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Soup to Nuts Guide to Changing Ad Formats

Earlier this year MSNBC.com introduced a site design - a 'single-page' format. The goal, it said, was to be able to sell large, customizable ads, with advertisers offered the choice of as many as 30 different combinations. Banner ads, though, were not among them. It was, in the eyes of the ad industry, the final nail in the coffin for the much-maligned banner ad. After years of being ignored by consumers, online publishers - so it seemed - were beginning to do away with the format all together. A second look, though, told a different story - one that can be applied not only to banner ads but also display, search, mobile, video and outre formats such as augmented reality and 3-D.

MSNBC didn't get rid of all banner advertising - it simply reduced the amount of banner advertising and re-designed their site to make it more visually appealing, Larry Weintraub, CEO, Fanscape, tells MarketingVOX. "The ads are expandable and allow for additional exploration without being taken away from MSNBC.com," he says.

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In short, banner ads and other graphic-based ads are not dying, or becoming obsolete - but they are changing in order to better appeal to consumers and publishers. This change is manifesting itself not only in the outward appearance of the ads - but also in how they are bought and served.

In our latest soup-to-nuts guide, MarketingVOX is looking at the two most common online ad formats display and banner. In later editions we will examine changes in search, mobile, video and other formats.

Bigger and Better

If the changes in format were to be summed up in one word that word would be bigger. Larger format ads have become more prevalent over the last two years, says Ben Dehan, CEO of Foodbuzz, an online food community. "Leaderboards and skyscrapers are no longer considered premium," he tells MarketingVOX. "And while wide skyscrapers and medium rectangles are now considered premium, you have to wonder how much longer that will go on for." Dehan’s best guess? Dynamic content ads will increasingly replace static ads going forward.

Display ads are moving along a similar - and faster - trajectory.

Indeed online advertising in general is projected to grow at a faster pace in 2011, according to estimates from Borrell Associates, in large part because of the changing nature of the display format, which is increasingly being used by local advertisers and social media ads. Namely online ad spending will grow almost 14%, from $45.6 billion in 2010, to $51.9 billion in 2011. While national advertisers will increase their use of targeted display by nearly 50%, local advertisers will outperform even that.

Use of targeted display by advertisers local to the markets where their ads run will more than double, reaching more than $2.3 billion next year. ComScore as well recently weighed in with its own statistics: it found that the average US internet user saw more than 6,000 display ads during the course of the Q3 2010, and 109 different advertisers delivered at least 1 billion display ad impressions during the quarter, up from 76 during Q3 2009. All together, 1.28 trillion online display ads were delivered to US internet users during Q3 2010, marking a 22% increase from 1.05 trillion online display ads during Q3 2009.

Value Add

New forms of display technologies run a wide gamut.

There is, for example, Medialets’s new format called Medialets Adaptables, which gives creative more flexibility in exactly where the expanding content displays on the screen; to the left, right, above, below, on top of and - perhaps most interestingly - even disconnected from the initial banner. The format can also be configured so the expanded content displays gradually to create, for example, a "growable" banner.

AOL also recently unveiled a new ad that is about four times as large as the ads which currently appear on the border of its web pages. The ads offers space for three special functions - for example, a photo gallery, a video, coupons, Facebook or Twitter updates, or maps. Another feature offers a 3-D view of a product. Advertisers will also have the ability to offer a click-to-buy option.

In August, Dapper introduced Dapper DisplayDR, a platform that allows advertisers and agencies to create and target dynamic ads that match the viewer's intent to the products and offers available at the advertiser's website. It is powered by Dapper's IntentMatch technology, which automatically extracts products, offers, and relevant content from advertisers' websites. Dapper was acquired by Yahoo last month.

Then there is Google, which is experimenting with new types of display ads, such as expandable ads on YouTube and ads aimed at a specific audience, such as young women who like basketball. Google and the Omnicom Group have also inked a deal to collaborate on Google's audience-based ad auction system and the tools Omnicom's trading desk uses to access inventory.

Beyond Banner and Display

But as consumer tastes - not to mention online content - continually changes, these formats, no matter how much revitalization they undergo, will not be enough to satisfy demand by both consumers and publishers for innovative formats. Already the industry is pushing at the edges of these formats, blurring the lines in some cases with other formats such as video. A promotion for Ubisoft's "Just Dance 2," a dance-off in Times Square used live video in a banner ad (via AdAge), for example. Some of the reluctance or disinterest by marketers in this particular twist to banner ads is that not many consumers are particularly interested in whether a video is live streamed or not – just so long as it is engaging. And that, of course, is entirely out of the marketer's hands when video is streamed live. Another factor has been a dearth of technology to make live streaming video and video ads such as Ubisoft’s Dance Off feasible. YouTube has only just begun offering live streaming trials with Next New Networks, Howcast, Rocketboom and others, AdAge noted.

CAPTCHA

Some online ads are morphing into entirely unrecognizable forms, designed ostensible to solve a problem - while delivering a marketer’s message at the same time. One example are the ad companies focusing on consumers’ distaste of CAPTCHA technology.

Solve Media recently introduced a TYPE-IN advertising platform, which uses CAPTCHA authentication. Instead of the hard-to-read jumble of words and numbers and phrases that great people when asked to prove that they are human and not an automated bot, the Solve Media platform shows them a simple logo, a brand message in quotes, and an input box. Users type in the brand message as authentication. Advertisers pay only for messages that have been both read and typed correctly. Engagement rates for TYPE-Ins have exceeded 40%, the company reports - compared with rates of 1% or less for typical online display ads. Toyota, Microsoft, Universal Pictures, AOL, Tribune, and Meredith Publishing are already using the system.

How They are Bought, Served

Other major changes have to do with how these ads are bought and served. Private advertising exchanges - while still very few in number - are seen as a potential growth area. The Weather Channel recently launched such a platform with AdMeld, called Category 5. It connects advertisers to more than 50 million consumers across TWC’s web and mobile properties. The network also gives the publisher complete control over how each impression is sold. Many of the largest advertising and media holding companies are integrated into Category 5, including Omnicom and Vivaki.

In many ways Channel 5 is the end result of long-forming trends in the ad market. Cross-platform, audience-targeted ad buying is gaining momentum as are the sophisticated data management tools that can identify, package and sell a publisher’s most valuable audience segments have come to market. Also, agencies and advertisers have long wanted a more efficient means of executing cross-platform buys with publishers of this caliber. For their part, publishers such as the Weather Chanel have long resented the low prices set by ad networks. Over the last twelve months, agencies have begun diverting sizable budgets to audience-targeted media buys, according to Michael Barrett, CEO of AdMeld. "This trend is accelerating, and the savviest publishers are moving to capture these spends and embrace ‘audience-selling’ as an integral part of their strategy."

The RTB Piece

Then there is the real-time bidding element to Channel 5, which has been a core competency of AdMeld. The launch of TWC’s private ad network will be closely watched not just to see if this particular concept takes off but also to see how well its real-time bidding elements will perform. At least half of all targeted ads will be bought using real-time bidding technologies within five years, predicted Neal Mohan, Google's VP of product management at the recent Mixx Conference in New York. That has been Google's experience with DoubleClick, which has seen its real-time advertising triple in the past year. Particularly hated by privacy advocates, real-time bidding lets advertisers target audiences by individual impressions via auctions. Advertisers get access to consumers based on their web history thus allowing them to show relevant ads based on their history. Right now only a miniscule percentage of ads are sold this way, but that is rapidly changing.

AdSafe recently observed that premium brand advertisers appear to be shifting a larger percentage of their display adverting spending to ad-exchanges, real-time-bidding platforms and demand side platforms - advertisers that had previously acquired media primarily through direct publisher sales. Also RTB offers an excellent ROI story. Improve Digital co-founder and COO Janneke Niessen cites research by Turn that shows click-through rates improving by up to 135%, conversion rates up 150% and cost per action up 145% when compared to non-real- time inventory. (via New Media Age).

Other data she points to is provided by comScore, which reported a 106% increase in overall CPM over six months by using real-time bidding. And Forrester Consulting found that an insurance company decreased its online cost per lead from $200 to $100.

Targeted, and Re-targeted

Another technical change that could further revitalize online ads is the growth of ad retargeting. A study from comScore and ValueClick, which measured the relative effectiveness of six major online targeting strategies - audience targeting, contextual targeting efficiency pricing, premium pricing run-of-network and retargeting - found the latter to offer the most lift at a whopping 1,046%.

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The technology received a boost when earlier this year Google rolled out a new AdWord remarketing feature to be used throughout its Content Network. It allows AdWords advertisers to pitch an ad to consumers anywhere they happen to be in Google's Content Network - based off of either where the consumer recently visited or as part of an integrated search ad campaign.

Other vendors are turning their attention to retargeting technology. Magnetic received a total of $5.25 million from Charles River Ventures, Ron Conway, NYC Investment Fund, Founder Collective and IA Capital Partners. The company plans to use the money to further develop its search re-targeting technology for all types of media buyers. It also announced a new option for advertisers - search re-targeted campaigns for advertisers and agencies. Criteo also recently landed $7 million in Series C round of funding from Bessemer Venture Partners, bringing its total funding to $24 million. Criteo, which offers display ad retargeting using a performance-based CPC model, is using the capital to build out new data centers and other infrastructure. GSI Commerce is using its recently acquired FetchBack's retargeting technology to expand its marketing services and reach into new vertical markets.

Banner Blindness

That all said, there are reasons why marketers have not gravitated to the concept - reasons that statistical evidence or new tech offerings may not completely address. One is that display ads technology in general has been lackluster, although that is changing as well. "People who end up on special interest sites are not going to pay attention to banner or display ads," Rodney Mason, CMO of the digital agency Moosylvania, told the E-Commerce Times. "What they will respond to are tools that allow them to continue to spread the word and interact with the company." Then there is very fact that ad retargeting is aimed at a consumer that has already bypassed a product or advertiser. Shown an ad for the same product or site too many times, it has the potential of becoming annoying.

"With all advertising, there is the law of diminishing returns," said Jarvis Coffin, CEO at Burst Media. "After a while, it doesn't make sense anymore to keep trying." (via the E-Commerce Times).

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