• by David Koretz , November 20, 2008

And let's kill brand advertising while we are at it.

Brand advertising and display advertising are outdated ideas that lack relevance in an online world. We merely dragged these concepts over from traditional advertising. Do we really want to be sharing our industry with  bus wraps and  heat-activated urinal billboards?

Online display advertising has become the bucket for all forms of terrible advertising. Pop-ups, interstitials, banner ads, Flash ads, and countless others litter our Web sites in lame attempts to generate revenue. We continue to develop new ad formats without any thought as to who is buying them or why.

It is time for publishers to stop sitting on the sidelines while the needs of our customers evolve beyond us. We have allowed a lack of clarity to exist for far too long.

Brand Advertising is just code for "ads that can't be measured and don't make any money."

EVERY ad is supposed to drive revenue for the advertiser; the only question is timing. Our customers can be divided into two distinctly different groups with unique goals:

Transactional Advertisers that are looking for customers to buy their product instantly, or as close to instantly as possible, and;

Influence Advertisers that are looking to influence long-term purchase behavior. These advertisers are selling cars or other products that either have long sales cycles or are primarily bought offline.

Let's break down these two new markets.

Transactional Advertisers: Time is the enemy of transactional advertisers.

The longer customers are away from an advertiser's Web site, the lower the chances they will end up buying something. Transactional advertisers need to instantly engage, demonstrate value, and close the deal.

Transactional advertisers are only concerned with three things. First, they want to immediately drive revenue. Second, they want to be able to measure the cost of acquiring the revenue so they can measure ROI. Third, and most importantly, they want to achieve the first two goals with the least amount of risk.

Transactional advertisers require new ad formats that enable transactions to happen on the spot. Many users are hesitant to click on ads, because they are afraid of losing their place and being taken to another site. Instead, the ad needs to come to them. For example, if I am looking at movie reviews on Rotten Tomatoes, I should be able to buy movie tickets without leaving the site. I should be empowered to use my social data to invite friends to join me at the movie.

Transactional advertisers need an unprecedented level of cooperation with publishers. They need results-driven pricing models like cost per action (CPA), but are willing to pay a premium for results.

If you eliminate risk for a transaction advertiser, you will be rewarded handsomely.

Influence Advertisers: Unfortunately, not every purchase can result in an immediate transaction.

There are several reasons for this. Some purchases, like buying a car, require multiple steps like securing financing (at least until a few months ago) and a test drive. Other purchases, like buying laundry detergent, do not typically happen online.

Influence Advertisers may have a multi-step sales cycle, but they still have a sales cycle.

So how should Influence advertising differ?

We need better ad formats and measurements. Annoying a potential customer with a flashy ad or an interstitial is a great way to damage your chances of winning the deal. The current click-through rate measurement rewards intrusive ads that may drive clicks, but not revenue. Click-through rates average less than 0.5%, so an annoying ad could end up angering 199 potential customers to generate a single click, but not a single dollar.

Why can't the ad enable you to print a coupon for laundry detergent or a test drive in-line without leaving the publisher's site? This would serve as a reminder and dramatically increase the likelihood of you taking action. It would also enable advertisers to track revenue of offline sales.

Influence advertisers need new measurements that track progress on the sales cycle, not clicks.  This progress should be driven by in-line ads that enable education and engagement to happen on the publisher's site.

Let's Bury Them Together

If we are to survive as an industry, we need to make drastic changes. The 21% drop in CPM prices this year is a clear signal that we are adding inventory faster than we are adding value.

As any loyal USA Today reader or Fox News viewer can now tell you, a strong economy hides a lot of problems. The recent economic downturn is going to make all of our flaws even easier to see.

Our customers are transactional advertisers, influence advertisers, or both. They buy our product because they believe we can deliver a positive return on investment short-term or long-term.

Let's kill off display and brand advertising, and prove them right.

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