Online display ads are the red-headed freckled kid of interactive advertising; present but not quite understood even though last year 4.5 trillion ads were served and each of us was exposed to nearly a hundred ads per person each business day.
Marketers spent an estimated $5.9 billion in 2008 to spray and pray banners, skyscrapers, advergames, “ghost” ads and moving or animated images (the top five ad formats) across the Internet. Some hoped to provoke clicks and convert those clicks into sales. Yet many just hoped to expose passing web surfers to a brand image or brand impression in the hope of raising or extending awareness or priming the pump for later consideration or sales.
And while the metrics of direct response advertising is generally known there is still no real consensus around and the value and utility of display advertising other than the logical belief that what worked for a century in traditional media ought to work in digital media. And while we buy the logic, many of us still have the “banners suck” mantra at the forefront of our consciousness.
But rationally it makes sense. Images, sound, moving pictures and uber creativity ought to capture the attention and motivate consumers at least as well as short text ads served up by search engines. But the difference for leading display ad sellers like Yahoo, Facebook, Fox Interactive, Microsoft, AOL and Google is in the perception of value and the ability of marketers to target and measure campaigns. And while 9.5 percent of campaigns were “behaviorally” targeted using a variety of methods and measurements, most marketers don’t have faith that they can effectively and efficiently reach target audiences using online display advertising even in this environment where there is a glut of inventory at significantly discounted prices and a gaggle of ad networks peddling remnant inventory for as low as 40 cents per thousand.
The Online Publishers Association and ComScore, both seriously interested parties, did a study of 80 campaigns for 50 top brands which was tracked across the top 200 highly trafficked sites and concluded:
1. The 80-20 rule applies to clicks. Eighty percent of the clicks come from 20 percent of the people exposed to the ads. At very best only 1 in 5 ads draws a click whether that was the intention of the ad or not.
2. Displays Ads Prompt Search. Queries for terms exposed in display ads were searched 50% more often a week after exposure and 38% more often even 4 weeks after exposure. If you see something that intersects your interests or your personal wish list, you are more likely to search for it directly when you’re ready to buy. Direct and brand advertising interact synergistically online and offline.
3. Display Ads Drive Site Engagement. Those exposed to ads spent 34 minutes per unique visitor on the sites exposed. This is hard to believe in terms of the time spent on site and the amount of “lift”. Maybe it just measures the vagaries of site architecture and navigation.
4. Brand Exposure Bumps Up eCommerce. Those exposed to brand ads spent 7% more on average when they bought. This feels like advertising orthodoxy; exposure drives awareness, consideration and purchase and maybe added exposure convinces customers to trade up a little.
But whether you buy this data or not, the issue of buying, targeting and measuring still looms large for anyone seriously contemplating an online display campaign. Into this fray comes Shaukat Shamin, a Yahoo veteran with $6 million in venture money from Rembrandt Ventures, Onset Ventures, Reid Hoffman and SoftTech VC, and a brand spanking new display ad platform solution called Permuto.
Permuto purports to create tools for display advertisers similar to the Google Adwords toolbox which will enable targeting, price negotiating, clearance verification, reporting and more effective sales conversion from display ads. Shaukat has organized a network of about 100 eCommerce, comparison-shopping sites and bargain hunter sites that cookie prospective buyers based on the category, product and SKUs they look at online.
They observe, infer and assign an “ActiveShopper Score” to these individuals and then offer marketers the opportunity to follow and serve them display ads for the products they spent time with on a cost-per-click (CPC) basis. He claims this is different and better than existing "remarketing" solutions but I can't see how. You buy this service on a per-SKU basis and, so far, there are no packaged deals to be had for multiple product sets or categories and there is no product or category exclusivity available.
At this point v1 doesn’t offer sophisticated targeting options against an estimated reach of 70 million prospective customers, but “more is planned for the future.” Overtime the marketers adopting this tool will develop best practices and/or common understandings about how to leverage the built-in functionality to optimize behavioral targeting and cost efficient conversions.
Permuto doesn’t help if the goal of a display campaign is brand exposure or awareness in which case we’re still stuck trying to figure out how to buy, place, negotiate and prove that display ads work.