Display costs fall

Media buyers estimate the average ratecard CPM for branding campaigns across premium sites has dropped from £60 last year to around £20 this year.

More to ignore

According to research by Harris Interactive, 46 per cent of internet users in the US ignore banner ads. Meanwhile Forrester points out that US consumers are exposed to more ads than ever before (an average 1,874 per day in 2009).

Focus on ROI advertising

“ROI-based advertising is starting to look and feel a lot like search,” says Mark Rabe, managing director of sales at Yahoo! UK & Ireland.

Google gets in on the act

Google has finally launched an ad exchange for display, taking on competitors including Yahoo!’s Right Media. The search giant is wading in and aggressively targeting agencies and media owners to sign up to its new ad-allocation technology.

Growth in rich media

According to Forrester, rich media and video advertising will account for 59 per cent of European online display ad spending in 2013.

Targeting a must

“We seldom do campaigns for clients like the COI without behavioural, demographic or geographic targeting,” says Ian Thomson, i-level’s head of business architecture.

The death of the microsite

“It’s our view that driving users to an advertiser’s site is pretty much a dead concept. We’re focusing on pushing content to users via ad formats,” says Joshua Rex, a partner at Open.

Video is a hot topic

Video is a growing area of interest for brands, especially as production costs fall. Forrester expects brand spend in video in Europe to quadruple from €239 million (£221m) in 2008 to €986m (£911m) in 2013.

Engagement emerges

Procter & Gamble plans to start using engagement as an ad metric, similarly brands using VideoEgg technology now pay when a user rolls their mouse over the ad rather than clicking through.

The banner ad has been hit hard by the recession in the UK digital market, with display spending in the first half of 2009 down 5.2 per cent on the same period last year, according to the IAB. It’s not that display is even hitting great heights; of all digital media spend, display is worth just 18.1 per cent.

Doubts have also been raised about the effectiveness of display advertising per se, with an AdTech study showing click-through rates on banners declining from 0.33 per cent to 0.19 per cent between 2004 and 2008.

It’s a sentiment echoed by Steve Hunt, head of media at Paramount Pictures, who reckons the decline of banner advertising is the fault of digital agencies. “The effectiveness of a banner ad depends entirely on the quality of its creative message, and that’s proved by click-through rates,” he says.

But is there a second life for the banner ad? Perhaps not for the all-too-irritating pop-ups and flashing banners of yesteryear, but certainly for a section of the industry that’s been written off countless times, there’s a surprising amount of innovation taking place in new formats, more selective targeting and ways of measuring ads, not to mention Google getting in on the game. And all this innovation has the potential to make display advertising as effective and accountable as search, which has brought in a few bob over the years.

The impact of size

The IAB’s standard ad sizes remain the most popular formats, but brands are increasingly looking to types of ads that leap out from the banner, enabling far better executions by creating a bigger canvas. A trend that’s originated from the US is larger in-page formats. “Leaderboards, MPUs and user-initiated pushdowns – used recently by Apple for its Mac ads – have been very impactful,” says Ian Thomson, head of business architecture at i-level.

At the other end of the scale, VideoEgg, a rich-media ad network, recently launched ‘Twig’, a thin format suited to blogs and other social-media sites with long pages. It stays at the top or bottom of the page whenever a user scrolls down so the advertiser doesn’t lose the reader’s attention as soon as they move below the fold.

On social networks too, brands are working out how to engage with fickle audiences by using interactivity in ads. O2 has taken things further with Agency Republic by including games within its display ads on sites such as MSN Messenger.
“Brands must work hard to use the banner to entertain and engage: rich-media ad formats provide an effective way of doing so,” says Jenni Convey, head of online marketing at O2.

Ad software firm Open’s approach has been to create a format that fits into the standard MPU size but incorporates the interactivity of widgets, social media and video. Working with OMD, Vodafone used the format to promote its sponsorship of the McLaren Mercedes Formula One team and Who Killed Summer? webisodes.
“It could have run banner inventory to drive people to the destination site to watch the content, but this way the user can engage with the content at that placement point,” says Joshua Rex, managing director of Open.

The Who Killed Summer? videos appeared with Twitter updates, past episodes, cast lists and the option to download the format, all in an MPU. Rex says the benefits for brands are ‘clicked view rates’ (when a user clicks to view the content), which can be up to 400 per cent higher than the industry’s average click-through rate.

Experience versus format

VideoEgg also promotes micro experiences through interactive video rather than static ads. Again, it’s more about the experience that is delivered to the consumer each time than the format. For this reason, the ad network is pushing a new form of measurement – cost per engagement – which it believes more accurately reflects a brand’s influence on a consumer than the traditional CPM, so brands only pay when the consumer rolls over the ad to expand the format.

This approach has merited the seal of approval from one of the UK’s top advertisers. Procter & Gamble has announced that it will be using engagement as an ad metric and has promised a new generation of creative ad formats.

Another format attracting brands is ‘in-skin’ advertising. This rich-media format essentially wraps around a publisher’s media player so that it is always in view whenever the user is watching content. “We’ve seen a huge level of engagement and it’s highly measurable in terms of interaction,” says i-level’s Thomson, who has used it for brands such as News International, Sony and the COI.

The average exposure to an in-skin ad is four to five minutes and click-through rates are three to four per cent, claims Hugo Drayton, chief executive of InSkin Media. The company is now planning to build on the success of formats such as homepage takeovers (see Casebook), with a new format called PageSkins, which is like an in-skin ad but surrounds the whole web page or a section of a site.

Targeting costs

It’s not just what banner ads look like but also how they are delivered that determines the success or failure of a campaign – and this has led to growing interest in ad targeting, despite the extra cost it usually involves. As well as typical behavioural-targeting ads that are offered by online publishers, some innovative start-ups are showing brands how they can use targeting to get the right message across to the right audience.

AdGenie is a third-party ad server that has the ability to dynamically generate different versions of an ad without brands having to come up with more than one creative. “We have one client who has 500,000 offers running in a single banner ad on a travel website, all within a single creative,” claims AdGenie’s commercial director, Martin Connolly.

Harnessing networks

This whole notion of making your display ads work harder to capture the attention of more fickle audiences has been picked up by the Rubicon Project, which offers technology to help publishers achieve the highest revenue for unsold inventory through online ad networks. Previously a founding member of MySpace’s UK team, Jay Stevens joined the Rubicon Project in June as vice-president and general manager, international. He says: “We’re able to see between 30 per cent and 300 per cent increases in effective CPM for that inventory.”

While start-ups are showing what the future of display could look like, the one company that has the ability to drag the sector out of its current slump is Google. By creating an ad exchange that runs auctions for inventory across hundreds of thousands of sites across the web, Google has the potential to do for display what it has already done successfully for search: make it a must-buy for brands.

It may take a while to get going, but Google’s expertise in making money from online advertising suggests that while banner ads may be dead for now, the internet giant’s exposure and a number of innovative new formats mean that there’s a marketing opportunity that stands a chance of being resurrected.

Smart think!ng: Online advertising

1. Display advertising may be getting less investment from marketers, but it can still be effective

2. New formats are emerging: from user-initiated pushdowns or leaderboards to PageSkins and Open’s Intelligent Media Unit

3. Successful display ads often have an interactive element and offer an alternative to going off site

4. Targeting is becoming more standard in campaigns and includes variables – from behaviour to demographics

5. Ad networks are growing – they took 44 per cent of the display market in 2008, according to IAB/PwC figures

Brands need to understand online video, and the fluid and interactive environment in which it operates. This means creating holistic campaigns that use pre-roll and in-banner video, reinforced with targeted display ads. This will ensure optimum reach and frequency is achieved efficiently.

If brands select the right ad network, sequential messaging, behavioural targeting and creative retargeting can also be included in the mix.
Studies show that barriers to online video ad spend are the ‘need for better measurement’ and the ‘need for more research’. Questions of scale and content are also highlighted by brands.

Our solution is to work with top publishers to deliver premium content and enough sites to deliver scale, develop the best targeting technologies and understand what the consumer wants and how they want it.

We’re excited about collaborating with our agencies and publisher partners on online video, and can’t wait to see what we’ll achieve in 2010 and beyond.

Mike James is the managing director of Adconion UK

Steve Hunt, head of media at Paramount Pictures, had a clear idea of the kind of display ads he wanted and how they should look. However, the challenge was working with MEC Interaction, The Creative Partnership and online publishers to make sure that his vision could be turned into reality.

“I wanted to completely transform homepages with a Transformers’ takeover ad but I wanted it absolutely non-user-initiated,” he recalls.

This would mean that the takeover ad would fire up automatically as soon as the user had arrived on the site, rather than when they clicked on it.

MSN and AOL came back with exactly what he wanted. “Obviously the sense of something transforming was going to be good; but I also wanted to create some standout, and do something that hadn’t really been done before on this scale,” says Hunt.
In both cases, the ads ran for one day and only appeared once, so as not to intrude on the homepage content. They were accompanied by similar homepage takeovers on sites such as LoveFilm and AskMen – but on these sites, the transformation did not start unless initiated by the web user.

The Channel 4 homepage takeover also saw its logo morph into the Transformers logo to entice visitors to click for the full transformation.

The takeover strategy worked, according to Paramount’s agencies. “Our interactions for the MSN and AOL takeover pages were the highest we’ve seen this year,” reveals Mark Brennan, account director at MEC Interaction. On MSN alone, the ad hit 4.5 million unique users and registered a click-through rate of 2.17 per cent.

Hunt adds: “Transformers has been phenomenally successful in the UK. I can’t say it’s totally down to the online campaign [one of the biggest that Paramount has ever run], but it had a bigger impact than expected.”