When will the internet advertisement model change?

A miniscule % of people see ads in ANY medium and not just Internet banner/video/text ads. I watch a lot of TV and read a lot of newspapers, but don't recall a single ad. I simply "zap" the channel with my remote the *moment* an ad breaks and completely ignore print ads. I also ignore a lot of digital ads. But when I was in the "hunt" for an air-conditioner , I remember paying attention to EVERY ad on internet, print, tv, radio I could so I could be aware of every brand / offer before I did my WOM research and bought one. Many of the ads on internet you ignore are not ignored by *everyone* and the entire internet economy KNOWS that including the advertiser. THEY have worked their metrics on the 0.1% range anyways. Plus, a very tiny % of all internet advertising is on CPM right now. Majority (90%+) is on "performance" meaning you pay per action (an action can be a click, visit, lead, registration, transaction or download). So why should you worry if you feel miniscule % see the ad? The advertiser is paying when some INTERACTS with the ad anyways. Besides, ad format innovation is MAXIMUM on the internet compared to any other medium. The recent IAB standards are evidence of that: http://www.iab.net/guidelines/508676/508767/displayguidelines A 10 sec TV spot on the other hand... is just that: a 10 sec tv spot. And it hasn't changed in 50 years. Likewise those newspaper ads and inserts are the same. But compare them to the ipad "iads" or even the contextual search ads on Google that harvest consumer "intent" (yes, these search ads are plain text ads, but they have a a billion $ technological innovation powering them, which you can't see). Publishers are also experimenting with "brand integration" which seamlessly merge with content and engage the user. I recently came across this mobile operator (Airtel) integrating a one click handset-ringtone (or "HelloTunes") integration with the site's music playlist. Its simple, yet innovative and non-intrusive. Check: http://gaana.com/#!/channels/airtel Even your simple banner ad which you ignore as a billion $ re-targeting/data/ ad-serving push behind it which is invisible to the naked eye. The next time you book an airline ticket on Expedia, you won't even remember that your decision is because of some display ad which has reached you 3 times the last 20 days. The ads you ignore on the internet are working. But you don't realize it.

Something has to change to deal with the ad fraud problem. http://www.clickz.com/clickz/news/2299698/fake-display-ad-impressions-comprise-30-of-all-online-traffic-study.  (Not only are a lot of people not looking at the ads, a lot of those looking at the ads aren't people.) Advertisers either have to adopt much more intrusive tracking to deal with fraud, or cut out some of the complex layers of adtech intermediaries. http://zgp.org/~dmarti/business/adtech-fraud/

If I get your question right, display ads won't get off the picture in the nearest future.We at Epom haven't really noticed any dicrease in profitability of display ad campaigns.  Of course, with the introduction of new technologies in terms of banners design, these now can attract more users' attention, if compared to the past practices.

Actually it HAS changed. Initially Google's ad marketplace were sold by an actual sales force under Tim Armstrong (formerly Adwords Premium). They would sell blocks of impressions the old fashioned way. The auction model as we know it now was invented by Kamangar and Veach and came about later. At the time was known as Adwords Select (launched in early 2002). For a while both programs ran in tandem. Google sunset Premium (I believe) a couple years later.

It will change soon. We as a industry will make switch from selling CPM to selling time spent with an ad. In that way we will get much closer to TV model (30 sec spots) and with that to online GRPs.