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Don’t Call it a Comeback, Dave Zinman on iMedia Connection

infolinks, January 15, 2013

Yes, I’m an Internet Old-timer, but surely I’m not the only one who remembers seeing the first banner ad for AT&T on back in October 1994. Display advertising is 18 years old. As the digital ad industry enters adulthood, it appears as though we’re training a whole new generation to ignore the very ads designed to keep our Internet free – a phenomenon called “banner blindness.” Despite comeback reports to the contrary and rosy analyst projections, I believe display advertising is fundamentally broken.

The way I see it, there are three big problems with display and three ways publishers can address them. After laying it all out, I’ll call out a publisher who is blazing a trail in best practices for addressing all of this.

Problem1: Expect Irrelevance. Good display ads are being crushed under the weight of tonnage. Take a look at premium publishing sites, or even some of the better special interest digital publishers, and you will see a lot of ads — too many ads. Some are relevant to the reader. Most are not. And the most relevant ads are capped out after the first few impressions of the day. After that, a steady stream of online universities, dating sites and subscription services are sadistically repeated to an uninterested audience. This creates a situation in which consumers have come to expect irrelevance from advertising, and consequently have learned to avoid even looking at standard IAB units.

Solution 1: Ramp up Relevance: The solution is three-fold. First, clamp down on the proliferation of standard units. A good rule of thumb is to introduce only one unit of each size on a page. Second, introduce innovative ad units that appear in non-traditional places. Examples include sliders, ads in the browser margins, or affiliate links tied to site content. Third, only serve new placements when the relevance is strong enough. Set a high minimum eCPM floor, so only the best, most relevant ads get served. The low eCPM ads are the ones mostly responsible for the irrelevant tonnage and are least likely to be missed in a publisher’s monthly revenue.

Problem 2: Real-time Intent. Search advertising changed the game by targeting user intent at a granular level, but also doing so when users are on task. Intent, in real time. The rise of display has been predicated almost entirely upon user targeting, but only after the fact, when users have moved on to other things. Intent, but too late. While better late than never, it’s too late for relevance. That’s another reason why click through rates have plummeted from 2% in 1998 to .1% today

Solution 2: Contextual Targeting. Let’s go back to basics here. It is as if the entire display advertising industry has collective amnesia. Contextual targeting works. After all, what is search advertising but high-powered contextual targeting? Use a contextual engine to identify intent based on the content of a web page, and serve ads when that intent matches an advertiser offer. When the intent doesn’t match an advertiser offer well enough, don’t serve an ad. This isn’t hard, people.

Problem 3: Fight Banner Blindness. Heatmap studies show that consumers skip over ads without even seeing them. It’s no surprise that response rates have fallen dramatically over time. That first AT&T ad had a 78% click rate. Now tonnage, standard placement and irrelevance have all deadened engagement. The result is banner blindness.

Solution 3: Native Advertising at Scale: The solution is to integrate new advertising units that work within the flow of content. But how can we do that at scale? Display advertisers have under-utilized a form of targeting that their search division has been spending a decade optimizing: keywords. Any search advertiser worth their salt can tell you the keywords that drive conversions. Go back to that contextual engine and get it to boil intent by page down to keywords, and use those keywords to enable advertisers to target display. Again, don’t serve the ads without ensuring a match between intent and offer. Presto, you now have ad units that render only when the intent of the user matches the advertiser’s offering. As Ross Perot once said, “America, problem solved.”

Who’s doing this now? I can point to many forward thinking publishers that are incorporating these principles into their advertising strategies. ChaCha, a leading question and answer site, for example, deploys an ad unit powered Infolinks’ new In3 platform. It slides up from the bottom of the page only when someone arrives at ChaCha through a search. Advertisers bid in real time to serve an ad based on the keyword that the user searched on. By using this approach, ChaCha delivers ads only when there is high relevance for users based on the task they are currently performing. When the relevance isn’t there, they don’t serve the unit.

Revenue pressure can lead to short-term decisions that disrupt rather than enhance the customer experience. Each site, on its own, decides that it can earn incrementally more by placing more standard units on their pages. Collectively, we end up with tonnage. But banner blindness and declining engagement metrics must be overcome to accelerate the migration of dollars from traditional media to digital. New publishing platforms and products that make context and intent more accessible take the focus off traditional banners, and place them squarely within the most relevant content. Only updated and creative solutions will address the digital advertising and publishing market as both sides of the equation look to solve the revenue issue.

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