What Is The Value Of Online Display Ads?
3 min read

What Is The Value Of Online Display Ads?

Now that Google, Yahoo, Microsoft, and WPP have spent collectively $10.4 billion to acquire the largest online display ad platform companies (DoubleClick, Right Media, aQuantive, and 24/7 Real Media) on the bet that display ads will be a key driver of growth for online ad spending, it’s fair to ask exactly what the value of an online display ad is.

If you ask an online media buyer, they will bemoan the classic display ad Catch 22 — clients insist the goal of the online display ad campaign is “branding,” but then do nothing but obsess over clicks. The impulse to treat online advertising as direct response marketing is only natural — the web is the greatest direct response medium ever — witness Google AdWords, not to mention dozens of pay-for-performance ad networks and online affiliate marketing, which have thrived for years.

But the BIG question — which is preventing billions of big brand dollars from flooding onto the web — is whether online display ads can achieve any meaningful branding objectives. According to research published in the Journal of Consumer Research (via Ars Technica):

The research concludes that repeated exposure to a product via banner ads generates a positive feeling towards that product.


The good news for consumers is that a critical reevaluation of the product can make these positive feelings vanish.


So, the psychologists have a better grip on their theories, and advertisers have a few things to consider. The first is that banner ads may provide a valuable function in fostering familiarity even if those that view them never click through to the source of the ads. The downside for advertisers is that any evaluation of the positive impressions that this familiarity creates, even one based on false premises, is enough to make those positive feelings vanish. This suggests that familiarity-based advertising may work best for impulse buys, where more detailed evaluations aren’t likely to occur. More importantly, this gives us a glimpse into the way our unconscious works with visual stimuli.

The research suggests that online display ads do have tangible value — they “foster familiarity,” which could lead to a designed action, such as actively considering a product or service. BUT…display ads can’t make up for deficiencies in products or services, i.e. the “messaging” isn’t going to make anyone buy.

The challenge for the online display advertising is that the research is based on displays being only “minimally perceptible” to most users:

There is a long history of experiments that show that repeated exposure to a stimulus that’s barely perceptible can enhance a person’s feelings towards what’s otherwise a neutral object. These feelings can include a liking or more subjective things such as “fame, truth, duration, loudness, stimulus brightness and darkness.” The authors hypothesized that banner ads should work well as such a stimulus, given that “most viewers pay minimal attention to banner ads.”

That’s why clicks on display ads are so low — but without clicks or some kind of response mechanism, how do advertisers determine the ROI of their display advertising?

One reason why Google’s AdWords program has been so successful is that the ads use the format of the universal call to action on the web — the text link. Unless a display is itself a call to action, which usually involves text that calls upon users to click through from some benefit, there is no way to really know what impact that ad had. Many advertisers use random sampling “brand lift” surveys through companies like Dynamic Logic, but in a medium so rich with data, this is hardly an exact science.

This is to say nothing of the quandary over video advertising, particularly pre-roll ads, which are the best way to ensure a user sees the ads, but which, unlike asynchronous display ads and text ads, are a barrier to the content. This has lead many publishers to place those minimally noticed display ads next to the video player — so back to where we started.

It would seem that online display advertising hasn’t progressed much beyond the old “half of my advertising is wasted” rule. The opportunity for the new vertically integrated media and advertising companies — or any startup — is to figure out how to avoid wasting the other half.