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5 ways you're wasting digital ad dollars

5 ways you're wasting digital ad dollars Peter Platt

In this nearly two-decade-old industry, I continue to be amazed at the variety of new ad placements, targeting opportunities, and technologies that appear every day that, in the end, don't necessarily provide any value to you, the advertiser, or worse yet, the consumer. 


All too often we're attracted to the shiny metal object in the corner, and in our effort to be first movers, we often overlook the very reason we're advertising. For every advertiser, marketing budgets are really about one thing -- generating more sales. This can come in the form of retaining market share, building brand awareness, or one of many other marketing objectives. So when we start evaluating digital marketing opportunities, how do we focus on the ones that will work best for our given objectives and provide the sort of return we're looking for?


The annoyance factor
Throughout the history of this industry, there have been some really bad advertising opportunities that have gotten widespread attention and use. Thankfully today their use and impact is limited. The best example of this, of course, is the pop-up ad. For those of you who don't remember this phenomenon, pop-ups were ads that opened a new browser window in front of the content you were trying to read.


In 2003, Intelliseek released survey results that showed pop-up ads ranked highest on the annoyance factor in advertising, surpassing telemarketing and spam email. Dynamic Logic released a study around the same time, indicating that greater than 90 percent of consumers found pop-ups annoying or objectionable. Consumers reacted negatively, marketers and publishers listened, and the pop-up ad is hardly ever seen anymore.


However, the pop-under ad is still alive and well today. With pop-unders, your ads appear in a new window, but behind the page you're viewing. These ads often go unnoticed until you've finished your browsing session and closed your web browser only to find several windows in the background that you need to close as well. While I'm sure some of these ads have great response rates, I would expect that for the most part they do more harm than good. If you look back at the 2003 studies, you'll see that consumers feel the same way about pop-unders as they did about pop-ups. So while you may not be hearing about it, many consumers are having a poor brand experience when they see your ads in a pop-under window. 


In addition, pop-unders are often seen after you've completed your browsing session (i.e., you've just closed your browser). While this may be a good time to capture someone's attention (as they've just finished what they are doing), it's also important to recognize that most folks are ready to move onto another task at this point. It's sort of like putting a commercial at the end of a movie... sure there are a few people still sitting in the theater, but most have gotten up and left.


So, for any advertiser considering pop-unders, it's important to consider this potential negative impact against the value of the response you are seeing. Not all advertising waste is strictly based on cost.


Bottom of the barrel
"Below the fold" is one of my favorite digital terms; it reminds me just how difficult it is, even for those of us in the industry, to think outside of traditional marketing expressions. When your ad appears on the bottom of a long web page, it makes me wonder -- if your ad server tracks an impression does your audience really see it? (My version of "If a tree falls in the forest...") 


While I have had some success using bottom-of-the-page placements, it's critical to negotiate the right cost for the value you get in return. Because many page visitors won't see the ad, you need to adjust the CPM accordingly. For example, assume that only 50 percent of visitors would scroll down the page, then a $4 CPM in turn would really have an $8 CPM for those who actually saw it.


Of course, the real challenge comes from trying to determine the correct percentage. One simple approach is to make sure your top-of-page and bottom-of-page placements are tracked separately, then take a look at your response rates. With that information, you can at least make an informed decision about the value of the placements.


When the lists get too pricey
The same rules apply when you use third-party email lists. In my experience, the general email open rate ranges between 50-60 percent for in-house lists, 20-30 percent for well-managed publisher lists, and can be as low as 5-10 percent for general email lists with minimal management. We often recommend third-party publisher lists as a great way to reach niche vertical markets, but sometimes those lists can be pricey ($200 - $300 CPMs). At a 25 percent open rate, you could be looking at nearly $1,000 CPMs based on those who actually open the message. Now for some niche vertical industries, those costs can provide extremely effective ROI, so the value may be there, but it's important to understand exactly what you're getting.


Don't expect a lot of response
Another false assumption of a good advertising opportunity is contextual targeting. In general, contextual targeting is a great way to get in front of appropriate audiences, but it's important to pay attention to the context you're in. For example, running ads on real estate sites for a mortgage company seems like a perfect opportunity. You know the audience is in the market for a home, what better place could there be to initiate a dialogue? But the reality of it is when people are home shopping online, they are incredibly task-oriented. They generate tons of page views looking from house to house, viewing the online photos, etc., but they aren't likely to respond to your advertising message. No matter how big the ad, or how interruptive the placement is, it's difficult for an advertiser to generate response within this context. In order to get the value out of contextual targeting, make sure you think about their mindset in the context needed to determine the value. By the way, this example could be an excellent way to build brand awareness of your offerings, just don't expect a lot of response.


What could go wrong here?
Search advertising is an area that's often thought of as having no waste. After all, you only pay if your ad is clicked on, your message appears in front of highly targeted prospects, and you can directly link to specific content to encourage conversion. What could go wrong here?


Several years ago, I was working with a client in the web hosting industry and at the time the No. 1 position on Google cost around $20-per-click. With web hosting fees running at around $10, the ROI models just didn't work for them. But there was another option that did provide a cost-effective approach -- display advertising on ad networks. With a $5 CPM and a paltry 0.05 percent CTR, we were able to cut the cost-per-click in half and build significant brand awareness at the same time. Over time, with optimization and creative improvements, we were able to lower the cost-per-click even more and generate significant business opportunities.


So are you wasting your ad dollars? In the digital space we're getting better at it. We continue to eat away at John Wannamaker's 50 percent of wasted ad dollars. But to be truly successful, you can't just assume digital marketing is more efficient; you need to pay attention to the details and understand the true value you get back from any online placement.


Peter Platt is chief digital officer, Catalyst.


On Twitter? Follow iMedia Connection at @iMediaTweet.

Peter is a 25+ year veteran of the agency business and has been involved in Internet marketing since the early 1990s. He was also one of the first 100 people certified in the Google AdWords program in 2004. Peter’s experience brings together a...

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Comments

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Commenter: Chris O'Hara

2010, July 06

Great food for thought here, Peter. we are finding many new display customers as traditional search advertisers find keyword availability drying up (not enough volume) or, as you noted, becoming too expensive on an ROI basis. Luckily, the combination of targeting options and today's pricing (along with new understanding of "sales lift") means that display is not just about branding anymore.

Commenter: Ben Aughenbaugh

2010, July 01

Peter,

Great submission to iMedia Connection! With respect to the paragraph entitled "Don't expect a lot of response", success metrics are a determinant of the whole campaign (online and off), and vary greatly by advertiser.

I am in complete agreement that contextual targeting is a great way to get in front of appropriate audiences, and very necessary to pay attention to the context and advertiser is in, but I respectfully disagree with the example you chose to site re: media partnership between real estate sites and mortgage companies (and any other peanut butter and jelly type relationships).

Working for the #2 publisher in the real estate vertical, mortgage/home loans and finance in general work strongly with highly, contextually relevant sites to promote their branding efforts while simultaneously achieving their low-funnel, direct response efforts.

It should be known, that when faced with high relevance/low engagement challenges, one needs to look at the opportunity from the scope of a user and incorporate the media where it is most applicable. In this scenario, everyone wins: advertiser, publisher, and most importantly, the user.

Ben