House Ads Continue to Clutter Sites
By David Martin, Marc Ryan

Getting web surfers to pay attention to a banner ad is much like locating a needle in a haystack. In today's web universe, marketers are faced with the competition of thousands of advertisers and billions of ad impressions. It should then be to advertisers' chagrin that in-house advertising continues to hold a significant presence in the online advertising world.

House ads have accounted for a substantial percentage of Internet advertising over the first half of 2001. In January, a record 35 percent of all impressions were attributed to site publisher self-promotions. That number dropped by March but increased at the start of the second quarter, only to descend back down to its present state of 24 percent.

Despite the abundance of house ads, paid online advertising impressions increased by 53 percent during the first half, from around 39 billion in January to over 60 billion in June. While that increase certainly bodes well for the ad market, a higher volume doesn't necessarily mean more ad dollars. Cost-per-action deals and heavy discounting on rate card prices have rendered even huge impressions purchases minimally lucrative for publishers.

Assuming that the ad market is generating zero revenue growth in its current state, a complimentary inverse decay in effective CPM must occur for impressions to be on the rise. With the effectiveness of Internet advertising in question, web advertisers face a buyers' market and have the ability to negotiate higher impression levels for less money. The end result of this is a higher volume of ads, and thus a higher level of competition for the single banner.

Given this drop in confidence and increase in the size of the proverbial haystack, sites should be doing everything to ensure that their clients' ads are visible. A proliferation of house ads on a site can have a deleterious effect on a paid advertiser's return on investment, as web ads are less effective when buried amongst many others; therefore it is up to site publishers to minimize page clutter to satisfy clients. Many sites, however, maintain a high rate of both house ads and page clutter.

The above chart is an index of site ad clutter, or the average number of ads on a page, and house ad percentages. These numbers are aggregated into website genres and indexed relative to each other. The baseline of 100 indicates the Internet average for both site clutter and house ads. If a genre is above this line in either category, that means its sites are above the industry average.

Sites with an above average index of house advertising and a below average index of clutter are flooding their few ad slots with self-promotion. Sites with below average house advertising and above average clutter are selling lots of ad space. Portals, business and finance sites, search engines, home and garden, and travel sites appear to be doing better than others because they are placing fewer house ads and have a greater number of ad slots, implying that they are selling more ad space. Sports and recreation, movies and television, and kids and family sites all appear to be doing poorly in these respects, as they have fewer ad slots per page and more house ads.

There may be no happy median between the two points, however, as both advertisers and sites benefit from different states. A site benefits from high clutter and low house ads, where they are selling loads of ad space. An advertiser benefits from low clutter, as there is less to detract from their paid ads.

In the current economy, where revenue-hungry sites must prove the effectiveness of Internet ads, the solution for web sites must favor the advertiser: reduce the amount of house ads in order to cut back on the number of ad elements on a given page. Cutting back on both in-house promotion and clutter will put the focus on paying customers' ads, increasing the effects of branding by raising recognition.

A reduction in house advertising as well as page-level clutter will not only make the average web surfer very happy, it will increase the chances that individuals will pay attention to paid ads. Advertisers control the future of the online ad market, and its up to the publishers to accommodate. If sites want to spin hay into gold, they'll have to reduce the size of their stack.