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Part two in a series. For part one, head here. Produced in partnership with Newco Shift.

So here we are. Twenty years into the internet, and we’re still telling ourselves the same lie: Ad dollars will inevitably follow eyeballs, and soon enough, the internet will get its fair share of those dollars, mostly from that old, dying medium called Television. But up till now, we’ve not managed to make anything on the internet that compares with the phenomenally effective medium of Television for reaching the mass public.

The reason? Advertising on the internet is mainly about performance — what’s called direct marketing. And advertising on TV is mainly about brand. And brand matters, a lot.

This concept is not new. It was put to paper nearly a hundred years ago: first touched upon by the English economist Joan Robinson, then nailed down the same year by Harvard economist Edward Hastings Chamberlin: companies sell in two ways: through direct sales (in that era, that meant salesmen) and through marketing (newspaper ads, poster boys). Today, in advertising, we still use the same divide: there is brand advertising (“Just do it,”) and direct advertising (“Get $10 off your first purchase.”)

These are, and have been, two entirely distinct streams of money for anyone on the receiving end of an advertisers’ order. To an internet startup, for all intents and purposes, they are two different clients. My friend Noah Brier calls them demand fulfillment (“what kind of camera should I buy?”) and demand creation (“hrmm, you know, good point. Maybe I should get more into photography.”)

For more a decade now, the big internet advertising opportunity has been just around the corner. The eyeballs are on the internet, the thinking went, so the money would follow. Hundreds, if not thousands, of startups were funded based on that opportunity. And indeed, perhaps the advertising money would have followed, had the internet built any tools to capture the rest of the money — the brand money. But more on that later.

What are the real-world ramifications of this miscalculation on the internet industry? Let us turn to the bible of the biz, Mary Meeker’s annual slideshow Internet Trends. What I call The Slide first appeared in her presentation in 2006:

Some variation of this slide has appeared in her presentation every year since. Here’s 2008:

I rather like this version, but it was not to last. By 2010 it had taken its permanent form:

2012:

2014:

Until recently, internet-based companies have focused almost entirely on demand fulfillment. Even though the early days of the internet advertising, first ushered in by Wired with what we call today the banner, were focused on brand advertising, very quickly thereafter people started caring about the clicks on those ads, and began tracking them through to purchase. And with that, the internet threw out brand advertising and instead focused on direct advertising — in particular targeted advertising, the kind that can track clicks, landing pages, conversions, and of course you, the consumer. Google, the first internet startup to create an advertising business at scale, was built on direct advertising: you type in your desire (a desire that already exists) and Google — and its advertisers — help you fulfill that desire. Type “what do I want?” into Google and well, it’s useless.

This difference is not academic. Let’s apply common sense for a moment. The biggest brands spend the most money. Thus, the biggest brands and their large budgets make up the lion’s share of the advertising market. Ad economists such as Byron Sharp and Andrew Ehrenberg have repeatedly pointed out that for the biggest brands, everyone is a potential customer. Coke doesn’t need to target. Crest doesn’t need to target. The brands that spend the most money don’t need to target down to the last bit of data. For them, most of the internet’s supposed appeal — improved data and targeting — is often useless. The only thing that could appeal to the internet is its lower price, but when you’re trying to reach everyone, TV is still cheaper. Oh, and the creative space — the thirty second spot — crushes a 1.7 second blip on Facebook.

The money that has come to the internet is the direct money. We took it from print — magazines and newspapers — and a little bit of radio. We never made a dent in television. Because television spending is a totally different type of spending. It is the equivalent of capturing the car market, and thinking you’ve captured the automotive market, as if trucks don’t exist. Surely those truck buyers will buy cars soon enough.

Analyzing a database covering 30 years and over 700 ad campaigns, ad researchers Peter Field and Les Binet point out that the mix between brand spending and direct spending has remained unchanged over time, even as the internet has cannibalized print:

Field and Binet find that “TV remains the channel of choice” for brand advertising. “Indeed, no other channel comes close,” they write.

The internet, of course, isn’t 100 percent advertising funded. We’ve always had e-commerce, and now we are seeing the rise of companies like Airbnb and Uber that draw revenue from places other than advertising. But the big players in media — Facebook and Google most notably, as well as Twitter, Yahoo/Verizon and Snapchat — all remain nearly 100% ad-funded. And Amazon has become a major player in advertising as well.

We also need to give the big tech platforms some credit. After eight years of misadventures, Google acquired YouTube in 2006. This was their first step in a belated realization that TV wasn’t going away. Their progress has been intermittent since. Facebook, too, has seen the truth — and this realization is driving much of their current video strategy. Yet as we will see in a subsequent installment in this series, these steps are still halting and misguided. And the analysts still seem to be clinging to the dream. Here is Meeker’s 2017 deck:

It’s an opportunity, to be sure. But whether the internet will take advantage of it remains to be proven.