Advertising Works on the Web

In 1997, Web usability guru Jakob Nielsen wrote a memorable essay entitled "Why Advertising Doesn't Work on the Web." In the article, Nielsen suggested that Web advertising was popular because old-media advertisers didn't understand how the Web worked. Nielsen suggested that once micropayments (pay-per-view at the page level) took hold, Web advertising would be "irrelevant for the success of the Web."

Fortunately for Web content providers, Nielsen's article wasn't just wrong, but spectacularly wrong.

Advertising Works on the Web

Web advertising has always had a lot of potential. Since the early days of banner advertising, some companies have been using Web advertising effectively.

In the last few years, though, advertisers have started to discover just how effective Web advertising can be. Web advertising revenues surged 30 percent in 2005, to an estimated $12.5 billion. This jump reflects the return on investment that marketers are getting with online advertising.

Many advertisers are finding online advertising more measurable and manageable than other forms of advertising. This has resulted in record Web ad spending over the last few quarters. 2005 Q4 revenues totaled $3.6 billion; making it the second consecutive quarter to surpass the $3 billion mark and the highest quarter reported. Fourth quarter revenues represent a 35 percent increase over the same period in 2004 and a 17 percent increase over Q3 of 2005.