Online display advertising has all the earmarks of an industry in decline. Overall spending on online display advertising for 2009, forecasts eMarketer, is expected to be down for the first time since 2002, and "ad blindness" on the part of anyone who spends time online is rampant. The consensus is that search advertising, driven by Google, has already fired the shot that is slowly but surely killing display advertising.
And yet, with the hours of online time continuing to trend upward and the steady decline of print ad vehicles, it's a medium that can't help but grow -- at least in the short term. Continued long-term growth will require fixing fundamentals that today are clearly and dangerously broken.
There are three important steps the industry should take to fix online display advertising, along the way boosting its efficacy for advertisers.
1. Get transparent: It's true that transparency has quickly become a buzzword in advertising, but that doesn't minimize its importance. Ads targeted to a specific subset of Web users must be able to produce a map of how they got there -- what data was used and where it came from. Even if it's true that consumers aren't as rabidly protective of their online privacy as lawmakers are, transparency is a vital business practice.
Another example: Advertisers have extended their online reach through the proliferation of ad exchanges in recent years, and while there's tremendous value and efficiency in this, without transparency it's difficult to guarantee the quality of the impressions. Without the quality, the additional reach doesn't matter at all.
And while we're on the subject, why don't ads tell users why they're being targeted? The general industry fear is users would revolt if they knew they were being targeted. Guess what? They know. And even if they didn't, it's simply not ethical to hide it from them, especially since study after study shows that they really don't care as long as they understand the trade-offs.
What if there was an icon at the bottom of every display ad that a user could click on to find out exactly why they're seeing the ad in front of them? What if they could then share preferences to make ad targeting better and make the ads they see more relevant to them? This kind of transparency would go a long way to both reducing ad blindness and increasing the efficacy of advertising simply through engaging the user in the process
2. Use quality data for ad targeting: Ad-targeting technology has matured and is considered a vital tool for advertising. Without targeting, ads can only hope for relevancy. But what's often taken for granted is the data that drives the targeting. Without consistently good data, targeting is worthless. Data quality requires perpetual vigilance to make sure it's properly collected, classified and employed, but it also requires industry standards for online profile components, intent data and historic click data.
And remember step No. 1? All use of data should be transparently collected with options for audience editing and opt-out.
3. Find a new way to measure efficacy: I'm not the first person to suggest that the click measurement just doesn't make sense any more, but there isn't widespread unanimity on what should replace it. To truly measure an ad campaign's success requires the measure of multiple factors including search data (a recent Forrester study shows that audiences are just about as likely to do a search on the name of the advertiser as they are to click on the ad itself), social media chatter and Web site traffic from other sources.
Additionally, site-engagement metrics like number of page views, time on site and cart size for e-commerce sites need to be part of the measurement mix.
Measuring all of these channels before and after display campaigns will shed light on the value of the ads in a way that measuring clicks never captured.
When this measurement is done, as shown in a recent study by comScore, the results are staggering and clearly demonstrate how significantly display ad spending can affect marketing results.
Likewise knowing your audience (see step No. 2) will go a long way toward understanding the value of your ads. Being able to fine-tune the targets of each through the use of solid data will make it easier to measure efficacy by narrowing the sample.
Other brilliant minds in the business will argue about the continued importance of creative and brand for online display ads, and I don't disagree. But transparency, high-quality, data-driven targeting and better measurement are a clear prescription to heal the illness affecting online display advertising.
Russell Glass is CEO of Bizo.