While a significant number of companies have invested in internet advertising and clearly digital media continue to grow in popularity, a significant segment of organisations is still uncertain about internet advertising efficiency. The purpose of this study is to gain insights into the perceptions of both advertised firms and advertising agencies of the internet as an advertising medium in order to identify the factors that inhibit or reinforce the integration of the new medium into their strategies and to identify future trends. One hundred and 24 managers participated in this study and their responses indicate that currently internet advertising is perceived as a questionable and ineffective marketing channel. However, in the short run, marketers and agencies are willing to exploit the benefits of internet advertising.