July 12, 2012

Display's Dismal Dysfunction

For years here at Ad Contrarian global headquarters, we have been questioning the marketing industry's delusional enthusiasm for online display advertising. Despite consumers' ongoing indifference, and the pitiful performance of this form of advertising, marketers continue to pour billions of dollars into this black hole.*

There are naive clients who insist on throwing their money away on display ads despite the admonitions of responsible agencies. And there are agencies who continue to hustle these ads to clients with a combination of digital jive talk and misleading data.

Finally, there are some in the industry who are getting fed up with the deceptive "metrics" and hype, and are starting to see that the emperor has no clicks. An article from Reuters recently laid out the case for the dysfunctional state of the display advertising industry.
  • Display ad prices have dropped about 50% since the dot-com boom. 
  • Last week, Microsoft had to write down essentially all of its $6.3 billion investment in display ad network aQuantive. Reuters says: "Microsoft's spectacular capitulation is the latest admission of failure on display advertising." 
  • Facebook is desperately attempting to justify its IPO price by flooding the market with display ad inventory, further deflating prices. 
  • ValueClick has lost half its value since 2007. 
  • In 1998, Yahoo was getting a CPM of $25 for banner ads. By the end of 2011, that had dropped to $11.50. Yahoo, too, is worth about half what it was worth in 2007. 
  • Despite the promise of pinpoint targeting, it looks like display is becoming the province of the exact opposite type of advertiser -- the tonnage direct marketer who used to buy the 2 am TV inventory. One industry veteran calls display "...a ghetto for bad direct-response.
  • Display advertising has become so devalued that according to one industry insider, Microsoft may be considering giving away display ads.
According to Reuters, "Advertisers now question the performance of display ads more as Internet users train themselves to avoid such marketing."  Duh. How long have we been saying that? 

But facts don't bother the display ad apologists. Despite the fact that 15 years of display advertising have failed to produce a single major consumer-facing brand, and TV advertising has produced thousands of them, you can still find spurious data to prove that display advertising is more effective than TV.

Accordingly, I have written a little poem that you might want to use as the first slide in every agency Powerpoint presentation. Maybe you've met someone like this:
There once was a digital guy
Who was brilliant at pie-in-the-sky
Sooner or later
He'd torture the data
To prove that elephants fly
 Tell the truth. Where else do you get ad poetry?

 *There is a sensible strategy for utilizing display advertising which you can find here.


Paul Benjou said...

Poetic genius!

Ben Kunz said...

Interesting. My point over at ThoughtGadgets is not that display ads work better than television -- I actually agree with you, that TV spots are better at building brands, as they should be, since a :30-second mini-movie should have more impact that a single colorful box -- but that the response rates are very similar.

Most advertising is ignored by most people. The genesis of my post was a debate with a social media guy who said banner response rates were low; I agree, but response rates to all advertising are low as well. The typical American is exposed to 160 television spots a day. If you an tell me 10% of the ones that hit you yesterday, I'll be very impressed.

I do find it amusing that some have such antipathy to a digital form of advertising, banners/display, that is similar to print ads or billboards. To argue that one channel is a ghetto while another channel is good, simply because one image is in pixels and another printed on paper or vinyl, is illogical.

The very definitions of what is display vs. television vs. print etc. are changing. TV is migrating online. Online video ads are expected by eMarketer to grow 4x by 2016. IAB standard banner ads are morphing into high impact units that include motion, video, and widget functionality.

The truth behind this debate is consumers are more screen hungry than ever before, and they spend hours in front of tablets, handsets, laptops, and big-screen TVs. All the images work together. And what we call these images is beginning to have the same name.

Thanks for the sparring, you have superb thoughts.

AdContrarian said...


I appreciate your thoughtful response.

I want to make one point. The comparison between print ads/billboards and display ads is not, in my opinion, a valid one.

A billboard is a highly visible and dominating form of advertising. It is essentially a type of forced exposure. A display ad is anything but. It is largely invisible, and based on every study I've seen, overwhelmingly ignored.

Print advertising is somewhere in between. Sometimes easily ignored, sometimes highly effective, depending on size and creative.

But saying that display is just a digital version of these forms is not really accurate. If you're looking for a traditional analogy, display is probably closer to a digital version of classified ads or small space newspaper ads than anything else.


headlemur said...

The Apex of the online ad industry took place in 1999 with the 'punch the monkey' ads. It had everything. bright colors, interactivity, prizes, and most important, stress relief.(who doesn't want to punch a monkey anyhow?)

In the intervening 13 years, ads got bigger, more intrusive, became video movies, and became vectors for data theft. In the name of 'tailoring' and 'predictive behavior models'. No number
of Cognitive Anthropologists  will ever make this work. Just ask your
stock broker.

"Investors are advised that past stock performance is no guarantee of future price appreciation"

As you mentioned, they have not produced a 'consumer facing brand' but
instead  have shown us the rectums of every company that swallowed the
excrementally driven social media branding meme.

But it is fun to watch.



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