NEW MEDIA: SPOTLIGHT ON ONLINE AD FORMATS - Is innovation enough to keep ad revenue rising on the net?

Are novelty rich-media ads more or less irritating than banners?

If you've spent even a moderate amount of time on the internet recently, the chances are you've been getting pretty sick of 3. Especially a chunky grey graphic of the numeral inlaid with a constantly mutating spiky splash of colour that constantly glides from one end of the spectrum to the other. Because this online overlay from Hutchison 3G is arguably one of the most in-your-face internet campaigns ever from a mainstream advertiser.

Hutchison hasn't been the only advertiser attempting to make a real song and dance on the internet recently. Over the past few weeks - and indeed across the first quarter of this year as a whole - a whole range of advertisers has been using new advertising formats in an uncompromisingly eye-catching way.

They've been using overlays that drift unannounced on to the page and sometimes feature rich-media video streaming. They've been using semi-transparent overlays and attempts at visual witticisms, such as the peel over - the overlay that makes it look as if the corner of the page you've been looking at has flopped forward, revealing an ad lurking behind.

It all seems a bit exciting at first glance - a lot more interesting than dull old banners at any rate. And widespread use of all these new formats coincides with a real surge in online revenues - up at least 40 per cent year on year over the first quarter.

Strangely, perhaps, the industry has seemed rather apologetic about all of this. Let's not get too carried away, some observers seem to be saying.

Perhaps, just perhaps, some of these new formats (especially the way they have been used) are rather flimsy gimmicks. And maybe, by the very intrusiveness of their nature, they are more likely to turn off potential audiences than to push the medium into new heights of both creativity and effectiveness.

Seb Royce, the creative director of Glue London, would certainly advise caution. He argues we should pay just as much attention to new opportunities in banner advertising as its formats continue to evolve. Bigger sizes - skyscrapers and super rectangles - offer bigger canvases for bigger ideas. Crucially, also, the file sizes allowable on banners have increased, allowing you to do more complex things.

He adds: "With things such as overlays, people don't mind if they are relevant, but it's true that floating ads have had a certain amount of bad press. Some of that is down to bad creative - and unfortunately there's still plenty of that around - and some of it is down to bad placement. Also, Flash video streaming overlays look better in demos than they do in real life. They can piss people off, especially if they can't get rid of them."

They certainly can. Especially as some advertisers have been employing horrible methods of tricking people into clicking. Royce argues that bigger banner formats are actually more audience-friendly - for instance, you can bring content from the advertiser site rather than redirecting people. With the bigger formats you can do more with branding campaigns. "We are interested with what you can do with streamed video overlays and we do use them but you have to do it carefully. The difference between the web and conventional media is that when you're on the web you're usually on a mission, whether it's finding something out or buying something. And if that mission is interrupted by something irrelevant it can be very annoying," he says.

But surely media owners are likely to be unequivocally in favour of what we've been seeing over the first quarter of this year? John Doyle, Granada's director of interactive and online sales, certainly agrees that standard banner formats seem to be in decline. He comments: "What we've been seeing makes for a more stimulating environment. Users can see these things as a distraction but if it is entertaining and relevant then it needn't be seen as a pest. It's up to us to make sure that ads are appropriate for their environment."

On the other hand, all media owners are probably rather grateful for the attractive margins that these new overlays and pop-ups offer them. The use of rich media in online advertising increased across the whole of 2002 - in the first quarter it accounted for 17 per cent of all online advertising but by the fourth quarter that figure had risen to 25 per cent. Meanwhile, prices paid for run-of-the mill banner campaigns are roughly a tenth of what they were a couple of years back. Prices for rich-media access have rocketed - and they're still rising. That's where the revenue growth is for media owners.

Carl White, the managing director of Value Click Europe, says that's obviously welcome, but he too adds caveats: "It's true that some formats allow for more creativity but formats are only part of the issue. The issue is really about meeting the requirements of the advertiser. For some advertisers, pop-unders, for instance, might be more effective because they don't annoy people so much."

And that's pretty much echoed by Ajaz Ahmed, the chairman of AKQA. He states: "There's always the danger that our industry gets more excited about different advertising formats and jargon buzzwords than it does ideas. A format is useless if it contains a poor idea or content that's not compelling. There will always be new formats and right now we're seeing formats within formats, but what the industry really needs is great ideas and creativity. The client perspective is always consistent now that they are treating digital just like any other medium - clients want a return on their investment. It's only when an innovative format is combined with a great idea that it will provide the results that clients seek."