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Is Display Advertising Doomed?

Data suggests users are becoming increasingly resistant to online ads

6Dec

When AT&T ran the very first banner ad back in 1994, it generated a clickthrough rate of 43%. Almost half the people that visited the web page were taken in by the ad's call to action, a number which, were it to be repeated today, would see everyone involved in putting it together promoted into some marketing hall of fame. The ad simply asked if users had ever clicked on a banner ad before, and then prompted them to do so, an example of quite how straightforward the internet could be in its early days.

When everything on a web page was novel, a display ad could reap unbelievable results. Users hadn't had the time to build up an inherent suspicion of online advertising, and 'banner blindness' wasn't a part of the digital marketing conversation. The situation as 2017 draws to a close, though, is unrecognizable. We have been bombarded with advertisements both online and in public for so long that many have become desensitized, and often we fail to even consciously acknowledge their existence.

The effectiveness of display advertising has fallen to an unrecognizable level since AT&T first trialled it. According to Smart Insights, the average click-through rate (CTR) for a banner ad comes in at less than 0.1% in the US, with conversion rates naturally even lower. When you take into account the fact that about 50% of clicks on mobile ads are accidental - the 'fat finger' effect - the effectiveness of display ads is seriously drawn into question. A majority of users say they don't 'trust' display ads, and a third say they find the medium to be intolerable (via BannerSnack and Adobe respectively). Consider your own personal experience with display advertising; how often can you say you click a banner ad out of genuine interest?

Unsurprisingly, it is the tech-savvy Millennial generation killing the effectiveness display advertising. Having grown up using the internet, the years of avoiding online advertisements and misleading click-bait links has developed a generation that is increasingly unreceptive to banners and displays. The bombardment has led directly to the explosion in ad blocker use, which surged by 30% in 2016, according to Business Insider. By the end of last year, there were some 615 million devices blocking ads worldwide, with areas like Asia-Pacific seeing a 94% adoption on mobile devices. The mass adopted is taking slightly longer in North America and Europe but, if and when device manufacturers begin configuring ad-blocking software as standard in their products, it will undoubtedly see a similar trajectory. As it stands, ads in the US are blocked on 18% of devices.

Perhaps some display ads are safe. When scrolling through an article on mobile, for example, if there are banner ad embedded between two paragraphs of text that are relevant to you as a reader, there is a chance you'll follow it through and see what's on offer. Banner ads that appear at the top of bottom of a page, on the other hand, are so easily ignored as to be all but irrelevant to a mobile internet user. This aforementioned 'banner blindness' means that only 14% of users can recall the last display ad they saw or the content it promoted.

You only have to look at the user preferences for ad type to get a sense of how they feel about being advertised to online. The most preferred format is the static banner ad, shortly followed by the skippable video ad. At the other end of the spectrum you have non-skippable video ads and autoplay videos. Essentially, users prefer ads they can ignore, which suggests that they see very little genuine value being offered by those buying the space.

The drop in effectiveness of display advertising has meant that many on the buy side have been pushing for increased prominence on the page, and many are purchasing full screen pop-up ads or video ads in response to the decline. As the research suggests, though, these are wildly unpopular ad formats that are ultimately unlikely to elicit a positive response from users.

Personalized ads and retargeted ads are another potential remedy. A report from Wishpond suggests that site visitors retargeted with display ads are 70% more likely to convert, with the average clickthrough rate around 10 times that of a standard display ad. Retargeted ads also greatly improve the chances that a customer will return to an abandoned basket and complete their purchase - perhaps there is something about seeing a product that you've previously researched or been close to buying that catches the eye. GDPR is set to come into affect in May 2018, though, which will make targeted advertising far more difficult, so its effectiveness as a remedy will almost certainly take a hit.

If display ads became so ineffective as to be no longer worthwhile for brands and publishers, there would be little public mourning. Having said that, despite their poor metrics, no one is suggesting that attention-demanding banners will die any time soon. Programmatic makes the whole process of buying and selling ad space so easy that, unless it is having a significant negative impact on user experience, there is very little reason for website hosts to do away with them. There is a strong argument to suggest that display ads have had their day as a genuinely effective form of digital marketing, though, and brands would do well to pursue more value-driven means going forward. 

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