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!