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5 reasons the banner ad isn't ready to die

5 reasons the banner ad isn't ready to die Jay Friedman
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Standardized testing in schools. The Electoral College. Employee performance reviews. The car-buying process. The stock market. And, banner ads. If we were playing the $64,000 pyramid, these clues would lead to the category, "Frustratingly entrenched systems no one has figured out how to dislodge at scale." None of these systems are perfect or even good. But for the broader purpose they need to accomplish, they work well enough that repeated attempts at developing something superior have failed.

Googling the exact quotation-encapsulated phrase "the death of the banner ad" yields over 4,000 results. That's a whole lot of people wanting something to die! Yet even if we too-aggressively eliminate any ad that isn't viewable, isn't viewed by a human, or is alongside unacceptable content, we're looking at well over 1 trillion banners being bought and served in the U.S. alone each month. Clearly someone doesn't mind them! There are a lot of reasons for the banner's continued existence, leading me to believe the banner isn't dying any time soon. Here are five reasons why.

Banners are the first system that scaled online

That first banner ad that ran and got a 71 percent click-through rate started a race to monetize a nascent medium. The IAB formed to provide standards, making it easier for agencies and marketers to spend their money in digital. The need for standards requires simplicity, not complexity. Rectangles that look like outdoor billboards or print ads were easy to grasp, develop, and place, especially at scale.

VHS wasn't first, Betamax was. Blu-ray and HD DVD launched around the same time, but Blu-ray won out. I'm not an expert on why some standards win and others don't, but banners won. Standards are notoriously hard to dislodge.

Marketers are obsessive about every dollar possible going toward media

Every major marketer in the U.S. tracks how much of their budget goes to media and how much goes to production and fees (i.e., all non-media). Most marketers have benchmarks around the percent of total spend that must end up in media. When marketers and their agencies are put in this box, they turn to scalable solutions because the cost to develop creative treatments around less scalable (albeit sometimes better) alternatives doesn't fit in that box. This need to minimize non-media spend, in which creative production and fees fall, makes banners a desirable channel. Changing this belief around non-media spend is not imminent.

Banners work

I can just hear some of you right now. You're looking at your screen shouting, "No they don't!" Yes they do. We've done research that proves empirically that banners create a lift in every meaningful metric, from brand awareness to actual offline purchases, over a control group with the exact same targeting. Yes, we've looked at only viewable banners. Yes, it's been against a control group. Yes, each study has had statistical significance.

The counter arguments don't hold water

There are some that will take the "banners don't work" line to their grave. First and foremost, look at the business they're in. Nine times out of 10 it's a business that competes with banners for budget. Regardless, here are the top five points I hear, and why they're inaccurate.

  • Branded banners have the same CTR as a white box: CTR is a meaningless metric except for DR advertisers with no brand recognition who need to create a sale then and there. Also, not all banners are good, just like creative in any other medium. If the goal of a banner is to be clicked, the creative needs to be better than a white box!
  • You can't do good creative in a box: Spoken by a creatively-challenged person, I presume!
  • Video works better: Yes it does. We've done the empirical research here, too. It works eight to 10 times better. It's also eight to 10 times more expensive if you're buying legit in/out-stream of equal quality. But we found that users exposed to both banners and video convert even better than those just exposed to video. They're both important.
  • But, but, native!: Sometimes a banner ad is a better vehicle. If you want to tell active car shoppers about a $199 lease and you believe that price point will truly influence consumers, an esoteric headline is not the best way to convey that. Native is important and viable, but it's not a replacement for banners.
  • I need to present something new to my client: We all like to change it up every so often. When clients tell me this, I tell them that my first responsibility is to ensure their money is spent in places where they'll achieve the best ROAS. Banners are often a part of that recommendation, and that's usually the right thing.

There aren't better alternatives

After the 2008 market crash, I did heavy research into alternative investment vehicles. I lost faith in the stock market. It turns out it's really hard to invest outside of the stock market, especially in 401(k) plans, 529s, or other government-blessed savings vehicles. As much as I still don't like the market, I've come to realize that the effort required to stay away from the market is more troubling than my dislike for the market. The ad marketplace has been compared to the financial markets because of the bidding and similar real-time nature, but I think the similarities extend to other areas.

Flash Boys by Michael Lewis quickly teaches that the average investor has no hope of achieving performance like the big firms. The average investor never has a shot at many of the deals larger investors do. In the last few years, we've realized ad markets are similar. The amount of quality inventory is far less than we all thought now that we know viewability rates and have better tools to measure fraud. Securing quality inventory at good rates through the private marketplace across a broad enough spectrum of publishers is simply not possible for the average non-Fortune 500 advertiser or non-holding company agency.

The more we learn about ad fraud the easier it is to lose hope in the market-based approach to digital media. Yet all media channels are heading toward programmatic. TV, radio, out-of-home. Looking at the financial markets, the racket that is high-frequency trading is no less disheartening than ad fraud. While real fraud in the financial markets is supposed to be cleaned up by the SEC, the ad industry has made significant progress on its own toward rooting out ad fraud. Let me be clear: What we have today is not enough. But we also have to understand it will never be 100 percent clean, much like the financial markets, but that's not a reason to avoid them completely. (Note: If we're talking ad fraud, other digital formats aren't necessarily less susceptible to fraud. Fraud is a digital media problem, not a banner problem. This includes banners, video, native, and even paid search.)

According to the latest Mary Meeker Internet Trends report, 48 percent of all media consumption time is spent digitally. No marketer can afford to ignore a channel with such significant "share of brain." Yes, there are alternatives to the banner, but to ignore banners leaves significant real estate for your competitors to conquest your customers.

Liking something and seeing value in it are two different things. I don't like vacuuming, but I realize the value and benefit it provides. Banners provide plenty of value, and you don't even have to change the bag or filter.

Jay Friedman is COO of Goodway Group, and a partner in the 3rd-generation family company founded by Milton Wolk in 1929. Friedman joined in 2006 to add a digital media component to Goodway’s offerings, beyond the existing print and promotional...

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