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Insight/ Online Media

Banner Ads: Past, Present, And. . .Future?

by Esther Shein
Contributing Writer
CMO.com

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It comes as no great surprise that advertisers display little respect for online banner ads. Click-through rates are down, and consumers tend to be more engaged by the interactive nature of social media and video ads rather than something static, industry observers say.

But don’t write them off just yet: Standard banner ads continue to account for the majority of online advertising impressions, according to MediaMind, a provider of digital ad products. A recent MediaMind global benchmark study found that since the peak of their decline in 2008, the average click-through rate (CTR) has remained steadily at around 0.09 percent.

“Depending on your budget and goals, you have to do a marketing mix to make [display ads] work,” says Tim Waddell, director of product marketing at Adobe Advertising. “It depends also on the message. Everyone has to figure out their own mix. [But] display ads are very effective and have their place in the world.”

Competing For Attention
In its report, MediaMind attributes banner ads' decline to—ironically—the success of online advertising. “As more budgets were poured into display, users were exposed to more and more ads,” the study states. “However, the number of ads that a user clicked on did not catch up with the number of ads that a user was exposed to, thus reducing the overall CTR.” 

Indeed, people have become so used to seeing ads on Web pages that they tend to focus only on the relative content they’re looking for, says Andrew Gordon, president of Direct Impact Group, a direct marketing firm that specializes in B2C lead generation. Even if they see the ads in their peripheral vision, they ignore them—a concept widely known as “banner blindness.”

The biggest challenge banner ads now have to contend with is the explosion of social media. “That’s the new, shiny object,” Gordon says. “A lot of advertisers are moving into the next iteration of the Web, and that has to do with social media, where they’re investing dollars not necessarily into ad-supported types of engagements, but. . .to get social media to pay out for them in terms of lead generation and selling products.”   

“When people go online, they hone in on content and block out everything around that,” concurs Mike Volpe, chief marketing officer at HubSpot. He also says the level of targeting and personalization that can be done on social media sites is where the action is. For example, Facebook offers “Sponsored Stories” and Twitter has “Promoted Tweets” integrated into a site’s content, Volpe says.

Todd Garland, founder of advertising marketplace Buysellads, says tweets from celebrities and well-known bloggers also have a certain panache that make people pay attention. For example, one of Buysellads' clients publishes a blog related to Apple. “We sell banner ads on their Web site, but they have a large following on Twitter, so we also sell Sponsored Tweets for them,” Garland says, giving marketers an “additional outlet to reach an audience.”       

Also clamoring for users’ attention: social-video advertising. A report by Visible Measures found that at the end of 2011, consumers watched ads more than 5.6 billion times in an “active, lean forward, user-initiated” way that required a real person to press the play button with the intention of viewing an ad. More than 500 campaigns topped 1 million views in 2011 (one in every 12 campaigns), the highest number to date, the report states. In all, social video views nearly doubled in 2011, according to the report.

“When you want to change the dialogue, that’s when you turn to social video,” notes Brian Shin, CEO of Visible Measures. “We believe it’s the fastest growing ad medium in history.”

Making Banners More Effective
That said, Adobe’s Waddell sees a continued role for banner ads in the broad scope of online advertising. Display ads are an integral part of the content on Web pages, he says. They have also enjoyed a resurgence because “the data and technology have become so much more sophisticated, allowing advertisers to target consumers in a more effective way,” Waddell adds.  

Next Page: On the road to conversion.

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That growing sophistication means advertisers need to achieve “balance of the correct size against the content, driving a host of applicable functionality without the consumer needing to leave the host site,” says Dean Donaldson, global director of media innovation at MediaMind, “and then to follow this up with connected sequential messages that help drive the consumer through the conversion cycle.”

But the real art is continuing the story, Donaldson adds. “As more advertisers look to do this with targeted, intent-based dynamic creative that ensures the message remains relevant over multiple exposures, the results drive interaction and conversion rates ever upward to figures that tweaking formats are no longer able to achieve,” he says.

In order for banner ads to remain viable, industry watchers say agencies need to alter their approach. “Banners are the closest thing in the digital world to traditional ad space, and as long as ads in any medium continue to be used, I think the use of banners will endure,” observed Doug Dimon, creative director at ad agency Definition 6, in an email. “But we need to treat them, and the consumer, with greater respect. As with any ads, we need to offer the consumer some kind of value, whether that’s a new experience, great content, or the bread-and-butter offer-type message,” adds Dimon, who spoke on a recent Digiday panel entitled “The Banner is Dead, Long Live the Banner.”

Dimon sees an opportunity for creating better content with the new “digital display ad units” released by the Internet Advertising Bureau. They represent what he calls “a new paradigm for display ads that allow brands to create a more complex brand experience for the consumer without requiring them to [leave] the page they are viewing.” Dimon says the new formats will “open up a world of creative possibilities” that will lead to better performance.

Visible Measures’ Shin says banners still have a place in marketing and can be effective “brand awareness mechanisms” for “low consideration items” where people don’t have tight brand loyalty. This is why there has been lot of technical innovation in display ads, he says: to make banners more efficient from a customization, delivery, or cost perspective.

HubSpot continues to purchase some display and banner ads, “but more with targeted sites we have a good relationship with,” Volpe says. Sponsorship ads within an email newsletter tend to do better than ads around content on a Web site, he adds.

Like Shin, Volpe believes, “Most people using banners a lot today tend to think of them as a branding play, so they’re looking to get into people’s heads with impressions,” he says. One way to measure the brand impact is by a metric called View Through, which counts the number of people who saw your banner but did not click on it, yet later visited your Web site. "But, overall, measuring the branding impact is difficult to do," Volpe acknowledges.

To improve banner effectiveness, some people are putting cookies on Web sites visitors and then displaying banner ads to them on other sites to get them to come back—a process known as retargeting, he says. “It makes a fair amount of sense if someone is on your site, they’re interested in your business,” Volpe says.

Social media ads may not have an extended shelf life, either, he warns, and, like banners, once people get more accustomed to seeing them, they’ll likely be ignored, too. “Marketing is about finding the next new thing,” Volpe says.

Brands should try everything and find what works for their businesses, says Garland, who has some clients that do exceptionally well with banner ads but can’t get traction with Facebook advertising, while others are decreasing what they spend with Buysellads in favor of social media.

“Advertising is a really funny thing. . .as an advertiser or marketer, you have to put your money into what’s getting you results right now,” Garland says. “Measure what works, and know that nothing’s going to be forever.”

And, of course, “creative is still king,” Adobe's Waddell says. “You still have to make ads interesting to make users engage with them. . . . Advertising is like running a laboratory: You’re always testing things.”

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