That most archaic form of display advertising, the humble banner ad, has been around for nearly 25 years.
It first appeared online in 1994, making it almost as old as the World Wide Web itself. But findings from The State of Digital Advertising 2017, a report by ClickZ Intelligence in partnership with Marin Software, suggest that the banner ad as a form of display advertising is on its way out.
While investment in display advertising is still widespread, with 70% of digital advertisers reporting that they invest in display advertising on desktop (and 61% on mobile), there has been a shift in the way in which traditional display advertising is used by marketers.
Marketers no longer rely on display advertising to drive direct ROI, and there is a growing perception that display advertising in general is lost on users, who are so used to it as to be ‘blind’ to its messaging.
So what methods are advertisers employing instead, and is there still a role for the banner ad to play in our increasingly sophisticated world of ad targeting?
Dwindling returns from display
The State of Digital Advertising 2017 surveyed more than 500 marketers to find out where and how they are investing their advertising spend – and what kind of returns and challenges they experience.
Although the vast majority of advertisers still invest at least some of their ad spend into display, when asked to specify which advertising channel was least likely to deliver returns for their business, 48% of advertisers chose “Display/Flash/programmatic advertising”.
This was by far the advertising channel perceived to perform most poorly, 25 percentage points ahead of the next most-cited underperformer, which was paid social media (cited by 23%).
In response to the question “How would you rate your ROI from the following advertising channels?”, more than a third of advertisers (34%) rated their ROI from desktop display advertising as ‘okay’, while a further 14% rated their ROI from desktop display as ‘poor’. Only 7% considered their ROI from this channel to be ‘excellent’.
Mobile display advertising was considered to be the worst-performing channel of all, with close to a fifth (18%) of advertisers rating their ROI from mobile display as ‘poor’, and a further 31% rating it as just ‘okay’. Six percent rated their ROI from mobile display as ‘excellent’.
Display advertising on mobile is generally perceived to contribute to a poor user experience, as it makes pages slow and expensive to load, and can often take up a disproportionate amount of screen real estate.
Just earlier this year, Google responded to the problems posed by mobile display by penalising sites that use intrusive mobile interstitials – pop-ups which load ahead of page content. With this in mind, it’s little wonder that twice as many users block ads on mobile as on desktop – or that advertisers are seeing poor returns from mobile display.
One survey respondent observed that the returns from display as an advertising channel have decreased significantly over the past several years. “It’s just not as valuable as it was eight to 10 years ago.”
Another stated that display advertising is no longer effective, as “Audiences are blind to banner ads – it’s just a psychological imprint with no guarantees.”
But while display advertising is widely agreed to be a poor source of direct ROI, for some marketers, a ‘psychological imprint’ is exactly the idea.
Awareness over revenue
The data gathered by the State of Digital Advertising report points to a shift in the role that display advertising plays in marketing campaigns. Rather than expecting it to deliver direct ROI, advertisers are using display as a tool to build brand presence and awareness. As one survey respondent wrote,
“[Display advertising] is more used for brand recognition and ensuring we are seen more than our competitors.”
Another advertiser agreed:
“It does keep the brand top of mind, but you don’t expect many direct conversions from this advertising channel.”
But is a vague, generalised impression of a brand all that display advertising can achieve? Over the past few years, some more targeted, sophisticated forms of display advertising have come to the fore: namely, programmatic advertising, and behavioural retargeting.
Programmatic and retargeting: The next generation of display?
Programmatic advertising allows advertisers to purchase ad space much more cheaply and easily, often in real-time (using methods such as Real-Time Bidding), enabling them to target it at specific users.
Behavioural retargeting or remarketing, meanwhile, targets online advertising at consumers based on their previous internet actions, also allowing for a much more personalised ad experience.
Both of these methods sound like a vast improvement on the old technique of simply showing a user an ad and hoping for the best. But how well do they deliver returns in practice?
More than half of advertisers (53%) surveyed in The State of Digital Advertising reported using behavioural retargeting or remarketing on desktop, and 44% on mobile. And generally speaking, the results are seen as positive: 44% of advertisers rated their ROI from desktop retargeting as ‘excellent’ (14%) or ‘good’ (30%) while only 9% rated it as ‘poor’.
Thirty-eight percent of advertisers rated their ROI from mobile retargeting as ‘excellent’ (13%) or ‘good’ (25%), and again, only 9% rated it as ‘poor’.
The results for programmatic advertising, on the other hand, are less universally positive. Close to a third of advertisers (30%) reported investing in programmatic advertising on desktop, and 26% are making use of it on mobile.
However, less than a fifth of advertisers (19%) would rate their ROI from desktop programmatic as ‘excellent’ (6%) or ‘good’ (13%). Similarly, only 18% of advertisers rated their ROI from mobile programmatic as ‘excellent’ (6%) or ‘good’ (12%).
Perhaps most tellingly, programmatic advertising on both desktop and mobile earned the highest percentage of ‘Don’t know’ ratings for its ROI, with 16% of advertisers reporting that they did not know how to rate their ROI from desktop programmatic advertising – and the same for mobile.
And advertisers who are unsure of the returns from an advertising channel will be less likely to invest or increase spend in it, preferring to stick to more tried and tested methods of advertising like traditional display – even when they might not deliver the returns they once used to.
Add to that the recent controversy over advertisers such as the Guardian and the British government seeing their programmatically purchased ads appearing next to extremist content online, and programmatic undoubtedly has some way to go before it can earn the trust of digital advertisers.
The landscape of display advertising is not what it once was 10 years ago. The rise of mobile, the proliferation of ad blocking software, and an overall user acclimatisation towards banner advertising have caused the ROI of display to diminish, and advertisers to turn to newer, more untested methods of reaching their audience – with mixed results.
For the time being, advertisers are keeping one foot in the world of traditional display, hedging their bets with display as a brand awareness tool, while relying on other methods to drive direct ROI. But as targeting and personalisation methods develop further, it may be a very different story just a few years down the line.
For more insights into the evolution of display advertising and global advertising trends in 2017, download The State of Digital Advertising 2017.
Advertisers are more concerned than ever about brand safety, and one of the primary ways they're trying to keep their ads from appearing in unfriendly places is through whitelisting. But as more and more brands turn to whitelisting, some are talking about the impact this will have.
We all know that Facebook is a viable source of huge amounts of mobile traffic with relatively cheap CPCs). It’s too good an opportunity to ignore in today’s digital landscape - even if your mobile landing-page experience isn’t up to snuff.
For years, advertisers have tolerated a big elephant in the room: the fact that their digital ads aren't always appearing where they would want them to.
Deep learning tools are the next major area of AI-based research, and it will spark a wave of future innovation in every industry – bringing a new era of marketing which both advertisers and end-users will benefit from.