What’s New is Old Again

I've been in the online space for awhile and have seen my fair share of different iterations on online advertising: display, search, email; CPM, CPA, CPC; pop-ups, pop-unders; superstitials, interstitials; pre-rolls, mid-rolls, post-rolls; agencies, networks; widgets, sponsorships; takeovers, floaters and more.  What has struck me now that I am running a non-traditional ad network is that online display advertising has not really changed in many years.  Buyers attempt to find the highest justifiable volume of acceptable inventory to bill against, creatives continue to work to CTR standards set by mortgage ads, and publishers pimp their remnant to scores of networks (including ours).  Maybe the recession will be the driver to kill this play-it-safe beast of a format.  The fact is that  only one third of online advertising is focused on brand-building; yet the display industry continues to pander to Madison Avenue mores.  Online display advertising will continue to feel the crunch if it attempts to justify itself against the “tv metrics online” ROI approach of the late nineties – maybe it ought to simply die off and come back as search did post-AltaVista/Excite.

Lack of standards – there has been a lack of standards for – as well as a proliferation of – measurement tools for display ads.  Hence, display ads are treated like ad budget detritus; they don’t get meaningful pieces of large branded advertisers in segments like CPG (Consumer Packaged Goods).  Remember that in 60 years of television, only five metrics have emerged to define the ad business, yet in only 13 years of online advertising, 13 types of performance metrics have sprung up like weeds.

Volume is increasing, eCPMs are shrinking – yet in this economy 80% of all display ads are indirectly served thru ad networks and the value of those ads is cut in half.  At some point, there will be an asymptotic point where eCPM levels settle – at the lowest point ever and continue to be meaningless pieces of overall ad budgets.  So, when do we get to the inevitable question around how to add real value to online display ads?

Take off the dunce cap – click-through rates are still primarily used to measure performance, yet we are all looking for more meaningful measures. A bunch of widget companies enable engagement tracking in addition to larger players like Microsoft's Atlas division. Atlas even measures the downstream impact of display impressions on search CTR and conversion to sale.  Or maybe the solution is to apply measurements like television's QRatio, or to apply performance marketing capabilities inside display ads.  Whatever it is, all of us denizens of the online world should adopt a standard.  Although search marketing is incredibly easy to measure methinks that brand advertising needs to push for clear measures and value.  Performance marketing is different than brand advertising.

Performance marketing is clearly a measurable return.  When you have intent mapped to advertising, abrah cadabrah, you can manage your return on ad spend.  Yet with only 7% of the $300 billion US media business being spent online yet 17% of all media consumed is online, its time to upgrade display advertising.  The display ad is dead.  Long live the display ad.