The advent of display advertising has been something less than auspicious. Advertisers complain about poor ad campaign performance from weak viewability and clickthrough rates. At best, consumers don't trust display ads, and at worst, they find them positively annoying. Consider these metrics from Hubspot:
• On average, a display ad has a clickthrough rate of 0.06 percent, and viewability rates remain weak
• Less than 3 percent of consumers find display ads relevant, and millennials ignore display ads even more than television commercials
• According to Unbounce, 98 percent of display ads lose money
• 33 percent of internet users describe display ads as "intolerable," and 28 percent actively attempt to hide their online activities from advertisers
What Is Display Advertising?
Carly Stec, Senior Content Strategist for Hubspot, defines display advertising as follows:
"In the simplest of terms, display advertising refers to the use of ads – from text to video to audio – on a website. Display advertisements serve as a way for businesses to monetize their website traffic, as advertisers pay to have their promotion displayed alongside the content on the page."
That sounds reasonably straightforward, and potentially lucrative for business. So, why have display campaigns gotten off to such a rocky start? The reasons are several, but chief among them is that ads lacked context.
Perhaps because the central business relationship was between the advertiser and the website owner, little, if any, attention was paid to the relationship between the content on the website page and the content in the ad. Savvy consumers noted the glaring disconnect and responded with nearly universal displeasure and avoidance, which came to be known as "banner blindness."
Nature Abhors a Vacuum
What appeared an insoluble problem to some marketers looked like opportunity to others. Forward-leaning marketers recognized the problems inherent in the way display ads were deployed and reacted with potentially game-changing new strategies, including the following five:
1. Rising Above a Whisper
Some advertisers reasoned that, if their ads were invisible in the context of the page on which they appeared, they could gain traction with ads that were larger or created with rich media. This led to the emergence of bigger display ads, including some which virtually took over the home page. Others who understood the power of rich media began to launch video display ads.
And some, like Hewlett Packard, went even further, creating fully functional interactive ads that allowed users to configure a new car or play an online game within the ad. Although this approach was not completely successful (with some arguing it increased the use of ad blockers), it did signal advertisers' intention to experiment with innovative strategies.
2. The Problem Is Relevance
Advertisers began to realize that the central problem was not how loudly they spoke. It was that ineffective display ads didn't adequately respond to specific user needs, so they began focusing on relevance, using collected data to more effectively target consumers.
Many began using the Google Display Network (an addendum to Adwords) to target ads based on demographics (like age and gender), behavior (including search engine queries) and geographic data. The result: consumers see ads that answer their questions, solve their problems and help them make more informed purchasing decisions, increasing conversions and sales.
3. Going Native
Enhancing relevance also means positioning ads alongside relevant content – hence the rise of native marketing. With native, advertisers choose websites the content on which is more closely aligned with the content of their ads. This also means your audience in already engaged about the subject of your ad.
An ad for a new car, for example, will get more traction when it appears alongside an article about car resale value (as opposed to one that discusses vehicle traffic death statistics). This approach works; employing native advertising strategies has, on average, boosted clickthrough rates by more than tenfold (from 0.1% to over 1.0%).
4. Hitching Your Wagon to a Star: Remarketing
Remarketing involves displaying ads on other websites to visitors who've left your site. The ads directly relate to what those visitors saw or did on your site (like products they viewed or shopping carts they abandoned). The strategy is remarkably useful: a recent analysis from CMO, for example, found that remarketing typically boosted ad response rates by more than 400 percent and that consumers who see remarketing ads are 70 percent more likely to convert.
Understanding the power of remarketing, an increasing number of advertisers are now applying the strategy to display advertising, and with similarly positive results. Because they're more relevant, display ads that take advantage of remarketing enjoy higher clickthrough rates and return on investment (ROI).
5. The Emergence of Programmatic Real-time Buying
The early problems with display advertising meant that publishers were left with a lot of banner space they couldn't sell. To make the strategy more attractive to advertisers, advertising networks began selling space on multiple websites with similar content. In this way, an advertiser selling cars could buy space on many relevant sites, obviating the need to make separate deals with each one.
To sweeten the proposition, networks began selling space based on target audience demographics and geographic data, improving relevance and effectiveness. They also introduced real-time bidding (RTB) to sell space for which advertisers weren't willing to pay prevailing rates.
These changes gave advertisers more control over their spending, improved the relevance of their ads and produced stronger results. This is arguably among the reasons that more than half of all display ad space in 2015 was purchased programmatically (at a total value of $15 billion).
The early history of display advertising is one punctuated with marketing challenges and, for many marketers, less than stellar results. Increasingly, however, marketing thought leaders are taking the time to understand the contextual problems others have missed and fixing those problems to create relevance, grow their brands, boost conversions and enhance their ROI.
Bonus: Learn how to optimize display ads with the right tools