Three Things That Are Trying To Kill Display Ads And Just Can’t Do It!

December 21, 2017 · 5 min · erika@kraftblick.com

“The report of my death was an exaggeration”

Mark Twain

In 2016, the amount of money spent on display advertising in the US surpassed what was spent on Search for the first time ever.

In 2017, spending on display in the US will hit $40.86 billion. But even with positive news like that, there are still a few problems display still hasn’t solved.

In this article, we’re going to discuss what I see as the three biggest problems that display is facing: banner blindness, ad-blocking extensions, and fraud.

Banner Blindness

[Image Source: thefirstbannerad.com]

The first banner ad ever was purchased by AT&T and ran on Hotwired.com back in 1994. Interestingly, about 44% of the people who saw the ad clicked on it. Nowadays, a 44% click-through rate (CTR) is practically unheard of.

According to Smart Insights, the average ad click-through rate (CTR) across all ad formats and placements is just 0.05%.

[Image Source: smartinsights.com]

There are a lot of explanations for the low CTR of modern day banner ads. One factor is “banner blindness”. The term “banner blindness” refers to a phenomenon where website visitors consciously or subconsciously ignore banner ads.

The facts are sobering: 86% of consumers suffer from banner blindness and only 14% of users are able to recall the last display ad they saw.

To combat the problem, advertisers have attempted to create better placements. In one eye tracking study it was revealed that “Native ads—units delivered within core content areas—were seen 47% more quickly than banner ads in traditional locations on the same pages.”

Statistics like that reveal why many advertisers are shifting spend to native advertising. User simply notice native ads more because native ad placements are located inside main content blocks of publisher sites. As a result, they also enjoy a higher CTR than standard display banners.

[Image Source: businessinsider.com]

Advertisers also created new ad types that are harder to miss. W elcome-page ads, for example, appear before the user is able to see the main website content. Forbes.com is a large publisher that uses this ad format liberally.

[Image Source: forbes.com]

There are also website-skin ads or page take-over ads that are designed to fill in the negative space on a publisher site with branded content.

The frame around the main page is a website-skin ad

[Image Source: imdb.com]

Both of these types of ads are more or less impossible to ignore and are just two examples of how the industry is taking action to solve the banner blindness problem.

AdBlock is Strangling Publisher Revenue

A recent report from PageFair says that AdBlock is now installed on 615 million devices. A real and emerging threat to online advertising, in 2016 AdBlock usage grew by 30% globally.

According to Juniper Research, digital publishers are going to suffer a loss of over $27 billion by 2020 due to AdBlock.

Randall Rotenberg, CEO of the Interactive Advertising Bureau (IAB), a business organisation that develops ad standards, says this about the situation with AdBlock:

“I’m really not worried about whether advertising will be able to find its way through digital channels. I am concerned – very, very concerned – that costs of ads will go up and up and up from this unethical obstruction”.

With some publisher sites having so many ads they look like Times Square on a Saturday night, it’s no wonder ad blocking is continuing to grow.

[Image Source: wikipedia.org]

Creating ads that are easier for users to tolerate is the name of the game right now. And that’s just what advertisers and the industry as a whole is working towards. We elaborate more on the topic of ad blocking extensions and how the industry is responding in our blog here.

Ad Fraud

The Association of National Advertisers (ANA) and WhiteOps recently released their third annual report dedicated to digital ad fraud. According to the report, losses due to bot fraud are estimated to reach $6.5 billion dollars in 2017.

While this represents a 10% improvement over the previous year’s $7.2 billion dollar ad fraud loss, the amount is still staggering.

Here are a few more alarming statistics on ad fraud:

For every $3 spent on digital ads, fraud takes $1
1 in 5 ad-serving websites are visited exclusively by fraud bots.
The ad fraud botnet “Chameleon” costs advertisers over $6 million a month.
Smartphone click fraud increased 102% from January – April 2017.

In a 2015 Wall Street Journal article IAB CEO Randall Rothenberg said the following:

“I’ve always believed that once we established a real compliance program with teeth across the industry, it [display ad fraud] can be contained relatively quickly. It’s in its early stages now.”

Two years later in a 2017 AdAge article on ad fraud he was more explicit: “We can’t deal with this shit anymore. This is serious.” said Rothenberg.

The above-mentioned report by the ANA suggests some action steps for the industry to fight fraud. Among them is joining the Trustworthy Accountability Group (TAG), an organization whose goal is the elimination of fraudulent traffic. From the TAG website:

“TAG works to combat the negative impact of fraudulent traffic by developing anti-fraud standards and protocols for all types of entities in the digital advertising supply chain.”

IAB makes registration at TAG mandatory for all of its 650 members. This is a huge step forward for the industry as members of the Interactive Advertising Bureau account for 86% of online advertising in the United States.

The ANA is also demanding transparency for sourced traffic and for refusal to pay for non-human traffic to be written in media contracts.

Takeaways

Regardless of the problems we’ve outlined above, display advertising is still going strong. According to Statista, spending on display ads in the US is projected to be $46.7 billion dollars in 2019. In addition, Native ads are projected to continue to grow as advertisers move towards the higher engagement they’ve been shown to produce.

[Image Source: emarketer.com]

What are your thoughts on the current state of display advertising? Are you planning on investing in a display ad campaign in the near future? Please tell us what you think about the current state of display advertising.

Sergey Ukustov December 26, 2017

Terenty, what is your take on micropayments? Could it be an appealing alternative to the ad-based revenue?
- Terenty Marinich December 27, 2017
  
  I’d prefer subscriptions over micropayments both from publishers’ and users’ perspective. However, I totally believe micropayments might help generate some extra revenue as well. I wouldn’t rely on it too much though.
a concerned person December 26, 2017

advertizing is terrible
- Terenty Marinich December 27, 2017
  
  Couldn’t disagree with you more, my friend! Advertising is awesome
  - Ernest December 28, 2017
    
    People block ads because ads block content. Advertising is awesome, but I do not think that word means what you think it does.
Necco Ceresani December 26, 2017

Hey Terenty,

Great read. I’ve worked as a software marketer for some years now and you’re hitting the nail on the head. I believe we are also seeing a transition from Display website ads to native social. Money is better spent on platforms like LinkedIn and Reddit (higher conversion, niche audience campaigns, easier UX in ad platforms). Unless you have some serious cash flow to play with, I would stay away from most Display pay per click.
- Terenty Marinich December 27, 2017
  
  Thanks, Necco! Come back for more content on display and native advertising from me and my colleagues. Highly appreciate your comment.
Paul December 28, 2017

What strikes me odd is that no one talks about the ad relevance. To me showing relevant ads to visitors should be the #1 priority. It should be the thing to strive for as that what attracts people to view or click. Online ad relevance has improved but I think the platforms should be able to do better. There are tracking systems and click baits everywhere but they still miss greatly. Not many companies and ad distributors really think of the end user’s needs when delivering the ads. Why should a target user see this ad? How relevant is it for her and what do we know about her? As soon as the ad industry starts focusing on the client’s perspective instead of what they want to sell then the CTR is going to improve. If not, the online ad is dead (just like the classic TV commercial) and everyone will learn in time how to ignore the noise.
- Terenty Marinich December 29, 2017
  
  Hello, Paul. Nice point of view about ad relevance. I also think that it is a huge area for improvement in the world of display ads nowadays. I do get to see the ad I eagerly click on from time to time (I don’t use ad blocking extensions in my browser). However, don’t you think that you exaggerate a little with the industry death at a current state of affairs?
James Jepsen December 28, 2017

Good article. One thing I notice across several of your links, and your page above, is that you don’t explain what you mean by the term “Ad Fraud” very well. What do fraud bots do, exactly? And how does the fraud take money away from advertisers? None of the links above explain the terms…they just use them, on the assumption that everyone reading knows all this.

Personally, I detest EXCESSIVE ads and I do practice a conscious form of ad blindness. If ads weren’t so over the top on Facebook, YouTube and other Social Media, this might be different. Nothing is more annoying than watching a 45 second video, only to have it paused 10 seconds in for a 15 second ad! Or to have an article interrupted by so much ad content that it crashes the page.
- Terenty Marinich December 29, 2017
  
  Thanks for your comment, James!
  
  We have plans on writing an article about ad fraud in a non-distant future. Please, stay with us at our blog
Ouroborus December 28, 2017

AdBlock unethical, Randall? Certainly you would only say this because you believe it to be true and not because it might be cutting into your chances at a CEO contract bonus.
Daniel Yonts January 13, 2018

First, click-through rate (CTR) is a meaningless and self-defeating metric. A low CTR means you’re seen more times for the same number of clicks. A focus on CTR assumes that being seen doesn’t matter and devalues online advertising. The real value of display advertising comes through brand activity that is generated through exposures. Brand activity includes brand searches and direct entries – which is where the majority of traffic and conversions occurs for B2B and B2C companies. No one searches for a brand or goes directly to a site without exposure to a brand. Display advertising provides this exposure. Marketers who understand how advertising influences decisions aren’t focused on CTR. They know that for every click conversion they receive – they get 7-10 view-through conversions (via brand searches and direct entries). A high click-through rate wouldn’t mean they’d get more clicks. It would only mean that they get fewer exposures for the same ad spend.

Check out this article which explains why/how you should lower CTR:

http://www.defaultlogic.com/blog/lower-click-thru-rate/

I’ve helped small companies Top 1,000 e-retailers using display and large corporation to grow their sales/leads by focusing on exposures. Display isn’t just for companies with large ad budgets. It is far cheaper than search and can reach far more people.

Banner Blindness#

AdBlock is Strangling Publisher Revenue#

Ad Fraud#

Takeaways#

Banner Blindness

AdBlock is Strangling Publisher Revenue

Ad Fraud

Takeaways