. The right comparison here is old medical techniques that were widely used until information arrived showing them worthless. Advertising worked for everyone so long as the limited supply made it look really high-value to advertisers and the absence of information let them fool themselves into believing it really effective. But at least with online advertising, there's so much supply, and so much proof that it's not very effective, that the prices paid by advertisers are coming into line with the amount of attention people pay to their advertisements. And that's grim news for industries that rely on advertising.
Italics mine. This is a little unfair to the Mad Men of the world and their clients. They've always known perfectly well that advertising doesn't always work. "I know I waste half the money I spend on advertising," said the founder of Wanamaker's department store. "The problem is, I don't know which half." But marketing firms really do have plenty of ways of measuring the effectiveness of advertising, and the fact is that most traditional advertising does have an impact. (In many cases, too big an impact for my taste, in fact.)
But that's largely because it's intrusive. In newspapers and magazines it takes up a lot of space. On TV and radio it interrupts the programs you're watching. Junk mail catches your eye with lots of coupons. The print/TV equivalent of direct clickthroughs might be just as low as it is for web advertising, but in addition these ads make an impression that, over the medium and long term, affects how people shop.
So the web's big problem isn't clickthroughs. Of course they're low. The problem is that clickthroughs are all it has. There's a limit to how intrusive you can make ads on the web. Too big and there's no room for actual content. Too small and they're easily ignorable. Too flashy and people complain. Too annoying and people install ad blockers. "Impressions" is a meaningful concept for most advertising, and that adds to the direct effect it has. On the web, it's close to meaningless.
But someone's going to figure this out. I'm not sure how (which puts me in good company), but I'll bet that it doesn't end up being display ads, which is an attempt to replicate what works in print. It'll be something else. Maybe clever inline hyperlinks. Maybe keyword driven stuff. Maybe something no one's even thought of yet. But something.