Data on individuals were used by marketers and advertisers long before the Internet. The great appeal of the Internet as an advertising medium is the ability to target ads to consumers much more precisely than can be done through other media. Targeted advertising on the Internet is based on developing an understanding of consumers. Using information from a variety of sources, including sometimes the past history of Internet browsing, Internet advertisers can deliver ads to consumers that are most useful to them, and avoid delivering those that are of no interest. Both consumers and advertisers benefit from better targeting of advertising messages, which is made possible by the use of personal information. More information can facilitate more precise targeting. All of this serves consumers well.

In 1997, the first year that marketers began to think of the Web as an advertising medium, U.S. Internet advertisers spent $940 million; a year later, that number had almost doubled, and some put it as high as $4 billion in 1999. Forecasts on what lies ahead are astronomical as much as $33 billion. Industry observers are shy to predict just what the future of advertising will look like, but they agree that the pace and enormity of changes that have come about in the first phase of online advertising will only accelerate in the future.

It should be noted, however, that targeting on the Web is only one option, and it typically includes a price hike. "If the increase in price for targeted ads does not yield value, then targeting may not be worth the expense. Careful planners will test both targeted and untargeted opportunities to determine the right fit for a given product.

The Internet is a multidimensional total environment for doing marketing. Traditional marketing tactics might include running a series of television or magazine ads and then posting an in-store display ad to remind potential customers about the product. With the Internet, you can seamlessly move the customer from awareness, to temptation, to transaction. Thus, a Web surfer intrigued by an ad for a camera can click on the ad and be taken to a Web site where she can learn more about the product and purchase it. The entire process from ad to purchase might take less than five minutes.

In addition to streamlining the flow of information and transactions, Web technology can also help advertisers meet two of the industry's biggest challenges. Targeting customers who are likely to be interested in what is being sold and measuring the effectiveness of an ad campaign. Improved technology promises to solve the age-old problem and that is half of the money spent on advertising is wasted, but no one knows which half.

Advertising revenue on the internet next year is expected to be US$80 billion. This is clearly a very rapidly growing market, and at the same time, Microsoft's current revenues from its software are being eroded to alternatives of open-source operating systems, applications on the internet such as Google's and Yahoo's online applications. Advertising and how it is done is a topic that that has a vast array of subtopics, the trick is to find the type of advertising that suites your business.