The banner ad is dying.
Or is it?
Online ad revenues remain on a hockey stick trajectory, clocking in at a record $9.6 billion in the first quarter of this year (yes, a bunch of this is search and video, but still). Yet the demise of t...
The banner ad is dying.
Or is it?
Online ad revenues remain on a hockey stick trajectory, clocking in at a record $9.6 billion in the first quarter of this year (yes, a bunch of this is search and video, but still). Yet the demise of the banner ad has long been predicted, and some say the deathwatch is imminent -- possibly before the end of the year.
That banners aren't working very well is common knowledge. You've seen the stories: You're more likely to survive a plane crash/become a Navy Seal/summit Everest/be the next Beatle or Elvis than to click on a banner ad.
That consumers don't interact with banners is no secret. In fact, it's entirely possible that most clicks are robot and/or click farm generated. Then there's the banner experiment Ted McConnell cooked up, a totally blank ad (no copy, no image, no nothing) that saw interaction rates that in many cases exceed those of "real" campaigns.
The result of all this inefficiency, unsurprisingly, is severe downward price pressure on banners, much to the chagrin of online publishers. As one publisher put it in a recent conversation, "It's more expensive to get readers, and then when we do we can sell them for less."
Yet at the same time, publishers speak of a "voracious appetite" for display ads and banners. "As publishers we'd tell advertisers that we're unique and special, but really we're not," one publisher confided just this morning, "When demand for banners was too high, we'd just rent an audience. We'd rent from Google, from telemarketers, or rent email lists. The performance isn't that different, and the advertisers don't really care."
So let's get this straight: Display advertising doesn't work, it yields ever-diminishing revenues, and advertisers can't get enough of it?
Houston, we've got a problem.
We are witnessing a meteoric rise in marketing solutions such as native advertising and content marketing, often at the expense of display advertising (and research indicates this is the budget being raided to pay for content creation). Is it possible that digital ad solutions have become too automated? Too "set-and-forget?"
And by automated, I'm not just referring to technological automation, but also to monodirectional campaign thinking; "throw a banner at it" being the de facto solution -- the box that needs to be ticked off on the marketing plan.
Automated buying, automated optimization, automatic personalization, customization, targeting, retargeting. All seem to be working less effectively for all parties involved: the buyers, sellers, and intermediaries in the display advertising value chain. The inevitable reaction to all-automated, all-the-time display is the more labor intensive content and social channels.
The question isn't whether or not the banner will die. It won't. The question is whether it can lead a more meaningful, rewarding life in the future. To do so it must become less commoditized, productized, and automated, and more integrated with its more labor-intensive marketing brethren.
Rebecca Lieb is an analyst in digital advertising/media for Altimeter Group.
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