Despite all the hype about digital ads, advertising dollars spent on the Internet last year totaled $2.6 billion—behind newspapers, television, and radio, but just ahead of billboards. “It has to do with how many people are online,” says Newhouse’s Falkner. “If I estimate high and say 110 million people are online in the United States, that is still roughly 40 percent of the country. That’s it. What percentage of the United States has access to television? 99.8 percent. Advertisers are interested in reaching as many people as possible, as often as they can afford to.”
      Advertisers use the web in several ways, not all entirely successful, Falkner says. There are destination sites, such as Wal-Mart’s, where people go either for information or to buy something. “When web sites first came out, it was, ‘Here’s our information. Oh did you want to order something? Forgot about that,’” Falkner says. “Now most of them realize that people are not necessarily looking just for information, but at some point might like to order something.”
      Probably the most familiar form of Internet advertising is the banner ad, which usually sits across the top of a web page. Despite garnering the most advertising dollars on the Internet last year, banner ads are in trouble. “Everybody loves to hate them,” Falkner says. “Ninety-nine percent of banner ads do not get clicked on. Half the people don’t even look at them. You know they’re there, you know they’re at the top of the page. So what do you do? Just ignore the top of the page.” Advertisers have responded by putting banners in the middle of pages, and by adding animation or music to the ads. Daughter windows, commonly known as pop-up ads, are another alternative. A small window opens up on the user’s screen when the banner is clicked, leaving the main window untouched. “Advertisers have always recognized there’s clutter on the screen, so the question was how to break through,” Falkner says. “They started with the banner ads when there wasn’t banner advertising. Now banner ads are the clutter, so they are coming up with these wonderful animated video pop-up ads.”
      Sponsorships are expected to surpass banner ads this year, Falkner says. A company’s logo is placed in a prime spot on a page, such as the search key. “It gives you some control over editorial placement,” she says. “It’s the same concept as a garden advertiser wanting to be placed across from the gardening column in a magazine. They pay more for that, because that’s where people’s eyes are going.” Another method becoming more popular with advertisers is opt-in e-mail. “I go to an advertiser’s web site because I’m interested, and it says if I subscribe to its newsletter, the advertiser will send me stuff,” Falkner says. “Advertisers are starting to use the Internet to build these relationships with people, the same way they can if they send direct mail.” Setting up and managing a list of some 75,000 subscribers is no easy task, but advertisers seem to be up to the challenge. “That’s where a lot of the dollars are headed now,” Falkner says.

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