The internet may still seem like a "new" medium next to old-timers such as outdoor, TV and newspapers. It is certainly growing like a newcomer.
Web revenues show no signs of slowing and its share of media spend recently overtook that of radio.
But despite its meteoric rise, a considerable disparity remains between the size of the internet's audience and its overall share of revenue.
If the internet is so new, why does it now account for 20 per cent of all media hours? Research from the Internet Advertising Bureau places the web above magazines (8 per cent) and newspapers (11 per cent), and not far behind radio (30 per cent) in terms of media consumption.
Two in five internet users claim to spend less time watching television, and 23 per cent say they read fewer newspapers and magazines as a result of their internet use. In a typical five-day week, at least half of all Brits use the internet. Yet despite these figures, which are only set to increase alongside the growth of broadband in the UK (six million, half of the UK's internet homes, have broadband), online advertising only accounts for around 4 per cent of total media spend.
But although it's a relatively paltry share, the speed with which it has got there is remarkable. In less than ten years, the web has gone from nothing to a 4 per cent share, overtaking radio at the start of this year. Ad revenue grew by 60 per cent between 2003 and 2004. The industry average for other media is about 5 per cent.
Guy Phillipson, who left his position as Vodafone's advertising chief to become the IAB's new chief executive earlier this year, expects online to be a billion-pound medium by 2006.
"It's still going to grow healthily over the next few years because all roads lead to the internet - music downloads, TV through internet protocol, and so on," Phillipson says.
Andrew Walmsley, the co-founder of i-level, one of the online industry's largest media buyers, says: "It's natural there would be a gap. Marketers are going to follow where audiences go - there's bound to be a lag. Audiences will continue to grow rapidly."
Paul O'Donnell, OgilvyOne's chairman for Europe, the Middle East and Africa, isn't convinced the gap is as big as people think. The way online spend is measured, he says, means much of the money that goes into digital communications goes unnoticed.
"It's a common mistake to judge the amount of online media spend by analogy with conventional media - where companies pay large amounts of money to Rupert Murdoch to rent their customers' attention," he says.
"By contrast, if you're an online business - say Amazon, easyJet or eBay - you no longer need to go through an expensive intermediary to speak to your customers. Instead, you can e-mail them directly or wait for them to come to your website."
The money is still being spent, but on creation of content and services, not on distribution of messages. Whether or not the figures are telling us the whole story, there could be many reasons why online's share of revenue is lagging behind its usage.
Alison Reay, the former commercial director of Yahoo! UK, comments: "Revenue always follows the audience, but it can be a slow migration." Indeed, TV revenues took many years to catch up with radio after the small screen first entered our living rooms. "This is mainly due to three factors; financial planning cycles, commercial forces and the time it takes to educate the marketing community," she says.
Investment in media is often planned on an annual basis, she explains, which is why it takes time for revenue to respond to increased consumption.
"The huge leaps in investment year on year are testament to the success of the internet as an advertising platform," she says.
Walmsley says some of the reticence on the part of marketers to invest in online is about risk. "If you look at the FMCG sector, a lot of it is driven by launches," he points out. "The risk is colossal. If a launch doesn't work online, they've lost their one chance of launching a product."
Wayne Arnold, the managing director of the digital agency Profero, says there is still a lot of educating to do. "In traditional agencies, planners are still recommending TV, press and outdoor as the primary media, either because it's not in their interests to recommend online or because they don't know what it's capable of."
He adds: "Online still has a number of specialist elements to it. With a couple of phone calls you can spend significant amounts on something such as outdoor or TV, but it's hard to spend that online. You need more resources to spend big budgets online."
Both Walmsley and Andy Hobsbawm, the European chairman of Agency.com, take a more cynical view.
"One large contributing factor is, I believe, the vested interests of the established media and creative agencies," Hobsbawm says. "As the telecoms analyst David Isenberg once noted: 'The milk of disruptive innovation doesn't flow from cash cows.' The change from old to new media involves cannibalising an existing revenue stream, which breeds strong resistance to such change."
Walmsley says that the demand for online ad campaigns is there, but that it's not being met by the older, more traditional creative agencies. "A lot of agencies just aren't up to taking on the task," he suggests. "One of the conditional factors for growth is finding the people to do it. There is a shortage of people - agencies need to spend money on training, recruiting people from outside the industry and training them up. Agencies just don't do that."
No matter how you look at the numbers, there's no doubt that online is growing and major advertisers are ploughing more and more marketing pounds into the medium. Over the past 12 months, a number of studies showing how online can work effectively with other media have emerged. This is key. It emphasises the importance of integrated planning, and that online is rarely the sole medium in an effective campaign.
Take a study by Dynamic Logic in the US for the launch of the McDonald's chicken flatbread sandwich, which looked at the effect of spending 13 per cent of the marketing budget on online communications. Product awareness increased by 8.3 per cent after the budget was shifted.
Another study by the Microsoft portal MSN found that it costs 23 per cent more to encourage a consumer purchase by using TV alone. By shifting 7 per cent of the budget to the web, it was possible to achieve purchase intent 9 per cent higher than that produced by a purely TV and print campaign.
Jamie Galloway, the director of digital media at COI Communications, one of the largest advertisers in the UK, says: "COI Communications' online advertising budget in the latest financial year was £8,163,000. This has increased substantially over the past few years and a greater share of our overall media spend goes online."
So what does online offer COI that it can't get elsewhere? "A combination of branding, call-to-action and the ability for the user to click and go through to a specific website where up-to-date information is available and where they can even respond. All of this in a well-targeted and cost-effective medium," Galloway says.
Andy Duncan was previously the BBC's head of new media, before joining Channel 4 as its chief executive in July 2004. Since his arrival, new media has been placed at the heart of the channel's marketing strategy.
In May this year, Duncan created the position of head of marketing, new media, which went to Tracy Blacher.
One of the first things Blacher did was to appoint Profero as the online agency for Channel 4. She says that Channel 4's investment in online marketing will go from very little to something significant over the next year, and that she hopes to invest more online than the 4 per cent industry average. "We know that between 10am and 7pm, online eclipses any other medium," Blacher says. "It will form a key part of our media plans."
Levi's has long invested in online advertising, and its digital activities have increased year on year. Helen Venge, Levi's Europe's digital marketing manager, says: "Online is extremely important, not just because our audience is so often online, but because the medium can be used in many different ways. You can take consumers from interest all the way through to loyalty. No other channel gives you a whole path on which to talk to consumers. It's an end-to-end experience."
Jim Stengel, the global marketing chief of Procter & Gamble, the world's largest advertiser, said in a recent press interview that his company is investing more of its $6 billion annual marketing budget in new media "because that is where the consumer is".
When people like Stengel make statements like that, the upward trajectory of online advertising seems inevitable. But how can internet players give it a helping hand?
Emma Jenkins, Procter & Gamble's head of interactive marketing, says the online industry should use metrics that the offline world can use and understand. "If we talk about the internet using a different language, we risk trading in a currency that doesn't resonate," she warns.
Phillipson has put the establishment of an industry-wide media measurement system for online at the top of his agenda for the IAB. "One of the things we're working on is to have an agreed industry currency - a Barb for online - that would help brands measure coverage and frequency. That would get online on more media plans."
Reay says content is king, and that Yahoo!'s emphasis will be to continue developing content strong enough to keep users on their sites for longer.
There is also a responsibility for the internet players to sell the medium better and educate the market. Chrys Philalithes, the European marketing director at the search marketing company Miva (formerly Espotting), says: "When you couple rising consumption with cost-effectiveness and accountability, it becomes a powerful tool. Internet models such as pay-per-click and pay-per-call dismantle Leverhulme's age-old dilemma 'half of my advertising budget is wasted - the problem is, I don't know which half'. The internet industry needs to keep pushing these benefits."
Venge adds: "It's important to have people in place who speak the client's language, who can explain something like the internet or mobile in a way that the client will understand. Knowledge is not enough and digital is complicated. So you need people in place to explain why it's a good idea."
Walmsley is characteristically bullish about the pushing for parity question.
"I don't think we need to," he says. "The demand out there is colossal. The big obstacle to growth is agencies who don't want to play. But soon, the risk of not doing online will overtake the risk of doing it."