A look at AdSense/AdWords

Google created a new kind of online advertising by focusing on pure text ads and eschewing the online rage of the times - banner ads, flash-based animations, pop-ups, etc. Web users loved these ads since they were unobtrusive and let them focus on, well, the web page. However, banner ads have recently found favor and according to a recent report on <> they enjoy a much better VTR (view through rate - link) than text based ads.

I marketing parlance, a user has to go through an entire spectrum of states in his mind before he actually makes the purchase. This is sometimes called the AIDA spectrum - Awareness, Interest, Desire, Action. Google's ads are focused on the last A - "Action" - correpsonding to the O " in the SFO (Search - Find - Obtain) spectrum.

A survey last year revealed that users spent 4% of their time online while online ads accounted only for 1.5 % of all ad expenditure. Why the disparity? One reason could be that traditional marketers are still to find the comfort level with online advertising, they burned their fingers during the dot com days. Another could be that the business world is obsessed with the "O" or the "A" (depending on whether you are the click and mortar or brick and mortar types) parts only. They haven't found a mechanism to push through the other parts of the agenda - building awareness, fostering interest, and igniting desire, which form a large part of the advertising in traditional media.