Also see -> Business: Advertising

It seems that 2003 was a banner year for Internet advertising... so was 2004, 2005 and the trend shows no signs of stopping.

Well, perhaps banner is not the right word... leaderboard ads at 726X90 are much bigger than banners and they showed the most growth in the last quarter of 2003.

According to eMarketer, as a percentage of overall advertising budgets, the percentage allocated to online advertising continues to grow, in fact that percentage is expected to double from 6% in 2006 to more than 12% in 2011 where of the projected $316 billion 2011 total media spend, $41 billion will be spent online. Furthermore, while growing at a rate of approximately 14% from 2007, according to TNS Media Intelligence, 2008 looks to be the year that Internet advertising spending outpaces radio in regards to advertising spending.

As a segment of online marketing in which to focus, paid search and display ads will garner the largest budgets accounting for approximately 60% of all online advertising while from 2007 to 2011, the following two marketing formats are projected to realize the greatest percentage increases: Rich Media/Video (approximately 38%) and Mobile (approximately 400%).

According to DoubleClick and Nielsen /NetRatings, there was a 49 percent increase in ad volume throughout the year, culminating in more than 200 billion impressions in the fourth quarter.

Not only were there more online ads, they got larger. Leaderboard ads, sized at 728x90, registered a more than 900 percent increase throughout 2003, while button-sized ads (88x31) experienced a 58 percent decline.

Many large rectangles and skyscraper ads proved popular with businesses spending money for online ads, with growth that ranged from 42 percent to 262.3 percent. The once-popular standard banner size — 468x60 — measured a 12.6 percent decline from Q1 to Q4, and square pop-ups (250x250) plunged 25 percent.

Rich media usage, ads that use flash to float across the text or noises to draw attention, increased 42 percent over the course of 2003 — growing from 27.8 percent of ad impressions served in Q1 to 39.7 percent in Q4 — yet only 12 percent of advertisers are using the enhanced technology. Rich media captured the largest portion of the animation-using advertisers' portfolios during the third quarter of the year. However, with more ads in the market, response rates suffered.

Ad click-through rates were a disappointment in the fourth quarter. They averaged .62 percent for the year — for every 1,000 impressions, 6 clicks result. Rich media responses declined from 2.15 percent in Q1 to 1.24 percent in Q4. The report suggested that the decline in click-throughs is likely a result of the increased ad volume.

It seems logical that an increase in ads would result in an increase in response, unless the ads are so obnoxious that customers are turned off by the experience.

Can it be true that no one in the advertising world realizes that consumers are more than a little weary of ads that blast them with noise or flashing lights, block the content, cause their browsers to freeze and crash or any of the other annoying behaviors that seem to be popular online. People are avoiding ads that are rude and "in your face".

When online consumers click less, the advertiser's response seem to be to make the ads even more annoying. Is it surprising that click through rates are not improving? Would any responsible print magazine or book publisher glue an ad over a page and make the reader remove it before they could read the text underneath?

At some point the people who spend money for ad campaigns are going to register the fact that more people respond to targeted ads that appeal to the buyer's interest. We'll all hope that that revelation comes soon with the success of Overture, Google and other targeted text ads on many user friendly sites.

On a brighter note, E-mail marketing crested through the end of the year, proving that despite rising spam rates, government legislation, and now rumors of payment proposals, the mail gets through. DoubleClick's Q4 2003 e-mail survey revealed that deliverability, open rates and click-through rates all improved.

Data Courtesy of CyberAtlas