July 12, 2012

Display's Dismal Dysfunction

For years here at Ad Contrarian global headquarters, we have been questioning the marketing industry's delusional enthusiasm for online display advertising. Despite consumers' ongoing indifference, and the pitiful performance of this form of advertising, marketers continue to pour billions of dollars into this black hole.*

There are naive clients who insist on throwing their money away on display ads despite the admonitions of responsible agencies. And there are agencies who continue to hustle these ads to clients with a combination of digital jive talk and misleading data.

Finally, there are some in the industry who are getting fed up with the deceptive "metrics" and hype, and are starting to see that the emperor has no clicks. An article from Reuters recently laid out the case for the dysfunctional state of the display advertising industry.
  • Display ad prices have dropped about 50% since the dot-com boom. 
  • Last week, Microsoft had to write down essentially all of its $6.3 billion investment in display ad network aQuantive. Reuters says: "Microsoft's spectacular capitulation is the latest admission of failure on display advertising." 
  • Facebook is desperately attempting to justify its IPO price by flooding the market with display ad inventory, further deflating prices. 
  • ValueClick has lost half its value since 2007. 
  • In 1998, Yahoo was getting a CPM of $25 for banner ads. By the end of 2011, that had dropped to $11.50. Yahoo, too, is worth about half what it was worth in 2007. 
  • Despite the promise of pinpoint targeting, it looks like display is becoming the province of the exact opposite type of advertiser -- the tonnage direct marketer who used to buy the 2 am TV inventory. One industry veteran calls display "...a ghetto for bad direct-response.
  • Display advertising has become so devalued that according to one industry insider, Microsoft may be considering giving away display ads.
According to Reuters, "Advertisers now question the performance of display ads more as Internet users train themselves to avoid such marketing."  Duh. How long have we been saying that? 

But facts don't bother the display ad apologists. Despite the fact that 15 years of display advertising have failed to produce a single major consumer-facing brand, and TV advertising has produced thousands of them, you can still find spurious data to prove that display advertising is more effective than TV.

Accordingly, I have written a little poem that you might want to use as the first slide in every agency Powerpoint presentation. Maybe you've met someone like this:
There once was a digital guy
Who was brilliant at pie-in-the-sky
Sooner or later
He'd torture the data
To prove that elephants fly
 
 Tell the truth. Where else do you get ad poetry?


 *There is a sensible strategy for utilizing display advertising which you can find here.