WHITE PAPER. The evolution of Display CMO SERIES 2ND IN A SERIES OF TWO ON THE EVOLUTION OF SEO, PAY-PER CLICK & DISPLAY ADVERTISING

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1 13 PAPER CMO SERIES The evolution of Display 2ND IN A SERIES OF TWO ON THE EVOLUTION OF SEO, PAY-PER CLICK & DISPLAY ADVERTISING Why read this paper? If you think display is dead, you need to read on. Display advertising does still have a place in the advertising mix as its biggest advantage and most beneficial factor is branding. Recent research by comscore confirmed that although it might be a delayed effect, a strong branding process definitely takes into effect when a viewer is exposed to a display ad, even when they don t click on the ad. Table of contents 1. The Origins Of Display 2. A Bit Of History 3. Display Advertisig Comes In Many Shapes, Sizes & Types 4. Does Display Advertising Still Work? 5. Display vs. Pay-Per-Click 6. Changing Attitudes 7. Better Targeting & More Relevant Ad Delivery 8. New Metrics To Measure Effectiveness 9. The Future Of Display Advertising 1

2 1. The Origins of Display Before the dawn of the Internet, display advertising originally referred to billboards or any other form of advertising that typically featured a logo and some text, such as posters and flyers. Once the Internet became a viable medium, display found a new home online. As new formats such as banners and skyscrapers were established and became commonplace throughout the industry, display started to flourish. As display grew in popularity, a dark side emerged which had to be stamped out intrusive formats like pop-ups. Standardized display formats have been hugely effective tools for: Delivering brand messages Immersing consumers with interactive experiences Generating direct response As the digital landscape has evolved, display is adapting in response as publishers begin to adopt larger formats, paving the way for increased creativity and innovation. Display has morphed from just a static ad embedded in a web page with images and text to include such elements as sound, animation or video to attract attention. Eventually, with the help of some programming it even became interactive. To help with the clutter factor, display ads use Flash animation and video to gain more attention, and use interactivity as a focal point. These types of ads gain the viewers attention, and make it easier for the advertiser to get the point across and boost the branding process. Up until 2004, display ads were measured and sold solely on the number of impressions, but today it also relies on tracking, the amounts of clicks received but most importantly conversions made. 2. A Bit Of History: Display advertising has only been around for the past 15 years. The first ever display ad was sold in 1993 by Global Network Navigator (GNN), which now holds the title for the first commercial website in history. But history changed on October 25th 1994, when HotWired placed and sold the world s first banner ad on its website. The 468 x 60 banner for AT&T teased web users by asking if they had ever clicked on a banner. You will it predicted. And online display advertising was born. Dispaly advertising timeline Early display advertising networks launch and gain in popularity Demand Side Platforms (DSPs) raise venture capital and launch Data Management Platforms (DMPs) raise venture capital and launch Net Gravity launches first local ad server Google aquires DoubleClick, including DoubleClick ad exchange Real Time Bidding Popularized Hotwire launches first banner ad for AT&T Right Media (now owned by Yahoo) launches first Ad Exchange followed by AdECN (now owned by Mircrosoft) TARGETING TREND BUYING TREND DISPLAY SPEND GROWTH CONTENT TARGETING BEHAVIORAL TARGETING PUBLISHER AD NETWORKS AD EXCHANGES DSPs LOW HIGH NEGATIVE MODERATE LOW MODERATE 2

3 Obviously things have changed dramatically since that first invitation by AT&T. The evolution has been driven by the introduction of exciting new formats and the desire of forward looking media owners to change the perception of display beyond that of as simply a direct response vehicle. The online ad market has grown from using static JPG image banners to GIF banners and Flash banners, which have smooth animation, exciting effects, engaging graphics and interactivity. Content and smooth animation can be shown all together in today s animated display ads. They take less space on the web page. Advertisers can put more text content and graphics and experiment with different looks on the same web page. Display ads also load quickly onto a web page unlike video ads. Viewers become impatient when the web page loads slowly and usually leave the page. Display ads make a page load quickly, so users can see the page content and ads without any hassle. 3. Display Advertising Comes In Many Shapes, Sizes & Types: As display has evolved over the years, more formats were introduced such as leaderboard, full banner, wide skyscraper, and medium rectangle. In 1996, rich media was developed; the first rich media featured a playable version of the game Pong in the banner. Video ads, including pre-roll, post-roll, mid-roll and overlays came next, with high-definition ads now being developed. To improve targeting, display ads were placed on specific websites by: Category (i.e. beauty cream on fashion or beauty sites) Retargeting (visitors who have already visited a specific site are served a specific ad when they browse elsewhere on the Internet) Contextual (ad matches the content of the web page and is of topical interest to the visitor) Behavioral (using cookies, targets a specific audience based on their web history) Optimization (different versions of ads are continually compared and user preferences and interactions noted so the most effective option is served more) There are also many types of display ads, including: Traditional (usually rectangular in shape, contain text and have a GIF or JPEG image that link to another page or site) In-Line (in a column on the right or left of a web page and can be graphical with a link, or just text with highlighted hyperlinks) Pop-Up (a separate window generated onscreen when a web page viewer clicks on a link or button) 4. Does Display Advertising Still Work? Many people consider traditional banners not much better than white noise. In fact, the average CTR ( Click Through Rate) is only about 0.1% or one click for every 1,000 impressions. A large part of the problem is the tremendous number of display ads that viewers are exposed. In 2011, every Internet user viewed approximately 30,000 banner impressions. Most people don t remember them. Display advertising has become more of an annoyance, and not surprisingly, advertisers are abandoning the format except in direct response industries. But recent research by comscore shows that display advertising has a discernable effect on user behavior even at low click through rates. A group of 139 display campaigns were monitored and the results showed that they had an extensive effect on traffic, sales and branding despite a low amount of clicks. The display campaigns gave a 46% increase in websites visits and exposed viewers were 38% more likely to conduct an advertiser related branded keyword search. And 27% percent were more likely to make a purchase online with 17% of viewers more likely to make a purchase at the advertiser s retail store. We at Sq1 measure the impact display has on other channels such as Pay Per Click and SEO traffic. We ve seen upwards of 55% increase in PPC effectiveness when PPC is coupled with a display campaign. It should also be noted that display has a significant impact on SEO conversions measured as View Through conversions. That is, even if a consumer does not click on your display ad when they return organically and interact with your site, we can track those conversions. We ve seen many more view through conversions then click conversion that we attribute to the display ad. 3

4 5. Display vs. PPC Advertising PPC campaigns can be laser-focused to target the exact audience you want. The advertiser can control campaigns with keywords, negative keywords, target demographics and budget. You can easily modify and track your campaign for increased efficiency at a minimum cost level. The minimum required budget per day with PPC Google Ads is a just one dollar. You only pay when your ad is clicked and you can even specify how much you are willing to pay. Display advertising can also be paid for on a PPC basis, but they re never as focused or targeted like PPC because the display ad can be triggered by any advertiser supplied keyword. This is a major drawback as the more related your ad is to the web page content, the more likely it is to reach its target audience and be effective. In most cases, display advertising is paid for on a cost per impression (CPI or CPM) basis with a set price, and ad placement on some web pages can be expensive. While it s easy to track and measure a display advertising campaign, modifications for your banner involve a lot more time and effort in comparison to the simple text copy of PPC. While each medium has its pros and cons, ultimately your choice is dependent on what you want to achieve from your campaign and your product. If you re aiming for high website traffic and effective branding, then you will benefit from a display advertising campaign. However, if you are focused on attaining high ROI and highly targeted traffic, then you would be more successful with a PPC campaign. 6. Changing Attitudes: Even though display ads have had low click through rates for years, they have remained a holdover from the earliest days of the Internet. Why is that? It s mainly because banner ads are the closest thing in the digital world to traditional magazines or print ads. There is a reluctance to let go, a sort of nostalgic, sentimental attachment. As mobile and social have exploded, publishers and content producers are now tasked to find new ways to engage their audiences. Advertisers are not only evolving their tactics, but also the fundamental way they think about display advertising. Today, digital is all about integration, not interruption. Display advertising is aimed towards building customer consciousness around a product, service or brand. This process is highly effective with visuals rather than with text. The biggest benefit of display advertising is that the image of a brand or product is embedded in the viewer s mind, and results in more chances of the viewer acting on this awareness in the future, thus accelerating sales and goals in the long run. Advertisers who do not leverage the power of the web in their display ads are missing out on a huge opportunity for clicks and conversions. Incorporating in-ad engagement opportunities such as videos, galleries and questionnaires gives you an opportunity to make a valuable impression and increase brand awareness without pulling the visitor away from their desired content. 7. Better Targeting & More Relevant Ad Delivery: With every passing day, more user data is shared with publishers and networks and it s being shared faster than ever before. This data offers potential advertisers a very rich and real-time profile of user interests. Just as Amazon shows consumers what other items were often purchased with the item they re viewing, ads can be delivered based on what other users are clicking on. This bigger, faster data increases relevancy to users and effectiveness to advertisers. 8. New Metrics To Measure Effectiveness ROI is still the issue the unresolved issue when it comes to display. But new metrics are being developed that will help change the CTR mindset. According to Google, 35% of all campaigns will primarily use metrics beyond clicks and conversions. The metrics being considered more closely relate to off-line advertising, such as emotional engagement and behavior impact. When you compare online consumption to traditional channels, it becomes readily apparent that digital measurement needs to evolve. 4

5 9. The Future Of Display Advertising: Some people suggest that display is already dead and has no future. They predict that the Internet will be dominated by social, branded content. Others view display as a necessary revenue stream for publishers that is here to stay. The massive shift to social media does not signal the death of display advertising. In fact, it s helping to accelerate the necessary evolution of display. Although many marketers are under the impression that display advertising is a dying form, recent studies and its abundance on the web state otherwise. Their visual appeal and versatility can be used for maximum advantage in engaging potential customers and they have a long lasting branding effect on all viewers without the need for clicks. This is a more traditional form of advertising, but is currently evolving to be more audience centric. At Sq1 we believe that if the message is relevant to the target consumer, which is a must from both a messaging and targeting point of view, then your display ads will have an impact. Properly managed, you can serve different display ads to different audience segments with various messaging depending upon where they are in your purchase funnel. New technologies and advancements in the industry are set to give advertisers improved targeting with display ads. Also, the introduction of real-time bidding (RTB) is minimizing the difference between display advertising and search. RTB is a relatively new advertising technology that allows online advertising to be purchased and served on the fly. It lets advertisers bid on one impression at a time, giving the ability to pick the right impression (viewer) at the right time on the right website just like search engine marketing. What is not mere conjecture is that the way users perceive advertising is changing. With more relevant ads delivered in newer unique ways, the display ad industry is evolving so it can survive. As marketers we need to adapt measurement techniques to find the best way to engage customers without interrupting their online experience with white noise. IMPROVED TARGETING REAL-TIME BIDDING I N - A D E N G A G E M E N T U N I Q U E F O R M AT S BRAND IMAGE THE FUTURE OF DISPLAY ADVERTISING 5

6 Sq1: The Customer Engagement & Conversion Optimization Agency About the author Judge Graham, President It s fitting that Judge became president of Sq1, as he has been at the leading entrepreneurial edge of digital his entire career. Before joining Sq1, he was co-founder and CEO of one of the most successful digital agencies in Texas. Judge helped his digital agency grow its client roster to include such notable companies as American Airlines, Mountain Dew, Pier 1 Imports, Dillard s and Radio Shack. The youngest recipient of Comdex s Small Business of the Year award, (one of the largest trade shows and computer expos in the world), Judge has been a leader in digital marketing/performance media, user experience and web design and development for well over a decade. He holds a bachelors degree in Business Administration from Texas Christian University with an emphasis in e-business. Sq1 continually engages customers along the entire consumer lifecycle and purchase funnel, using conversion optimization to drive higher sales at a lower cost. Our customer-centric approach applies data and analytics to every interaction helping our clients maximize customer profitability and optimize customer experiences. Designed to adapt with our clients ever-changing consumer base, we take the guesswork out of marketing. Our repeatable programs integrate all channels and media to steer consumers along the path to purchase pre and post leading to predictive ROI modeling. While traditional conversion optimization measures only one phase of the conversion process, we measure each and every consumer touchpoint to determine the best way to maximize marketing spend. Every single program is viewed as an opportunity to test, learn and optimize. Using multivariate and A/B testing, we continually scrutinize a variety of factors including: landing page effectiveness, messaging, and targeting methodologies. We take full advantage of the latest in technology, message delivery and measurement. Our Optimization Science Engineers design our programs, focusing on predictive modeling, ROI, and monitor results in real time, making changes to campaigns whenever necessary all while the campaigns are live. We are a privately-held corporation with offices in Dallas, Houston and Portland. For more information, contact Sq1 at or visit 6