Web Advertising Coming of Age

Mar 5, 2014

Credit Ivelin Radkov / fotolia.com

The internet can be a great tool for advertising, but, as with all new forms of advertising, it takes time to master the potential benefits. 

When we get old we are suspicious of new things. Since I’m old, I was suspicious of advertising on the Internet.

As an advertising medium, though, the Internet grows by double digits annually. Last year advertisers spent about $60 billion on the Internet.

Am I still suspicious? Suspicious, no. Wary, yes. And concerned for the number of advertisers who spend billions on the Internet just because it’s there.

In time, smart advertisers have learned that the Internet is a more effective medium for some product categories than others.

In a recent Harvard Business Review, Itamar Simonson and Emanuel Rosen wrote that consumer purchase decisions are made on a combination of three factors: buyers' prior preferences and beliefs, information from advertisers, and input from other people. The greater people rely on product information from one of these sources, the less they use the others.

The authors cite regular purchases such as milk on which buyers depend on prior purchases and beliefs. For toothbrushes they might depend more on the company’s information. On brand X of an electronic gizmo, they may depend completely on input from other users, in which case the Internet is a bonanza.

With each new medium, it takes advertisers time to learn how and when to use it effectively. As they do, suspicions ebb, and advertising becomes more cost-efficient.

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