JohnT,
When I wrote that I saw more opportunity for ad revenue, I meant for the networks or the internet sites (which in turn would pay the networks. the legal websites anyway). But you raise a very interesting issue about internet ads, and I hope that you don’t mind receiving some of these initial thoughts I had after reading your post.
For starters, I agree that traditional internet advertisements are mostly ineffective for all the reasons that you mentioned. Few people were clicking on the banners.
However, in the past few years we have seen the rise of a new kind of internet ad; they have popped up on, say, facebook and google. Google keeps track of what a user searches for, and facebook (and especially facebook applications) keeps track of everything a member may do on that site; both sites then have algorithms programmed to deliver ads to users based on your personal characteristics. I may be wrong on the details of internet collection but either way the system works (I am constantly shocked at how often I see banners on my gmail account that actually promote products/services that I am actually interest in… I don’t click on them everyday, mind you, but I will admit that I sometimes do click on them). However privacy laws may work, I realize that I am nonetheless being targeted by the very products or services that appear to be appropriate for me. If they are doing that right, then they have solved a large problem with television ads.
As we know, the problem with television advertising is that the ads reach a very large audience (10 million viewers, for example) but not necessarily a very large segment of the intended target audience (females aged 18-25, for example). Advertising over the internet using Google’s method, for example, allows advertisers to get right to their target audience. Whether or not that target audience member trains him/herself not to click on the banner is not much practically different than whether the television audiences member trains him/herself to change the channel at commercials.
I am not an engineer, but is it possible that sometime in the not too distant future sites like Hulu will be able to target ads for their viewers? If so, I think that advertisers would be very interested in such an idea.