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Is display advertising dead?

Chris Autry
Is display advertising dead? Chris Autry

The time has come to seriously rethink online display advertising.

Before deciding what this rethink should consist of, let us consider what we know. On the supply side, we know that the market for online display advertising is huge ($51.6 billion by 2010, according to PWC Global Entertainment and Media Outlook: 2006-2010). It's everywhere, and it isn't going away. On the demand side, we know response rates are low (0.25 percent average) and that most consumers simply ignore display ads unless they are forced to watch them, for example, interstitials.

Advertisers are trying desperately to connect with consumers in the online space, but the opportunity to close the deal is clearly being missed. Despite the very clever attempts at contextual and behavioral advertising, consumers are not responding to online ads as they should, if at all. They may see them inadvertently, may not see them, or may completely block them from their browsers.

Perhaps the problem lies in the ad units, the ad banner model of advertising, or perhaps we may even need to revisit the concept of advertising and what it means within a context where nearly anything is possible.

Beyond animated trackable billboards
The current model of online display advertising is (at best) the contextual and behavioral placement of animated, trackable and sometimes interactive billboards. Yawn. No wonder people ignore ads. We spend our lives developing mechanisms to screen out noise and recognize what is relevant, useful information when it comes onto our radar. We use our screening mechanisms in response to being pushed information that we don't necessarily ask for. But what happens when we ask for information? What happens if the information requested corresponds with some form of commerce?

A consumer pull model of display advertising
To date, online display advertising is based on a consumer push model. We are pushed adverts based on our behavior and the context in which we are working. Imagine if we could pull the information that we wanted instead of being pushed information that most likely is not of interest. What do you think the likelihood of interacting or eventually transacting with this information would be? If the standard ecommerce site model or paid search model is any indication, the chances are good indeed.

Real world examples
The concept is a simple one: Get users' permission before you try to sell them something. Give them something they can use -- and want to use -- when they want to use it. To understand how this fits in context, consider two broad-based categories of online display advertising: narrow networks (closed networks such as an individual site or a grouping of content-specific sites) and wide networks (ad networks, for example).

Narrow networks
In many ways, narrow networks could replace wide networks as the online display advertising channel of choice. Why? Because there is explicit permission on the part of the consumer at some level to interact in context with particular advertisers.

Mydeco is a fantastic example of an ecommerce advertising opportunity built directly into the site itself.  It allows for users to configure any room of their own on the site and decorate and furnish it with a select array of flooring, furniture, wallpaper and accessories. Once items are selected, the user can complete the purchase through deep links to the supplier site. Say, for example, you choose to furnish your room with an Arosio sofa; you simply click on the sofa in the room set up and you're off to the supplier's page where the purchase can occur. This is advertising and ecommerce in context at its most extreme.

A second model of narrow network consumer pull advertising is the Live Video tie-up with Tailgate Technologies. Live Video and its associated sites on the Live Universe network will shortly be enabled for transactions to take place from within a video. If for example, you are watching a movie trailer or a music video, you simply roll over the video and you can purchase the DVD, buy a movie ticket, download a music track or buy a ticket to a live event, all without ever leaving the video.

Lastly, the recent explosion of widgets on social networking sites could, if executed correctly, provide another viable means of providing useful transactional capability for consumers. Widgets are perfect examples of permission-based sales channels that can be used according to needs. A film widget that allows for film search and ticketing would be one such example. Similarly, widgets to search and procure travel, order takeout, books, DVDs, electronics, etc., all within the confines of one container site, would be another example. Currently widgets act as interactive tools much the same as rich media banners. This can and is now being taken to the next level.

Wide networks
The very nature of a wide network is to distribute ad content to many sites in many contexts over a range of time. The default approach to achieving relevancy for the consumer is some form of contextual and behavioral algorithm. While this helps fine tune what may or may not interest a consumer, an ad banner needs to be very compelling if a user is to move off the primary site he has chosen to visit. We know that most ads are not compelling enough to warrant this type of drive, so let's start with some questions.

What if...

  1. Ads were not ads at all but mini-applications or widgets served on ad networks?

  2. Users could perform and transact with these ads or mini-applications without leaving the host site?

  3. Ecommerce was not just restricted to banners but could be part of any display, anywhere, on any site or platform?

These three propositions alone would significantly alter the current model of online display advertising for the advertiser, consumer and publisher alike. Instead of just moving billboards, there would be a range of customized, transactional and most importantly of all, useful applications in their place. Users would not see ads, they would use applications.

Advertising as application
A networked-based approach can easily transform advertising from a primarily passive experience into an active tool-based experience. The legacy approach to online display advertising has been to merely replicate the offline approach to advertising, resulting in a cross between a print ad and a poor cousin of a TVC. Over time, tracking and interactive capabilities have been added, and while both of these functions are large and wide ranging, they are also limited in their current forms.

Transforming information intended for visual communication into a set of useful and relevant user applications will profoundly effect the online display advertising industry as we know it. Marketing channels will become sales channels and vice versa. Advertisers become more than just players on screen, screaming the loudest to try to get users to their sites. Instead, advertisers can take their site functionality to anywhere consumers are, and generating brand awareness will exist side by side with functionality.

Consumers will not be bombarded with relatively useless adverts but will instead interact and be able to use a range of applications to perform relevant tasks. Publishers can create content-based container applications that allow the right ad-based applications to get to the right consumers.

Online display advertising is here, and it's here to stay. The time has come to transform it for the better, for everyone involved. The good news is, this revolution is well underway.

Christopher Autry is CEO of Tailgate Technologies.


to leave comments.

Commenter: Eric Low

2008, April 16

Great article with many good points. One thing to remember is that display ads are still good for branding which is not measured through clicks. Good display campaigns need to be relevant to the content and can be more effective when combined with rich media or welcome ads / interstitials. Where display advertising lacks in transactional campaigns, advertising applications may well be the next generation. As of now, consumers are moving up the ladder when it comes to the advertising they respond to. Just look at the declining trend in responses to Google's text ads.

Commenter: Brad LaRock

2008, April 15

I especially like the what if...insightful and forward thinking. I am an Ad Manager and I am daily attempting to fill the idea hopper to keep ads on the cutting edge. You're right by saying we are attuned to tune out. Online advertising should always be informational by nature and delivery. Sure its a sell but an informative sell. Our platform is narrow and local. We're hyperlocal and our clients are SMB's. I am so glad I read your article.

Commenter: Jessica McGrath

2008, April 14

I think display ads need to be relevant to the site where they are displayed. Bombarding users with random advertisements is a waste of time as they get blocked as peripheral rubbish. If it is relevant then it can enhance the online experience.

Commenter: Meredith Keller

2008, April 10

You actually can achieve great success with display ads. I think the failure of the majority of display ads has more to do with poor creative and poor targeting. Most marketers seem to do what's easiest rather than what's most thought out and this means consumers are bombarded by irrelevant ads and boring creative. Systems like Adwords only compound the problem, making it easy to let a robot decide who should see your ads most of the time. Based on most of the display ads I've seen, my conclusion is that most of the marketers behind them didn't put enough thought into an attention grabbing creative and didn't put enough thought into how to best target their campaign. On the other hand, I've seen some really successful display ads with good creatives and well thought out placements -- for example, the company advertising funny, cute, animal t-shirts on cuteoverload.com. They designed attention-grabbing creative and they knew where to run their ad to find their audience. That's a campaign that's probably getting tons of conversions (I say this because of the price of that ad space and the amount of time that marketer has been running their ad in that space. It would be too expensive to maintain without any ROI). Any way, I don't wholeheartedly agree that display ads in and of themselves are the problem. I think display advertisers are a big part of their own problem.

Commenter: Jamie Turner

2008, April 09

Excellent article, Christopher. Lots of detail. Lots of good information. Thanks for sharing.