Advertising follows eyeballs to the Internet

MONTREAL - Advertising follows eyeballs, and they've been moving to the Internet.

The reach of online advertising is growing as consumers, especially younger ones, move online for content and consumption.

But how to gauge the success of online ads?

It's not just about measuring mouse clicks that result in purchases via the Internet, said Andrew Lipsman of U.S.-based ComScore, which studies ways the Internet is used.

"If you are trying to measure your ad campaign in clicks, you are completely missing the impact," said Lipsman, senior manager.

The bigger impact is building a product's brand online and affecting consumers' behaviour offline, he said from Chicago.

The average number of online ads viewed by an Internet user in the United States is 1,762 a month, Lipsman said. This number doesn't include any online ads seen on mobile phones. No Canadian statistics were available from ComScore.

"People are beginning to understand how these online ad exposures do have a brand-building impact. And as they begin to see the value in that and get out of the mindset it's all about direct response and purchasing something online right now, more dollars will begin to shift online."

Yahoo, AOL and MSN and social networking site MySpace are market leaders in serving up display ads, Lipsman said.

Google's share of this market is smaller, he said.

But Google has "a much larger share of the paid search (ad) market" - these are ads that appear along with websites on a page of search results.

Meanwhile, online advertising has raised concerns about consumers' privacy.

The Canadian Internet Policy and Public Interest Clinic, based at the University of Ottawa, has asked the federal privacy commissioner to investigate the practice of online profiling of Internet users for targeted advertising. It says its research suggests that some Canadian Internet service providers may be doing this or preparing to do so.

"We question whether such collection and use of personal data is necessary for advertising purposes, whether subscribers have consented to such uses of their personal data, and whether the practice is ... appropriate in the circumstances," the organization said in a recent letter to Privacy Commissioner Jennifer Stoddart.

In the United States, Congress is asking 33 cable, phone and Internet companies to provide information on how they collect data and track consumers' web habits for targeted advertising. Among the companies that are part of the inquiry are AOL, AT&T, Verizon, Google and Microsoft.

Some American Internet service providers already have caused controversy for doing trials that monitored all aspects of customers' Internet activity, said Eric Goldman of Santa Clara University in California's Silicon Valley.

"In theory, they could know everything you would see on your screen," said Goldman, assistant professor and director of the university's High Tech Law Institute.

There's doubt about whether such inspection is legally permissible, "at least without some fairly clear consent on the part of the users," said Goldman.

It's difficult to say how widespread that kind of deep monitoring is, he added.

The Interactive Advertising Bureau of Canada says online advertising revenues climbed to just more than $1.2 billion in 2007.

There are various ways that consumers can be targeted with online ads, said bureau president Paula Gignac. "Click-stream analysis," for example, collects and analyzes data about the pages that users visit.

As for consumers' privacy concerns, Gignac said: "If we make those eyeballs less trusting, they won't come to your site and then they can't be reached by advertisers."

Gignac's organization is predicting online revenue will increase to $1.5 billion this year.

Marc Tellier, president and CEO of Yellow Pages Group, said yellowpages.ca has been online for 10 years and reaches 41 per cent of all Canadian web users in a given month, or about 9.7 million people monthly.

"That positions us as the eighth most-visited (online) destination in Canada," Tellier said. "We're looking at $214 million in Internet revenue annualized. By 2010, online should reach about 20 per cent of our revenues. It's a growing category."

But Tellier noted that consumers are still using Yellow Pages print directories.

General Motors, meanwhile, has said it plans to shift half of its $3-billion advertising budget to digital marketing.

Wal-Mart Stores has launched an online classified advertising site, a move that opens a broader range of shopping options to Wal-Mart's Internet customers.