My wife and I were listening this morning to a local CBC radio story about a filmmaker who had invested very large sums in the production of short video clips intended for viewing online or on mobile devices. I was only half listening, so please excuse the lack of more precise details. The point is that he was quoted as being “hopeful” that an arrangement he had forged with Canadian ISP Sympatico would eventually pay dividends for him if his content drove higher viewer numbers that, in turn, drove higher ad revenues for Sympatico.

Good luck, my wife commented, adding that the nut of getting web content to pay is still, to a very large degree, yet to be reliably cracked. Besides adwords, what’s your play?

Well, for some time now, I’ve been hearing about the growth of internet advertising, especially its growth outside adwords. Our family breakfast discussion this morning was timely given a research report out of IDC just today that said, “Worldwide spending on Internet advertising will total $65.2 billion in 2008, which represents nearly 10% of all ad spending across all media.” The researchers went on to predict, “this share will reach 13.6% by 2011 as Internet ad spending grows to $106.6 billion worldwide.”

This is good news for our filmmaker and others seeking to monetise their content through advertising revenue. Still, IDC said, spending on display ads would not outstrip spending on adwords anytime soon, with display ads expected to account for only 20% of all online ad revenues, compared to fully 33% for adwords and just a shade ahead of the 19% share claimed by classified advertising.

This, I believe, is where internet advertising is missing the boat. And it’s a point I have not heard made by most of those talking about advertising on this medium.

Research consistently shows that as much as 80% of the purchase decision-making process takes place within one metre of the product itself; in other words, in the store aisle while the consumer is eyeballing her or his array or choices. At that critical stage, most advertising is but a dim memory.

The internet is the only place, outside of in-store or point-of-purchase advertising, where the opportunity to promote a product lives cheek-by-jowl with the ability to actually purchase the product. This incredibly powerful cohabitation of promotional message with the product itself is the very force behind the planet’s most successful e-commerce sites such as Amazon, but it is a force seemingly only dimly understood by too many of today’s online advertisers who fail to grasp that the internet is not just a medium, it’s also a marketplace.

Until these two elements come together — medium and marketplace — the full potential of internet advertising will not be realised and our local filmmaker will never become rich.

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