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Display advertising is starting to look like the little ad format that could lately. Online advertisers are moving away from click-through rates as a metric for display success, large companies from Google to Yahoo are stepping up their display efforts and now Nielsen has come out with numbers that imply display may be more effective for retailers than search advertising.
According to Nielsen, less than 10% of online retailers' web traffic, on average, comes from search engines. That's good news for display ads. But is it true?
Nielsen's findings are based on second-quarter traffic for 200 online retailers. They found that 61% of retailers' web traffic on average comes from people typing a web address into their browser bar. Comparison shopping sites, like NetTag or Shopzilla, accounted for 1% of traffic. Other referrals — like affiliate programs or advertising — accounted for the rest of traffic.
And the 9.5% of search traffic is likely diluted even more, by included brand searches, such as when a person types Amazon into the search bar when looking for a book instead of putting in the title name or other descriptors.
Increasingly, people know what they're searching for online. They type a specific type of shoe or a retailer into the search engine rather than a generic search term.
Ken Cassar, VP-industry insights at Nielsen's Online division, tells AdAge that out of the top 50 search terms revealed recently, only three weren't branded (and those three were pornographic):
"When you take a step back and look at that together -- the fact that such a high percentage of people go directly to retail sites and even those that search generally have a pretty clear intent as to which website they'd like to go to -- it makes a compelling argument that brand and past experiences [with a marketer] matter an awful lot and will be far more significant determinants of success than any customer acquisition strategy that they're going to engage in."
With that in mind, it may make sense for marketers to invest more heavily in display than search online. But that's not to say that search no longer matters.
In fact, search is hurt by the same problems that afflict display when it comes to clicks. Display advertising has long been trying to break free of the click as a measurement of effectiveness, but search isn't properly measured that way either. Conversion rates only count purchases made after the last click, meaning that search gets measured more effectively than display. Web surfers often see and remember display ads without clicking on them and then make purchases based on the ad later. But similarly, searchers often look for a product only to abandon their query and then come back to the site directly to purchase later.
Nielsen's numbers are interesting, but it looks like they once again point back to the inneffectiveness of clicks as a measurement tool.