Will interactive media succeed in capturing advertisers’ interest? Research suggests the answer is "not yet." A new survey of advertising agency media executives reveals that current spending on and experience with interactive advertising are much less extensive than the hype around this fashionable topic would suggest.

Notwithstanding the subscription revenues of current consumer online services, the pot of gold expected to drive industry development is advertising. Capturing a mere 2 percent of 1994 measured media spending in the United States would translate to $2.8 billion, or more than four times the 1994 revenues of all consumer online services combined.

Limited spending

In 1994, only $135 million was spent on advertising on interactive media, most of it on online services and CD-ROMs. This poor showing occurred in spite of significant trial by advertising agencies (Exhibit 1), which exhibited strong awareness of interactive media and believed them relevant to the goods and services they marketed. The low level of spending also belies the perceived superiority in targeting and building relationships with attractive audiences that these new vehicles have over more traditional media (Exhibit 2).

Mixed experiences

One reason for this low level of spending is that actual experience with interactive media has been poor. Most trials have left participants either neutral or dissatisfied; few have created real impact. Many leading advertisers are consequently unlikely to use these media again in the near term. Perhaps as a result, advertising media professionals are divided as to the ultimate impact of interactive media on the industry, with nearly half those surveyed singing the revolutionary anthem, the other half more reserved in their judgment.

What advertisers need

Has all the furore over interactive advertising been hype? If not, what will it take for these new media to break open the opportunity for advertisers that the business community and popular press believe exists?

At the least, the nature of the information, entertainment, and advertising content of interactive multimedia needs to evolve to become sufficiently compelling. At present, no one has cracked content. Without a compelling range of interactive experiences, it will be impossible to generate the clear consumer usage patterns and strong demographics that advertisers need before committing significant sums of money.