May 16, 2013

Display: A House Of Cards

Despite its dismal track record, spending on display advertising keeps growing at an astonishing rate. Forrester Research is projecting a 17% compound annual growth over the next 5 years.

As far as I'm concerned, it's a house of cards. And if the house goes down, it will take a lot of advertising-supported online businesses with it.

Here are some reasons I believe display is a house of cards:
  • Interactivity has proven to be a joke. Nobody interacts with display advertising. Click through rates are abysmal and keep dropping.
  • The promise of precision targeting has also proven to be a farce. Facebook, the poster child for precision targeting, has click rate results so low that they refuse to publish them. If "precision targeting" can't deliver better results, what the hell is the point?
  • Ironically, despite its promise of pinpoint targeting, display is looking more and more like it's attracting the scattershot advertiser -- the tonnage direct marketer.
  • Even if pinpoint targeting was real, what difference does it make if nobody notices the ads? In most cases, the physical properties of display ads render them essentially invisible. Have you ever heard anyone discuss that awesome display ad they saw?
  • The amount of known click fraud is alarming. The amount of unknown click fraud is...unknown.
  • The amount of known website visitor fraud is also alarming. The amount of unknown website visitor fraud get the picture.
  • After 15 years, can you name a single significant consumer brand that has been built by display advertising? I didn't think so.
There are plenty of smart people in the advertising industry who know display has been a mess, but are keeping their mouths shut because there is too much at stake. Remember, prudent, intelligent people in the ad industry who were skeptical of the magical powers of "interactive" advertising were excoriated for years for being Luddite dinosaurs (who moi?)
    There are a few things that could destabilize display's house of cards.
    • A high profile fraud scandal
    • Widespread recognition of Facebook's display ad dysfunction
    • Mobile not living up to expectations
    • A major agency or research company throwing open the emperor's closet
    I'm not predicting that display's house of cards is going to collapse. It is too well entrenched for that. But if it started to follow the downward track of print advertising, I wouldn't be shocked.

    Be sure to see my piece today at Digiday on banner advertising.


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    Ian Williams said...

    There are a lot of client-side people-specific issues that ensure display spending remains high.

    I've seen a lot of money thrown the way of display just because 'its what we did last year'.

    These people are scared of underperforming, losing jobs or doing anything that may draw flak. Especially so in today's economy. So they just keep doing what they or their predecessors have always been doing.

    As long as those people remain, so will the 'house of cards'. And I don't see those people going anywhere anytime soon...

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    Ed said...

    Great post Bob, not for the first time...

    The thinking now is that display can work alongside broadcast media, as part of a larger push for awareness. So it's a sidestep which places display as useful only when no direct response metrics apply.

    Want a new incoming metric for measurement?

    How about selling display ads by time spent, rather than based on space or formats:

    Another case of struggling to justify the investment?

    Stephen McGill said...

    Perhaps it comes down to this. Hyper targeting is exciting for those who get excited by such things. The almost complete lack of ability to do anything creative with the space is a complete pain in the ass to those of us who put the ads together. Much like getting the chance to work on a 2 second spot for the Super Bowl I would think.

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    vinny warren said...

    You nailed it Stephen. The idea of scientifically targeted advertising is appealing to marketers. The vessel for the, ahem, messaging is abysmal.

    dotcoma said...

    it IS exactly the domain of the tonnage direct marketer.

    BUT: as long as it works for them (and by and large, it does);
    and as long as extra revenue is coming in from more or less
    clueless large companies that feel that they "have" to do it,
    I don't really see this whole thing coming to an end.

    And on my side - personally, I mean - I just use Adblock.

    Works just fine.

    Danielhiggins said...

    "After 15 years, can you name a single significant consumer brand that has been built by display advertising? I didn't think so."


    adcontrarian said...

    Yeah, I think you've got one there.

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    No, Netflix wasn't built on display. It was built on integrated campaigns, including initiatives to reach early adopters such as the Netflix Prize. Last year Netflix expanded into the UK and Ireland. Their advertising campaigns were again integrated, and included TV advertising.

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    Phil Koesterer said...

    The brand was *built* through word of mouth.

    Belinda Summers said...

    But given the numbers, won't display advertising cause the bottom-line to shrink. I mean, if displays aren't bringing in the money, then companies shrink, and people get laid-off. It's still a losing proposition for them if they don't expand their operations.

    Deborah Fisher said...

    So while I agree that display has it's issues, I have been involved with several high profile tests where display is proven to serve its purpose lifting results of other media. If you want clicks don't buy display, if you want serious brand tonnage, that's pretty cheap and has a pretty substantial halo effect, display is your medium.

    KJ said...

    Why would I care what Facebook's click thru rates are? Or display advertising's aggregate CTR? Thank you for the utterly meaningless factoids.

    I only care what MY FB click thru rates are....

    ...And I don't even care that much...

    ....Because my campaigns are optimized for ROI.

    Same with display. It's quite easy to determine if you're making or losing money, and to weigh the opportunity costs of making investments in other mediums.