Earlier this week the New York Times reported that companies are reconsidering their approach to online display advertising. The Times also noted that companies are planning to push even bigger budgets into search marketing. They mention tough economic times as a possible reason. I am not sure that is the whole story. The bigger story may be an impeding evolution in how companies view display advertising.
Advertisers have had the ability to narrowly target their paid search ads for some time. The same advertisers are now hoping to do the same with their display ads and media buys. Rather than sponsor a whole portal and accept the associated large media spend, companies are hoping to target their display ads to more narrowly defined personas and demographics. This seems like a natural evolution.
The Times goes on to report that the result of this display advertising shift has been lower CPM rates from the ad networks. Prices have been pushed down because fewer companies are willing to bid high and compete for what has seemed like unsatisfactory results. Meanwhile search marketing costs seem to keep rising. Perhaps this is a sign that advertisers are willing to pay more and more because they can so closely manage their search campaigns.
Experts will point to the fact it may be hard to verify the branding effect of display ads. Most online marketers give sales credit to the last click a customer made before buying. With so many sales coming from search referrals, it stands to reason that search is where you want to be. Some would argue that display ads may lead consumers to later search for related services. The tough part is trying to figure out how to give credit to the display ad if it wasn’t the last click before purchase.
What’s next? We could be witnessing a bit of a sea change in the display advertising world. It seems only the companies with the biggest online marketing budgets have been able to experiment with banner/display ads. As costs come down, and targeting becomes more of a reality, many smaller companies may be able to run tests in the display space without having to commit an enterprise style budget. These same smaller companies have already been active in search marketing for years. Many are anxious to do more in online marketing, but don’t want to break the bank with tests.
Integration, integration, integration. I can’t say it enough. Use your online marketing budget intelligently and don’t toss all your eggs into one basket. The most successful websites combine a strategic mix of paid search marketing, display advertising, natural search optimization, email marketing, social marketing, and more. The key is the think it all through so the multiple channels work well together.
I am not surprised that the display advertising world is changing. I hope that it opens the door to more advertisers. Ultimately the ad networks and even web users will benefit. We all must admit that display/banner ads seem less annoying when they offer products we are likely already interested in. Targeting feels good.