As a result of higher seasonal ad spending, the fourth quarter is typically the strongest of the year for display advertising. But the latest report from Macquarie Securities analyzing
home page ad trends suggests that display advertising at the end of 2012 improved in the prior quarter and year-earlier period, too.
Overall, more than half (56%) of home page ads running across Yahoo, AOL, MSN and YouTube were oversized/custom units, compared to 45% in the third quarter and 43% in the fourth quarter of 2011. Macquarie uses these units as a proxy for display ad health because they tend to command higher CPMs than traditional ad sizes.
The report noted an increase in purely brand-focused (versus direct-response) advertising in Q4, at 67% of ads -- up from 58% in Q3, and 59% a year ago. In terms of industry categories, media and financial services led the way, accounting for 18% and 14% of home page ads, respectively. Holiday promotions in auto, telecom, consumer electronics and retail also drove much year-end advertising.
YouTube remains the strongest of the Web portals in ad quality, with its oversized masthead unit selling out 91% of the days in the fourth quarter, and sponsored video units running the remaining 9% of days.
Another positive sign for the video hub was the increased diversity of its ad base in the quarter. Media -- which usually accounts for roughly half of home page ads on YouTube -- fell to 37%, with a seasonal rise in auto, telecom and consumer electronics advertising. “It remains to be seen if this is a brief fluctuation or the beginning of a trend,” stated the report, authored by Macquarie analyst Ben Schachter.
Yahoo also had a solid quarter with oversized units accounting for 36% of home page ads, up from 26% a year ago. Brand-focused ads reached 63%, up from 52%. However, Yahoo saw the sell-through rate for the ad placement on its log-in page fall to 63% from 75% a year ago.
Amazon may be a newcomer to display advertising compared to Yahoo, but the online retailer continued to make gains in its ad business in Q4. The proportion of oversized ads on its home page increased to 17% from 1% a year ago, mostly through the addition of a standard-sized unit integrated with a “click-to-expand” upper banner, often advertising credit card special offers.
The share of brand-focused ads on Amazon has also jumped to 35% from 8% a year ago, accompanied by a decline in direct-response ads -- from 38% to 28%. The bulk of ads (55%) had a combination of branding and direct-response elements. The report noted that ads for Amazon’s own products like MyHabit or Amazon Local continued to play a major role on the home page, rising slightly to 21% from 19% a year earlier.
AOL and MSN also saw the share of high-impact ads on their home pages shoot up in the fourth quarter, rising to 52% from 28% on AOL, and 45% from 26% on MSN. Skyscraper ads on AOL increased to 37% from 21% a year ago and 19% in Q3.