How Far Has Digital Advertising Come?

Digital advertising (and in particular the humble ad banner) has come a long way since its first appearance on the site Hotwired 19 years ago. According to the first-ever banner ad’s creator Joe McCambley, the campaign generated an impressive 44 percent click-through rate. The advertiser, AT&T, must have been delighted with the response and more than likely unsure how to measure the true value of the campaign.

Fast-forward to 2012 and the growth of the simple ad banner has been phenomenal:

  • 4 trillion banner ads served
  • Estimated value of $23 billion
  • Accounts for almost a quarter of the total annual global digital spend

It would appear the ad banner is maturing nicely, or is it?

In a recent study by the U.K. company OnScroll, it is estimated that 54 percent of banner ads are never seen. That’s $11.7 billion of wasted ad spend in just 2012! Pretty inefficient.

Then compare today’s average click-through rates of 0.05 to 0.10 percent to the first-ever campaign of 44 percent. I know it’s not comparing like for like numbers (and massively so), but the contrast is indicative of an ad format that lacks impact and responsiveness. Pretty ineffective.

Let’s focus on the first issue, of ads being seen or viewed. The IAB’s definition of what constitutes a successfully served ad is that 50 percent of the ad must be seen for at least a second. In itself, this is hardly reassuring for advertisers. If you add OnScroll’s claim to the mix, then banner ads are an incredibly inefficient and ineffective way to spend advertising dollars.

But this is about to change, demonstrating how this industry is constantly evolving and at an unprecedented pace. Advertisers and agencies in the U.K. and U.S. are beginning to demand that they only pay for viewed ads, and publishers/site owners must prove that they are being seen:

“The Viewable Impression is the most realistic view of internet ads that will move the business…It’s the new currency that will move the business forward” – David Cohen, CEO of Universal McCann

So advertisers and agencies now see ad viewability as a currency that they will trade on. Publishers/site owners should take note. It’s not a question of if this becomes currency but how quickly.

But this is also a big opportunity for publishers/site owners to increase ad efficiencies and to better monetize their inventory, as companies like OnScroll are fast helping them realize. In recent test campaigns in the U.K., using OnScroll’s platform, publishers enjoyed:

  • CTR increases of 50 percent-plus
  • 2.5 times engagement level increases
  • 76 percent CPM increases

Let’s focus next on the engagement levels and responsiveness of banner ads. Many years ago the digital media industry coined the phrase “banner fatigue” with research from neuroscientists testifying to the fact that the human brain had virtually no reaction when exposed to a banner ad. Banner ads were/are too small or too simple to engage the viewer or make any emotional impact or appeal. Banner ads do lack the impact and emotional appeal of, say, TV advertising, but this misses the point entirely and it is way too early to write them off. The current inefficiencies and ineffectiveness of banner ads are not the end game for Internet advertising but a growing pain. New initiatives like 3MS (Making Measurement Make Sense) are looking into digital advertising efficiency and effectiveness, experimentation with larger ad formats, and the ability to target anyone, anywhere, anytime, and make real-time adjustments to campaigns. Platforms such as OnScroll and continued experimentation and iteration will allow this segment of the market to become even more dominant and cost-effective.

This may sound corny, but in terms of digital advertising formats we might just be arriving at the end of the beginning, but absolutely not at the beginning of the end.

Digital Advertising image on home page via Shutterstock.

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