• by Geoff Ramsey , July 12, 2011

If you look at the modern online ad marketplace today, you'll see that it functions more like the financial stock market - with display ads being bought and sold through a real-time market exchange, much the way stocks are traded.

For the past few years, much of the news and developments taking place in online display advertising has concerned ad networks. These organizations, large and small, aggregate ad inventory by connecting up web sites that are looking to sell ads (i.e., publishers, portals, blog sites and even social media sites such as Facebook) with advertisers who want to deliver their ads to select target audiences. An ad network typically amalgamates thousands of web properties ranging from small, niche web sites to larger, premium sites, all with ad inventory to sell.  

An advertiser can come to an ad network to buy ads armed with their audience profile, as well as pricing ranges for placing the display ads. The ad network, in turn, purchases the ads from a variety of publishers and other sites, and sometimes even from other ad networks. Through this process, an ad network can reach audiences comparable in size to those at the larger web sites, but at a lower cost. Some of the big ad networks are Backpage.com, Advertising.com and 24/7 Real Media.

However, there are two major drawbacks with ad networks. First, they have yet to deliver on the promise of truly cost-effective scale. Second, advertisers usually have no clue about where their ads are getting placed. Brand advertisers are particularly sensitive about the kinds of contexts in which their ads appear and so they are increasingly demanding greater transparency.

These two issues have led to some significant transformations in the online ad market place, both driven by technology - real-time bidding (rtp) and demand-side platforms (dtp). Traditional ad networks are being replaced by these more cost effective, transparent systems that provide the advertiser with greater buying control. What we are talking about here is an auction-based, media buying platform in a real-time bidding environment. There is no middleman - no ad network that takes a percentage cut to administer the inventory. As a result, prices for display ads are being significantly reduced as they slip down to true, market-driven equilibrium.

Ultimately, this real-time bidding approach shifts the advertiser's focus from purchasing web site pages to buying actual audiences - wherever they are - based on detailed audience profiles. This leads to far greater buying efficiencies, and often business results.

Almost all large ad agencies and their respective holding companies have started to create in-house display ad trading desks that use these exchanges and demand-side auction platforms to access online ad inventory directly and buy ad space for advertisers. The market leaders in this space are Media Math, Invite Media, x+1, Triggit, Turn and eXelate.

If you are a sizeable marketer, you need to ensure that your agency is using these platforms and employing real-time bidding and demand-side auction platforms for placing your display ads. Otherwise, you are paying significantly more than you should for your media.

Another development in the display ad marketplace is the emergence of self-service platforms that enable even relatively small businesses to easily purchase inventory for banner campaigns. Such services, being offered by leading Internet players like Google, Facebook, aol and Yahoo, reduce the amount of time it takes to buy online ads as well as the associated costs.

Creative Counts

It pays to invest in good creative execution! According to Jon Gibs, vp Media Analytics at Nielsen Company, "Creative is about 70% to 80% of the effectiveness of advertising." Sharing this opinion is Ken Mallon, svp, Custom Solutions & Ad Effectiveness Consulting at Dynamic Logic, a company that has evaluated the brand impact of thousands of online campaigns. Mr. Mallon says: "By far the biggest driver of brand impact success is the creative. The best ads that we see in terms of performance online tend to be ones that almost have a magazine feel. They look nice; people think about things like having the right human form in there, the right product shot."

If there is a really compelling piece of content - that just happens to be an advertiser's brand message in the form of a display ad - consumers will gravitate to it and respond. A strong image can pack a lot of punch. Even in campaigns for text-heavy websites - such as publishing websites, print book retailers, financial services and health care products - it's been shown time and again that strong images with limited text provide the emotional pull to draw audiences in. There's also considerable credence to the idea that a static banner ad with a strong, emotional image can be as effective as a busily animated display ad.

As proof that creative execution really matters with display ads, Dynamic Logic evaluated results from 2,512 online campaigns and found significant differences in brand metrics from those campaigns deemed "best," versus "average" and "worst" campaigns.

Another creative approach with banners is to focus on giving consumers what they want. In a 2010 study by Cone, while only 21% of online consumers said they wanted marketers to "market to me", 77% said they would like marketers to offer them incentives, such as free products, coupons and discounts. Further, a healthy 46% said they would like marketers to "solve my problems/provide product or service information," and 39% wanted marketers to solicit their feedback on products and services. Thus, even banner ads can serve as Magnetic Content - if they are useful, offer help, entertain or inform consumers.

Excerpted with permission of the publisher John Wiley & Sons, Inc., www.wiley.com, from Digital Impact: The Two Secrets to Online Marketing Success by Vipin Mayar and Geoff Ramsey (c) 2011 by Vipin Mayar and Geoff Ramsey