Display Advertising Is Broken

Apparently, the only thing that people agree on in this divided country is that they won’t click on ads. Click-through rates for standard banner advertisements are appallingly low, reaching only .08%. That means for every thousand ads served, we should expect LESS than one click. Adding rich media -- once considered the savior for display -- increases response slightly, to .14%. Considering that this is the format on which we have essentially built our industry, one fact has become glaringly obvious: display advertising is broken.

Since 2007, industry media and experts like Jakob Nielsen have been waving a flag, warning us about Banner Blindness. For more than 5 years, we’ve known there were cracks in the foundation of the house we were building, and yet we continued to build. In 2010, it was reported that 43% of consumers ignore online display ads. Sure, we’re in the process of adopting new standards, but while those may help improve the performance of online display ads, we’re still working upon that same foundation -- a foundation we know is crumbling.



Why would consumers ignore the ads that we have worked so hard to create and place? “The fault, dear Brutus, is not in our stars, but in ourselves.” We in the industry -- publishers, marketers, advertisers and media buyers alike -- are the ones to blame, for:

  1. Creating an endless tonnage of ad space, one Web site at a time, but adding up to thousands of ad impressions a month for each viewer
  2. Delivering only a small amount of relevant advertising, and leaving the vast bulk of the tonnage to irrelevant offers, sold at rock-bottom prices
  3. Consigning online ads to a predictable size and placement, thereby educating users thousands of times a month where they should avert their gaze to avoid wasting their time looking at useless advertising

Essentially, we have let this happen. As marketers, we have been laser-focused on our ROI; as custodians of the company’s marketing budget, we have watched every penny we’ve spent. We made it a point to buy as many impressions as possible at the lowest possible CPM, hoping to drive the most conversions. We focused on quantity, rather than quality -- a classic and tragic mistake.

Yes, we have spent time and creative energy crafting our ads, writing compelling calls to action -- but in the end, we didn’t ask enough questions. When we purchased media, did we ever ask where on the pages the ads were appearing? Did we even check? Did we attempt to deliver our messages to people when relevant to the context in which they appeared? Did we ever consider other types of ads -- or even consider that there were possibilities beyond standard display placements? We’ve been so busy watching the numbers, our noses buried in the campaign reports, that quality and relevance have fallen from our view. We haven’t been thinking outside the banner.

So how can we fix our caving tower? Now that our industry is truly on the brink of thriving, with more big brand marketers allocating budget to the online channel, how can we repair what seems to be fundamentally broken? Three simple recommendations:

  1. Ask publishers to create unique placements for ads to break the banner blindness cycle
  2. Focus on targeting user intent at that moment, based on what their interest is now -- not what they were interested in yesterday, last week or last month
  3. Insist that your ads be shown only when the match between the offer and the intent is high

These steps will ensure that our ads served are noticed, relevant and valuable to both consumers and us.


8 comments about "Display Advertising Is Broken ".
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  1. Tim Orr from Barnett Orr Marketing Group, Inc., November 27, 2012 at 11:23 a.m.

    A few more suggestions for the creative side:
    (1) Accept, once and for all that your company name and/or logo is neither a headline nor a customer benefit. (2) Offer a true customer benefit in every ad. (3) Track results and adjust creative and media to optimize, just as DM people do. As to trying to break the "banner blindness" cycle, recognize that banner blindness came about because of the relative worthlessness (to the consumer) of the ads being presented.

  2. Catherine Wachs from Right Brain, November 27, 2012 at 12:52 p.m.

    So right, Tim. Offering a free, worthwhile goodie increases the click rate. And arresting visuals or headlines carry the show, as they always have.

  3. Ned Newhouse from Conde Nast , November 27, 2012 at 3:48 p.m.

    David. Your usual articulate informed opinion. Nicely done.

    I do dispute that we have yet to push and force the issue of compelling functional advertising. The html5 ads coming out of the mobile industry bring consumer utility via native smartphone functionality (eg Calendar, mapping, social, video gaming, ecomnerce etc and etc. much of this functioality is also availablr on the desktop too. The reason why people don't click is because ad creative stink and are uninspiring that the content is significantly better. And that is the real battle getting a consumer to leave the content and engage with the content. So now we have the ad market dynamics that creative is blah and clients/agencies blame the site that their performance sucks. Gee maybe the weaker the content the better the performance. Imho this is the mediocre gridlock state we're in.

  4. Tom Cunniff from Tom Cunniff, November 28, 2012 at 7:42 a.m.

    Display advertising for brands is, indeed, broken.

    However, I think we're missing the two fundamental reasons why this is true.

    1. To date, only TV delivers the scale that brand marketers require.
    2. Consumer brands tried so hard to “be digital" that they forgot the fundamentals.

    Any brand that sells via mass retail must drive turns at shelf fast. Yet digital promises smallness: “the right ad to the right person at the right moment”. This is in direct conflict with what big brands need: large numbers of new buyers entering the category, becoming aware of the brand, or switching brands.

    Also, brands have been optimizing to the wrong metrics. Because digital is so measurable, brands enthusiastically adopted Direct Response metrics. We measured events (CTRs and conversions), ignoring the reality that brand preference is built over time.

    In my opinion, brands need to return to fundamentals in digital. We must identify ways to sell at scale, and we must focus on what builds brands.

    For brands the problem isn't the medium, at all. It is the way we've been using it.

  5. S HS from AAA, November 28, 2012 at 11:52 a.m.

    #socialmedia,#content,#conversation, #community all words that work just fine without being followed by #marketing #listen #listen #listen

  6. Walter Sabo from SABO media, November 29, 2012 at 12:23 a.m.

    Tom Cunniff is absolutely right. Brands say they want new and cool and precise and hyper local but what they really want is a big buy and to sell a lot of stuff tomorrow. They don't even want brand loyalty or affinity. They just want to sell stuff. Only TV and Radio offers that scale of the moment.

  7. Marcelo Salup from Iffective LLC, November 29, 2012 at 11:46 a.m.

    I think that this post is one of those well-meaning but impractical blue-sky ideas that sometimes makes me wonder about our collective ability to think things through

    1. How are you going to divine intent? Really? Let's say I go into and look at the new bimmers (the 3 series 2012 model), am I...

    - Fantasizing about buying one?
    - Seriously considering buying one?
    - Learning more so I can completely crush my stupid cousin who bought it because now they come with rinky-dinky 2.0 L Turbo engine vs. the 6 Cyl inline straight 6?

    How would you know?

    2. Are you, the agency, going to write a zillion different ads to match intent?

    3. If you do... how are you going to tag them so that the media server knows what to deliver?

    4. What are you willing to pay for that? Because part of the problem is that those kind of contextually-rich programs are also expensive. So... $30 cpm? $40 cpm? $2.50 cpm?

    5. I assume you will do some test, because prima facie you can't prove that such a hyper-contextualized campaign will work X-times better than the other ones

    6. If you do a test.. how do you track from there to purchase? If purchase is an intent?

    In all honesty --and I've done serious shit in my time-- this is the kind of idea that "sounds" good but is highly impractical in the real world

  8. DG T from Viewthrough Measurement Consortium, December 2, 2012 at 1:02 p.m.

    Nice post Dave, I'll venture to add one more from the analytics POV:

    #4. Look at hybrid brand-response metrics like viewthrough. See for more about this industry initiative.

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