First I was reading through an article in the paper which quoted David Halprin from eMarketer saying: "Internet advertising has the potential to be the most effective form of advertising the world has ever known." Pretty bold stuff on its own, but quite amusing when compared with the second article I read 5 minutes later from Nielsen/Netratings declaring that banners are dead. They noted that click-through-rates (CTR) have dropped from their heady days of 2.5% in the mid-90s to a miserable 0.36% this year. So, what's happening here? How can two of the industry's reference experts have such differing forecasts for the future of on-line advertising? Or, is it possible that all of these "experts" are missing the point, by focussing on Internet Advertising, which has become a small and inseparable component of the more critical Internet Marketing.

A hint of the answer to these questions appeared in still another recent report, this one published by AdKnowledge, the central ad serving network that delivers the millions of on-line ads which supposedly don't work. Over the 6-month period of its "Online Advertising Report"; AdKnowledge tagged Internet users who were exposed to banners ads and then watched their behaviours. They found that the people who saw an ad, but never clicked, made more conversions to on-line sales/actions than the people who had clicked on the banners. This result reinforces that the return on investment (ROI) for on-line advertising is likely much higher than it seems simply from click-through-rates. Steve Findley, V.P. of AdKnoweldge, summed it up by claiming that "advertisers that focus only on clicks or even post-click conversions may miss vitally important effects of advertising campaigns."

This element of accountability (being able to develop concrete metrics such as cost-per-customer acquired) is the real benefit to come from on-line marketing. By working together as a unified industry, traditional and new media, we are finally able to offer clients effective campaigns with exact measurements.

Banner ads are just a small part of on-line marketing, as are opt-in emails, rich media, search engines and WAP. Like cinema ads, buses and post cards, these are tools, which have their uses, but to be most effective they must be integrated into the rest of the campaign. Integrating on-line marketing allows us to move beyond measuring just recall & recognition, and start measuring the real drivers of our clients' businesses: Preference, Sales and Loyalty. Internet Marketing allows each client for the first time the ability to measure how effective each ad is to each customer. Maybe their banners are only getting a 0.2% CTR, which on first glance seems horrible compared to a great DM that garners 9% response rate. But, thanks to the integration of on-line and off-line marketing we can finally measure to see what the cost per sale/customer is for each of those campaigns, and it may just be that 10,000 new customers can be had at a 0.2%CTR for the same campaign cost as 2,000 new customers via the 9% DM.

Only by taking this important step towards intelligent customer-by-customer analysis can we really judge which media will work best for each client & campaign. That may not be as sexy as a headline in The Industry Standard declaring that "Banners are Dead" but it will certainly do our clients, and our industry better justice.

Faced with this new insight last night I instantly wanted to hammer out this month's column so I could share it with all of you. Too bad I live so far from work and had to wait until this morning…