Online display advertising has become the bucket for all forms of terrible advertising. Pop-ups, interstitials, banner ads, Flash ads, and countless others litter our Web sites in lame attempts to generate revenue. We continue to develop new ad formats without any thought as to who is buying them or why. It is time for publishers to stop sitting on the sidelines while the needs of our customers evolve beyond us. We have allowed a lack of clarity to exist for far too long.

As we enter an age of government bailouts and buyouts for investment banks, mortgage companies and auto manufacturers, one begins to wonder who the next contestant will be in the Uncle Sam Handout Sweepstakes. While the Internet juggernaut is showing signs of slowed growth, it is hard to imagine the kind of meltdown the financial industry has experienced in recent months taking a similar path in our industry — or is it?

How many times have you heard the term “User Path Analysis” being mentioned as something you should conduct for your site? If you have anything to do with managing a Web site or Web analytics, chances are, you have considered it… or maybe gone down that path! It does, thus, seem intuitive to want to analyze this user path — to determine the most common path users take before a desired outcome (a purchase, a request for information, etc.). This information can then be used to modify site navigation or copy to push visitors down that trusted, successful path. This approach, however, is not as efficient as it sounds.

I don’t mean to sound like a pessimist or set off alarms for the sake of hearing a bell ring, but we have a core value problem that will only get worse, not better, based on the tracks the online sales train is running. Two weeks ago in this OPI offering, David Koretz pointed to the dramatic disparity between the spending allocated to online advertising versus the time consumers spend on Web sites. Why does this disparity exist? One simple answer: Online inventory is cheaper, so advertisers don’t have to spend as much as they do with other media. And I can’t think of a worse label for a medium to bear than “cheap.”

In previous articles I created a hypothetical example to illustrate how to make a compelling engagement story work in an advertising discussion. I have also done the same with CondeNet. To cite an actual case study, I will turn to a company I worked for several years ago, CNET Networks. Now part of CBS Interactive, the company has a rich history of telling powerful engagement stories that lead to actionable insight for advertisers. I spoke recently with Dave Morris, CBS Interactive Chief Client Officer (now there’s a great title!), who outlined how the company is using site data to provide advertisers with actionable site intelligence.

It is our fault. The current growth issues facing online advertising are problems that we created and have let persist. There is no question that the economy has been completely mismanaged. There is no denying the $14 trillion in U.S. debt, and there is no sugarcoating the 40% drop in the Dow over the last 12 months that wiped out trillions in shareholder value. Yet, much as we would like to believe, the growth challenges in online advertising have little to do with the recent economic struggles.

For those of you old enough to have watched the ’70’s television classic, “WKRP in Cincinnati,” you will remember the straight-laced, bumbling and insecure newsman from the lowest-rated radio station in Ohio. In one episode, he is having a discussion with a man named Steel in which Steel makes the comment that he feels a man’s name says a lot about who he is. He then asks the geeky, balding newsman what is name is. The reply: “Les. Les Nessman.” In the same way that “Steel” was a fitting name for the steroid-enhanced deliveryman, “Les” perfectly described the diminutive and incompetent news director.

The heart of what’s wrong with our industry can be found beating at our industry conferences. This is where we stand on stages; beat our chests as self-anointed media pioneers celebrating our own kind, while missing the entire big picture.

The interactive dimension of the Web continues to deepen and broaden. Social media, professional communities, user-generated content, games, widgets, video — all attest to richer levels of audience engagement. How do publishers make the most of this heightened interactivity?

While the online advertising industry struggles, one sector is purposely restraining its growth. Online video advertising could be a $20 billion juggernaut virtually overnight. The television networks just need to be willing to eat their own young. And it has nothing to do with ad formats. Our industry has this perverse need to “innovate” even when the best solution already exists. We have all suffered through countless arguments about pre-rolls versus post-rolls, the correct length of ads, and how to integrate interactivity into ads. These arguments overlook the simplest fact of video advertising: the current format works.