Thinking Beyond the Online Banner

NEW YORK Considering the magazine-heavy resume of The Daily Beast founder Tina Brown, it stands to reason the Web publisher would take her cues from that world. But rather than adopt the banner, the most magazine-like Internet ad format, the IAC-owned Daily Beast has sworn off "traditional" Web ads in favor of custom executions."[Banners] are small and standard, and have been in exactly the same place for so many years it's an easy user behavior to ignore them," said Caroline Marks, gm of The Daily Beast, which launched nearly eight months ago. "We felt the need to challenge the existing product set and look for new products to help advertisers leverage the benefits of interactivity."The Daily Beast is not alone. Several other Web publishers, particularly in social media -- including Facebook and Digg -- are moving away from a reliance on typical display ads and pricing methods as the linchpins of their ad efforts.Instead, they're rolling out unique units and pricing systems, betting advertisers will find custom campaigns worth the extra time and effort.At The Daily Beast, that's meant taking advertising from the periphery of banners and mixing it more closely with content. The site runs "sponsored stories," such as a Paramount campaign that included a Q&A with The Curious Case of Benjamin Button actress Taraji P. Henson. Luxury brand Bottega Veneta ran "breakthrough" ads with product shots plopped in the middle of stories. This week, the site is launching its latest ad twist, a two-week push with British Airways that puts the headlines of the site's most recent posts inside a BA "New Arrivals" unit."Being able to work with the site to develop something that's a combination of utility and advertising, you don't get that all that often," said Paras Shah, account director for the BA business at Agency.com.The crisis of confidence in the banner comes nearly seven years after the industry settled on a set of standard formats. At the time, the Interactive Advertising Bureau's "universal ad package" was seen as a critical step forward in attracting ad dollars to the Web. Yet the flip side of standardization is commoditization: banners became interchangeable and are often sold like "pork bellies," in then-Yahoo ad sales chief Wenda Harris Millard's famous formulation. What's more, users have trained themselves to ignore ad units on the periphery. A .5 percent click-through rate is judged a resounding success. The response rates in online social media have, in many cases, been even lower. There isn't much lingering over content on a site like Facebook or Twitter. The uneasy fit of banners with regular editorial content is downright antithetical to channels defined by users who scroll through streams of content commenting and rating, and who are attracted to the stream of constantly updated information in the middle of the page. The banner ad, meant to mimic the effect of flipping the page of a magazine, is a fish out of water there.That's why Facebook outsourced its banner ads to Microsoft, and now concentrates its ad efforts around what it calls "engagement ads." They take advertiser content and enable it with the rating, commenting and sharing features of other site content. Social news site Digg takes a similar approach. It places ads into that stream of content rather than in the margins in standard ad units. Last week, it unveiled plans for its first ad product, Digg Ads, which aims to flow advertiser content into the Digg experience more naturally. Rather than standard IAB units, Digg Ads take the form of stories users can vote on, as they do with the site's other content. "We need to find ways for brands to borrow the grammar of the [user] experience," said Chas Edwards, the chief revenue officer at Digg. "There's a limited set of publishers large enough to make the case for a unique ad format."Digg is using those user votes to determine the price advertisers pay. The more "Diggs," the less advertisers will need to pay for impressions. This is the same approach taken by the Internet's most successful advertising innovation, Google's search ad system, which sets the price paid based on the click rate for particular ads. A popular ad pays less than an unpopular placement.The advantage of Digg Ads: they're easy to make. Customized ads, in general, have be-come easier to produce. Standardized ad formats have the advantage of letting agencies create one set of ads that run nearly everywhere. Now, agencies are getting smarter about the production process, breaking ads down into creative assets that can be assembled into varying formats with minimal tweaking.Meebo, a group chat service, has decided to run custom-size units that better fit their environment. Meebo has a standard 728 x 90 ad that expands to a non-standard 900 x 400 placement when users click.Like Digg, Meebo is veering from standard pricing formats. It sells its ads on a CPM basis, but it's also moving to price based on engagement. The rationale is ads on Meebo, a site that typically has long user sessions, draw more user interaction than typical social sites. "With the Web awash in ad impressions, there's a need to stand out in the market," said Martin Green, COO at Meebo. "There's a growing number of impressions without any interaction, so the price is dropping to zero. Actions are harder to come by than impressions."For now, the experimentation with non-standard formats and pricing will remain the exception, said Ian Schafer, CEO of Deep Focus. He noted while it makes sense to build ad products around engagement since that's what advertisers want from those platforms, the ad industry infrastructure is based around standard display ads with impression-based pricing."It's a different mind-set when you're buying engagement-based media than impression-based media," he said. "But right now, most media agencies are buying impression media."

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Thinking Beyond the Online Banner

Brian Morrissey

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