How much impact is the Internet really having on advertising and marketing? Is it just another emerging niche medium with some peculiar creative capabilities and constraints? Or might it transform consumer marketing in the same way that network television revolutionized consumer culture and commercial practice four or five decades ago?

Interviews with marketers reveal that few believe the Internet will change their approach to advertising. Most see it as little more than a complement to traditional marketing practices, and don’t expect it to reduce expenditure on broadcast and print media or change the form, pricing, or delivery of advertisements. Their view is probably a reaction to the early hype about the Internet and the World Wide Web, which created unrealistic short-term expectations among marketers and frustration with the inadequacies of the delivery technologies among consumers.

We take a contrary view. We believe that Internet advertising will account for a growing proportion of overall advertising expenditure. Moreover, advertising—and marketing in general—will adopt practices first developed or deployed on the Internet. As the technology improves, the impact of Internet advertising will increase and become easier to measure, and the gap between this new precise, interactive marketing capability and conventional "fuzzy" passive...