Q2 Ad Serving Findings: Increase in Eye-Catching Ads, Drop In Geo-Targeting

Online ad click-through rates remain at a stable low, and advertisers have boosted usage of rich media and large ad formats to grab attention, according to DoubleClick's Q2 2004 Ad Serving Trend Report. The Web ad management firm's latest report reveals view-through rate increases, and lackluster use of ad targeting by advertisers.

Since Q2 2003, average click-through rates have continued their decline, dropping 17 percent year-over-year. However, at 0.56 percent in Q2 2004, they remain steady compared to Q1 of this year. Also going downhill are average rich media click-through rates which were pegged at 1.17 percent in Q2 2004 compared to 1.87 percent in Q2 of last year.

Considering the increasing adoption of Web advertising among brand marketers, comments Denise Garcia, media research director at GartnerG2, a greater portion of ads may have "no call to action necessarily." Thus, click-through is not always the goal of online advertising.

Regardless of lower click-through rates, rich media use among advertisers is on the rise according to DoubleClick's numbers. While the same as last quarter, rich media advertising increased 34 percent to 42.7 percent over Q2 2003. Kathryn Koegel, DoubleClick's director of research and industry development, cautions that the company's rich media stats tend to skew high. In comparison, a February 2004 Nielsen//NetRatings' AdRelevance report estimated that rich media ads represented 17.4 percent of all online ads.

To counteract the click-through rate downturn, DoubleClick highlights view-through rates which track the percentage of users who convert within 30 days of seeing an ad, but do not click on that ad. At 0.73 percent, view-through rates for ads served by advertisers have risen since Q2 2003 when they hit 0.63 percent. The report compares that number to a Q2 2004 click-through rate of 4.3 percent for advertiser-served ads. DoubleClick advertisers that tracked response through to online conversion, garnered 42.5 conversions per view-through activity, or over six times the amount of conversions from click-through activity.

Koegel admits that advertisers have been skeptical of the view-through metric in the past, concerned that several factors contribute to a consumers Web conversion, not simply Web ads. DoubleClick conducted a study in February which tracked view-through activity following exposure to Continental Airlines Internet ads. People were exposed to either test or control ads and tracked for sales and registrations. DoubleClick attributed 67.5 percent of Continental's view-through registrations and sales to the Web campaign.

"I think it's absolutely believable that view-through would have a long term impact on sales, particularly for sales that involve high priced items," suggested GartnerG2's Garcia.

At 30 percent, banners still account for the largest portion of ads served. Larger ad sizes are on the rise, though. Leaderboards, ads placed along the top of site pages, have jumped 384 percent year-over-year to 7.9 percent of ads served by DoubleClick. "Leaderboards are a pretty easy size for publishers to implement without doing a major reorganization of their site," explained DoubleClick's Koegel.

DoubleClick also looked at ads served by Web publishers, which often handle campaign ad targeting. It found that under 2 percent of publisher-served ads are targeted based on time of day, browser type, domain, ISP, or operating system.

Jupiter Research associate analyst, Nate Elliott was "distraught" by the fact that so few advertisers took advantage of the Web's targeting capabilities. "The fact that advertisers are not using these very basic forms of targeting is worrisome," he lamented.

Perhaps more significant: The DoubleClick report shows that geo-targeting decreased from 7.4 percent of all publisher inventory in Q2 2003 to 1.8 percent in Q2 of this year. DoubleClick may be focusing its report on targeting because the firm began appending its data with that of Internet protocol-based intelligence outfit Digital Envoy in March to enable targeting down to the zip code level. In April, ad targeting and optimization firm Poindexter Systems integrated Digital Envoy's geo-targeting technology with its optimization technology.

A lack of demand for ad targeting is a "red flag to the industry that's been counting on targeting to increase ad rates," commented GartnerG2's Garcia.