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Display advertising may not have the reliable click-through rates of search, but after months of economic weakness and public disparaging, numerous online companies have been ratcheting up their display ad businesses. And it may be a bit early to say definitively, but it's starting to look like display is making comeback.
At least that's what Citigroup analyst Mark Mahaney is tentatively saying. According to AllThingsDigital:
"The Citigroup (C) analyst spoke with PubMatic and the Rubicon Project, two 'optimization' firms that help publishers manage inventory they hand over to ad networks. And both say they’re seeing continued upticks in sales and demand."
Those two firms may not be emblamatic of the entire online ad business, but they both say that money is "increasingly going to “performance-based” ads, which are paid for only when someone interacts with them."
That would also line up with the seismic shifts that are currently happening in the display business.
As search dollars grew online, for years many traditional advertisers kept their brand building dollars in print ads. Mostly, because they were perceived to be more effective, and generally better looking. Futhermore, display ad click-through rates are abysmal.
But as advertising budgets shrunk with the recession, print advertising has suffered. And when those brands start having more money to spread around, chances are it will go online.
That's one reason why online behemoths are investing in display now. Google recently jumped into the fray with an ad exchange. And after essentially giving up on search with its deal with Microsoft, Yahoo is repositioning itself as a display advertsing megalith. Meanwhile, AOL under Tim Armstrong is also making a big play for the display space.
According to Jeff Levick, AOL's new ad boss, it's all about context. AOL has been ratcheting up its content creation in efforts to make its advertising more valuable. Says Levick:
"That's what's being defined as we enter the next wave of Internet advertising. Matching up content and advertising early in the process rather than trying to match ads with content down the funnel."
Right now, the main issue is creating more useful advertising and figuring out how to measure it.
"At some point, publishers decide that if all clients care about is impressions, then OK, we’ll give them impressions. The output is an industry that overproduces shallow, superficial, commoditized impressions. Why do we have so many bad sites that republish the same junky content–content that’s often made by machines or $1-per-post contractors? Why do sites intentionally try to get us to turn lots of pages with tons of top 10 lists, photo galleries, or single-paragraph summaries of someone else’s story?"
Clearly, something has to change with display advertising. Whether online ads are measured by CPM, CPA, CPC or some completely different metric, as people go online, brand advertising is going to have to travel with them. The trick now is proving display can perform when that shift happens.