If you look at reports from early last year, online display was declared dead on arrival. But banners, long the bastard stepchild to search in the online marketing world, have come back. ComScore data show double-digit growth (total banner impressions across the web are up 23% from December 2008 to December 2009) and a Forrester report from the past summer projected 17% growth in display advertising over the next five years. Even newspapers shared the wealth: The New York Times announced that fourth-quarter digital advertising revenue rose nearly 11% year-over-year. At The Washington Post, display advertising was up 15% for the same period.
Where's the growth coming from?
Nielsen Online display-spending numbers show that categories such as web media (+20.8%), entertainment (+32.3%), consumer goods (+13.8%), health (+13.9%), and B-to-B (+14.7%) all experienced double-digit spending growth year over year. Telecom (cellphone spend benefited all media) grew 7.2%. Pullbacks were from the recessionary trauma cases, such as retail (-12.0%) and auto (-16.1%). Financial services, which account for the largest spend and volume of online display, were flat in impressions (.3%) and slightly up in spend (+5.7%).
Those don't sound like direct-response advertisers -- and I thought the web was best-suited to them, thanks to its ability to measure click-through rates.
Over the past year, more marketers have been adopting metrics beyond the click-through rate, which has held online apart from other media. (Other media tends to be measured on an exposure rather than direct-response basis). The problem with this? Click behavior is scarce. The latest ComScore data indicate that a small percentage of internet users click display ads and those clicks are largely concentrated among certain demos that are often less desired by advertisers. Microsoft's Atlas division (in conjunction with ComScore) made a repeated push for online reach and frequency tools, which were seen as a bridge to traditional planning (read "TV") where the reach of a targeted audience multiplied by the number of exposures ties into a buying metric.
There have also been several moves to connect online ad exposure to offline action. Among them: ComScore with DunnhumbyUSA; Nielsen with its National Consumer Panel (a joint venture with IRI); X Plus One with its CPGconnect product with IRI; and Dynamic Logic, with an IRI partnership. Advertisers with sizeable display campaigns can determine the incremental sales lift attributable to online ads by working with these companies that try to marry online-ad-impression data to store-scanner data. ComScore made available the "view-through," a metric that has been discussed since the late '90s and measures online ad effectiveness outside of clicks. And even Google, the house that clicks built, announced that for its online display-ad network (AdSense), the click was not the appropriate effectiveness measure and that impact over time was a better gauge of performance.
I thought online was the most precise channel ever invented. Is that not true?
If we're talking in terms of the amount of data available as compared to other media, yes. But not all of that data is useful and many agencies are just not equipped to handle it efficiently. Online's ability to measure isn't bad if you think of other media, such as print, which counts "pass along" readers as equal to the people who actually bought the publication and assumes that each reader read each page, or TV, where most buys now include three days of time-delayed viewing and no account of fast-forwarding of ads. The point is that all media should be somewhat realistic and not overpromise on data that is clearly directional.
OK, so "traditional" advertisers are engaged in online. Do they actually buy through ad networks? Are those safe for brands? How do publishers feel about networks?
ComScore tracks 54 ad networks -- that's a lot of companies aggregating inventory and packaging it for advertisers. And recently many have tried to differentiate themselves by guaranteeing an advertiser's ad will be in an appropriate (non-compromising) context. And you'd be hard-pressed to find an agency that does not use networks to increase the efficiency and reach of buys.
That said, some publishers are eschewing them. Stalwarts such as ESPN and Turner have said they will not, under any circumstances, use networks. Other media brands have started their own "vertical networks": Time Inc., Martha Stewart, CBS Interactive and Forbes are among them. Context remains king -- which is why, for example, financial-services advertisers heavy up on buying finance-related inventory -- but there is a ton of non-contextual inventory out there and this is where networks excel, providing efficient reach of the broad demo targets advertisers crave.
What happened to behavioral targeting?
It's bigger than ever, but now often called "audience targeting." The idea is simple: If I know through data I have gathered from a cookie that someone is in the market to buy a car, why do I need to buy the inventory on Cars.com? Why not on nonamesite.com? Devoid of context, that cookie does not have as much value, but it certainly has more than running the ad "run of network."
Think of it this way: All media buying has typically been focused on audience: for example, you buy TV on basic demos, such as men 25 to 54. Online, people buy impressions. These are typically planned based on the idea of reaching a demo but in reality are not matched back to a particular demo. What the behavioral targeting companies have done is create value out of non-contextual inventory. They aggregate it and make assumptions about demography and purchase intent based on usage patterns.
Does this really work?
For direct response, absolutely. There's a ton of non-contextual inventory out there and if adding audience attributes increases the click-through rate, so be it. But you run into challenges when an advertiser isn't measuring on direct response and wants some kind of guarantee that those implied "audience" impressions actually reached men 25-to-54. For package-goods advertisers who are into creating a brand perception among a broad demo swath and moving goods offline, that's what counts.
Is technology commoditizing online advertising?
There is no turning back the forces of technology, and if technology can make online easier and more efficient for agencies to buy, then Madison Avenue needs to start thinking more like Wall Street. Maybe they will actually spend less time manipulating the numbers and more time on the creative (isn't the creative where agencies really should shine?) TV has continued to win out over online due to its superior creative qualities and ease of buying.
What can help publishers and agencies trapped in the tsunami of online inventory?
This was the year publishers pushed for larger, and more dynamic units -- but that also unleashed a bit of chaos due to the lack of standardization. Let's stop talking size and start talking creative, clutter and placement, the basics of any media. And while we're at it, publishers need to hire marketing technologists (yield-management experts) to model their inventory and use real-time bidding (RTB) to their advantage when they experience traffic surges their salespeople cannot handle. Meanwhile, agencies need to simplify and automate data processes that suck up way too much time.
What the heck is RTB and DSP?
It's alphabet soup in the online ad world these days and there are a lot of VCs slurping it up. DSP is Demand Side Platform, or basically an ad exchange from the advertiser's perspective: the demand portion of the business. Agencies such as WPP (through its B3 division), Publicis ( through its Vivaki Nerve Center) and Havas (through AdNetik) are all in the DSP business.
DBO is Dynamic Media Buying Optimization and refers to layering technology onto a media buy to increase its performance (companies such as Atlas, X Plus One and MediaMath) do this. RTB (Real Time Bidding) is when sellers of online media are able to put inventory into an exchange, have the impressions matched with audience attributes and buyers get instantaneous access to it. Several companies have made recent announcements that they have these capabilities (DoubleClick, AppNexus, X Plus One, Pubmatic, Invite Media and TriggIt among them). It's hard to find companies that will go on record that they are using RTB, but eBay (a client of AppNexus) was a notable exception. Advertisers and publishers are notoriously secretive about anything that can potentially give them a leg up on the competition.
Is there anything that online display advertising could learn from other media?
I've already made analogies with TV and print and now I will dare to make one with mobile, a true nascent area of media that may finally have its day in the sun this year. Ad effectiveness studies from both Dynamic Logic and Insight Express show that mobile banners, those lowly images that appear on tiny screens, have higher levels of recall and overall impact than online display ads, even if you factor out novelty. What does it prove? Provide content a consumer wants and have one ad unit associated with it, and the ad works. Simple as that.
|ABOUT THE AUTHOR|
Kathryn Koegel is the marketing practice lead at Primary Impact whitepapers on online display advertising and mobile marketing and can be found at www.primaryimpact.com/kathrynkoegel.