• by Mark Walsh , September 24, 2009

A group of digital heavyweights from Web giants including AOL, Facebook and Google touted their latest efforts to convince marketers that online advertising in addition to search really works during a panel discussion Thursday at the Paley Center.

The Internet executives acknowledged that traditional banner ads have fallen short, but assured that more precise targeting and improved measurement would lead to better results for display advertising.

"The opportunity in digital advertising has always been out there," said Mike Murphy, vice president of global media sales at Facebook. "We as an industry for years used banner advertising to broadcast messages rather than deliver highly targeted, relevant advertising."

Facebook's answer to the dreaded banner has been "engagement ads" -- interactive home page units that let users do things like post comments, send invites or virtual gifts, and participate in polls. In effect, the company is taking what would have typically been a static display unit and "using it to feel more like content," according to Murphy.

That's one thing if the ad contains a movie trailer, but what if you're a consumer packaged goods company trying to sell paper towels?, asked moderator Todd Wasserman, editor of Brandweek. Murphy said he has been surprised at the range of brands that draw enthusiasts.

Eileen Naughton, Google's director of media platforms, pointed to a contest Heinz ran on YouTube two years ago inviting people to submit videos for selection as its next ketchup TV commercial. She said the effort led to 120,000 hours of people interacting with the brand.

To help prove that social media advertising is actually more effective than ordinary banners, Facebook earlier this week announced a partnership with Nielsen under which the social network will start polling users about some of the display ads on its site.

Facebook will then provide that data -- including responses from those who did not see an ad -- to Nielsen, which will package it for advertisers, say the companies.

Jeff Levick, AOL's new ad boss, emphasized that no single ad unit is going to be the silver bullet to rejuvenate display advertising. "It's more about how you place an ad and how you target it," he said.

"That's what's being defined as we enter the next wave of Internet advertising. Matching up content and advertising early in the process rather than trying to match ads with content down the funnel."

AOL's approach to attracting targeted advertising over the last two years has been to launch scores of niche content sites with plans to operate 100 different online properties by year's end.

Having conquered search, Google made its own major push into the display ad market last week by unveiling the overhauled DoubleClick Ad Exchange as a real-time marketplace for buying and selling unsold display inventory. "Half of all display ad dollars in the U.S. are display ad dollars," said Naughton, explaining the reasoning behind the initiative.

The new system is designed to simplify the ad-buying process and improve performance through an open exchange that lets advertisers bid on individual impressions and slot ads almost instantaneously.