More evidence that online advertising is a waste of money

Last year, in the USA alone, advertisers “invested” some $21bn in online advertising. No wonder we are in an economic mess – most of that money is being thrown away since almost no-one is looking at online adverts.

Banner advertising has long been known to attract few people; current click-through rates on banner adverts are less than a quarter of a percent. In other words you have to show the advert to mroe than 400 people in order to get one person to click on it. And with conversion rates from such adverts running at less than 1%, it means you need to have more than 40,000 views of an advert to generate one sale….!

Now, a new study of social networking users shows that they aren’t interested in adverts either. Only 13% of people using social networks pays any attention to the advertising in the first place, with even fewer acting on it. Furthermore, in spite of all the hype and claims that video would come to the rescue of advertisers, this study also revealed that video advertising attracts even fewer people.

Data on online engagement also shows another interesting feature. MySpace users stay an average of only 10 minutes on the site; a year ago it was 25 minutes. What’s happened in the year in between to affect this? A dramatic increase in advertising.

Social networks are seeking ways of making money and advertising has been a long-hoped-for solution. But as advertising increases, users show their clear disapproval. That reduces the money that the social networking sites can make, because their offering to the advertisers is weaker.

What the latest research shows, however, is that if the advert is precisely targeted there is much more engagement. Six out of ten people would look at an advertisement if they are already using an ecommerce site with a view to buying the type of product which the advertiser is trying to sell.That doesn’t mean they would buy it, of course, but the chances are obviously much higher.

So, if you are trying to advertise your products and services online it suggests that the targeting of your advert is much more important than it ever was in the offline world. But there again, you never knew in the offline world of newspapers, Yellow Pages, radio and TV, what your real return was on advertising. Thankfully, online we now have some accurate data – and it seems, as many people have suggested, advertising is a serious waste of money.

Remember, advertising is an interruption – an unwanted one at that. Online, it is much easier to rid ourselves of the interruptions and so the value of advertising falls even further. Ask yourself this question: what is it that I am looking for online? if your answer is “information” or “advice” or some such word, then the chances are that’s what your potential customers are looking for too – and so it’s a big clue as to how you can engage with them. If however, your answer to the question was “I’m looking for adverts” – then congratulate yourself for being a really unusual human being…..! There aren’t many people like you…!

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Graham Jones
Graham Jones is an Internet Psychologist who studies the way people use the online world, in particular how people engage with businesses. He uses this knowledge to help companies improve their online connections to their customers and potential customers and offers consultancy, workshops, masterclasses and webinars. He also speaks regularly at conferences and business events. Graham is an award-winning writer and the author of 32 books, several of which are about various aspects of the Internet. For more information connect with me on Google+
Graham Jones

@grahamjones

Graham Jones is an Internet Psychologist, professional speaker and author of 32 books who helps businesses understand the online behaviour of their customers
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