Are banner ads dead?

on Oct 17 in business, marketing, News, trends posted by

According to the Interactive Advertising Bureau, online ad spending still grew 10.6 percent to $23.4 billion in 2008. In the same year, a DoubleClick report (PDF) click through rates were 0.1 percent (i.e., 1 in a 1000 website visitors actually click on an ad). This CTR is a third of what it was in 2004, about 0.3 percent, at least in Europe according to Adtech. These numbers are interesting but not news.

It’s true that such low rates combined with an excess of ad inventory worry marketers about how to boost CTRs. So behavioral targeting, rich media, flash and other technologies are driving ever more sophisticated and compelling ads. Again not news. What is interesting (hence the name of this post) are recent reports questioning the ROI of online banner ads. A recent article on Marketing Pilgrim asked Are Banner Ads Dying? The balance of that post seems to be that the jury is still out.

But recent news suggest that the final nails are being hammered into the banner ad coffin. An October 12, Wall Street Jurnal article reports that several major brands fell victim to buying invisible ads — paying for online ad space for ads that never appeared.

So are banner ads dead? Maybe there is life in them yet. But given such malfeasance on the part of ad distributors combined with the diminishing ROI, marketers are going to be hard-pressed to justify continuing ad spend at current levels. At the very least, the CTR and CPMs will have to drop in response to market pressures, cutting distributors’ margins and profits. Tighten your belts!

2 Comments Leave a comment

  1. While it’s widely accepted that digital display ad have a long way to go, banners are still the most flexible, scalable, and measurable way to distribute marketing content across the web.

    When developed correctly with the appropriate format, structure, usability, and call to action, banners can achieve nearly any marketing objective. Nothing wrong with Click Through. It’s nice, but for many marketers it is not the end goal.

    The challenge is creative agencies do not know how to design display ads that drive results. Additionally, media teams don’t know why or when to recommend which formats. Creative teams design on gut, not best practices and historical learning. "Learn More" is not a call to action. I’ll go "Learn More" in the library… You need to tell the user exactly what you want them to do. And don’t wait for 15 seconds of animation to play out before bringing in your key brand messaging and call to action. Most users are off the page or have scrolled down within :15 seconds.

    Agencies make $$$ building websites, not banners. Next time you are working with a designer on your display ads, ask them how many ads they have developed. Then ask – of those, on how many have they seen the reporting. You will be shocked.

    We need to remember that digital display advertising is still in its infancy and most people working in the display industry still think you buy display for Click Through. If you are only buying display for Click Through and that .1% who Click, you are in trouble.

    When used properly, digital display can make any social initiative, micro-site, mobile program, integrated sponsorship, _____ fill in the blank digital program broader reaching and more discoverable.

    This is our challenge and opportunity.

    Comment by Lee F — October 30, 2009 @ 7:41 am

  2. Lee, thank you for your careful and well-thought out comment. I appreciate it. I agree with you on most points. My sense is that the role of banner ads is changing. The fact is that responses to banner ads are very low, and given the ROI of other channels, why would marketers continue their spend on banners? Unless we can get past the CTR mindset, as you rightly point out, banner ad spends are due for considerable downsizing.

    Your insights about agencies are spot on. You’re right that agencies make their money building websites. For them banners are an add-on service to sweeten a deal or to keep things easy for the client.

    Comment by Roger — October 30, 2009 @ 9:37 pm

RSS feed for comments on this post. TrackBack URL

Leave a comment