Clickthrough rates on web banner advertising actually rise! (But they’re still subterranean.)

bbThe headlines last week were near-breathless, announcing that North American clickthrough rates for web banner advertising are rising!

And that’s true on the face of it: According to a new analysis by advertising management company Sizmek based on billions of online ad impressions, the average engagement (clickthrough) rate on a standard banner ad has actually increased.

It’s risen all the way up to 0.14%.

It means that for a standard banner ad, for every 1,000 times it’s served, 1.4 engagements happen.

Here’s what that also means: Don’t bank your business success on online display advertising.

Of course, there are more ways to advertise online than by using standard banner ads. So-called “rich media” ads – ones that incorporate animation and/or sound – perform substantially better.

But it’s all relative, because “substantially better” in this case means that in North America, achieving an average of 2.1 engagements for every 1,000 times a rich media ad is served.

The situation is even worse than these figures imply, actually. When one considers the incidences when viewers accidentally click through on an ad thanks to an errant mouse or a fat finger, even “one out of a thousand” for engagement isn’t really correct.

The Sizmek analysis found that banner ads in certain industries perform better than those in others. Among the “winners” (if one could characterize it that way) are electronic products, apparel, and other retail advertising.

At the bottom?  Automotive, jobs and careers and, ironically, tech and internet advertising.

A glimmer of hope in this continuing saga of hopeless news is in-stream video which, according to the Sizmek study, is generating far higher engagement levels of 1.5% or greater, depending on the degree of interactivity.

But I can’t help but wonder: As the novelty of these newer ad innovations inevitably wears off, won’t we see the same phenomenon occurring over time wherein audiences will become as “blind” to these ads as they are to the standard banner ad today?

As the years roll by and the effectiveness of online banner advertising continues to underwhelm in overwhelming ways, the “drive towards zero” seems to be the relentless theme. I seriously doubt we’re going to see a reversal of that.

Digital display advertising: (Still) looking like the weakest online promo tactic.

untitledI’ve blogged before about the lack of engagement with online banner advertising, and as time goes on … the picture doesn’t change much at all.

When you break it down, online banner advertising is a bust on several levels:

 

  • As of the most recent stats, clickthrough rates on online banner advertising are running about 0.08%. That translates to fewer than one click for every 1,000 times the ad is served.

 

  • Based on current pricing for online banner ads, that one click might be costing anywhere from $5 to $10 (and it might have even been an accidental click).

 

Despite these “inconvenient truths,” nearly two-thirds of digital ad spending continues to go to online banner advertising based on a “cost per impression” pricing model. Why?

One answer is that it’s an easy way to advertise a product or service. Simply supply ad creative to the publisher and let it be served online.

Another may be that advertisers consider banner advertising to be a basic component of any promotional campaign: prepare a mix of direct marketing, some search engine marketing, some print advertising and some digital display advertising, and you’re off to the races.

A third reason — related to the one above and I suspect one big reason why so much digital display advertising persists in the B-to-B realm in particular — is that publishers who offer a suite of promo tactics as part of a specially priced integrated program always throw in digital display advertising as part of the mix. It becomes the default option for advertisers as they approve bundled programs and the discount rates that come along with them.

Here’s a suggestion for advertisers going forward: Push back a bit and ask publishers to come up with alternative program options that don’t include digital display advertising.  The revised program might not look as promising at first blush, but then remember the stats above and you may well see the attributes of the alternative program in a more positive light.

Banner Ads Turn 20 This Year …

… But who really wants to celebrate?

paint the town red
Celebrating in the geriatric ward: The online banner ad turns 20.

It might come as a surprise to some, but the online banner ad is 20 years old this year.

In general, 20 years doesn’t seem very old, but in the online word, 20 years is ancient.

Simply put, banner ads represent the geriatric ward of online advertising.

In fact, there’s very little to love anymore about an advertising tool that once seemed so fresh and new … and now seems so tired and worn-out.

Furthermore, banner ads are a symbol of what’s wrong with online advertising.  They’re unwelcome.  They intrude on people’s web experience.  And they’re ignored by nearly everyone.

Old banner advertising
A whole lotta … nothing? Online banner ads in 2015.

But despite all of this, banner ads are as ubiquitous as ever.

Consider these stats as reported by Internet analytics company ComScore:

  • The number of display ads served in the United States approaches 6 trillion annually.
  • Fewer than 500 different advertisers alone are responsible for delivering 1 billion of these ads. 
  • The typical Internet user is served about 1,700 banner ads per month. (For 25 to 34 year-olds, it’s around 2,100 per month.) 
  • Approximately 30% of banner ad impressions are non-viewable.

paying no attention to advertisingAnd when it comes to banner ad engagement, it’s more like … disengagement:

  • According to DoubleClick, Google’s ad serving services subisidary, banner ads have a click rate of .04% (4 out of every 10,000 served) for ads sized 468×60 pixels. 
  • According to GoldSpot Media, as many as 50% of clicks on mobile banner ads are accidental. 
  • According to ComScore, just 8% of Internet users are responsible for ~85% of the clicks on banner ads.

Come to think of it, “banner blindness” seems wholly appropriate for an advertising vehicle that’s as old as this one is in the web world.

The final ignominy is that people trust banner ads even less than they do TV ads:  15% vs. 29%, according to a survey conducted by market research company eMarketer.

Despite the drumbeat of negative news and bad statistics, banner advertising continues to be a bulwark of the online advertising system.

Publishers love them because they’re easy to produce and cost practically nothing to run.

Ad clients understand them better than other online promotional tactics, so they’re easier to sell either as premium content or as part of ad networks and exchanges.

There’s plenty of talk about native advertising, sponsored content and many other advertising tactics that seem a lot fresher and newer than banner ads.  But I suspect we’ll continue to be inundated with them for years to come.

What do you think?  Do you have a different prediction?  Please share your thoughts with other readers here.

Many online banner ads are “invisible” — just like all the other kinds of advertising.

poor online display ad clickthrough ratesI’ve blogged before about the dismal performance of web banner ads, with their miniscule clickthrough rates resulting from “banner blindness.”

The situation has caused more than a few marketers to shy away from engaging in any sort of banner advertising online — and it’s not hard to understand why.

But as Ben Kunz, a vice president at media buying and planning agency Mediassociates likes to point out, other forms of display advertising have similar challenges.

The fact that omnibus marketing information resource eMarketer has predicted that digital ad spending will increase to ~$132 billion this year is proof that many advertisers continue to see the value in online display advertising.

So what is Kunz’s major argument? Simply this:  Digital ads have the same challenges that television, radio and print advertising have as well.  In Kunz’s view, there’s huge waste in advertising because of advertising’s very nature.

He is correct. The vast majority of ad impressions that are “served” are never really seen or heard — regardless of the ad medium.

Ad visibility online is an issue for sure. Proving the point, internet analytics company comScore evaluated some 290 billion ad impressions on thousands of web sites … and found that ~54% of them weren’t visible.

There was some differentiation the comScore detected between different types of sites. Ads served up on “Ppemium” web publisher sites performed better (only ~39% of theirs weren’t visible).

Ads that aren’t visible occur for a variety of reasons, one of which is fraud (fake web traffic). But more often, it’s because of slow load times on digital devices or because the ads fall outside a viewable browser window or further down that page, necessitating scrolling that many viewers simply don’t do.

The Swedish firm Sticky has investigated banner blindness from another angle — studying the eyeball movements of ~500 subjects. Its research found that of the digital ads that do appear within a viewable window, only ~51% of them are actually “seen” by the viewer.

Mashing it all up, it means that roughly three out of four online ads are “invisible” to viewers. It’s a lot of waste for sure.

But then … what’s the alternative? Do other advertising tactics and channels actually do better?

Nope. According to Kunz, at least three out of four newspaper ads aren’t seen, either.

Ben Kunz
Ben Kunz

Here’s how he arrives at that conclusion. The average U.S. newspaper has ~60 pages, with an average number of ads per page of around 20 (this includes large ads and smaller classifieds).  Around half of the pages are unopened when someone reads the paper, meaning that those ads are “unviewable.”  If half of the remaining ads are ignored as well, the viewability stats are effectively tied.

Kunz also contends that ~30% of radio advertising is “invisible,” citing an Arbitron study that quantified the extent to which listeners switch stations when advertising came on, then flip back later.

The findings were such that Arbitron started recommending that media planners change their measurement from 100 GRPs to 70 GRPs, reflecting the fact that ~30% of radio ads paid for never make it human ears.

TV advertising? It’s the same phenomenon.

Trips to the refrigerator or the bathroom abound during commercial breaks — not to mention channel flipping or TiVo-ing.  Kunz contends that such ad-dodging techniques reduce TV ad viewability by as much as 75%.

The bottom line on all of this: Waste in digital advertising is a significant issue … but it’s a similar issue with other ad vehicles as well.

Add to this the fact that digital advertising offers the best metrics (accountability for every click and conversion action), and it should come as little surprise that digital ad spending continues to grow (and why eMarketer expects it to reach about a quarter of all ad spending this year).

Does Kunz have a point about offline and online advertising sharing similar “blindness” characteristics? What are your thoughts?  Please share your perspectives with other readers.

Mobile advertising doesn’t work so well … but why?

Lack of advertising engagementOne of the complaints marketers have had about mobile advertising is that the engagement levels are so pitifully low.

But is this really so surprising? … seeing as how clickthrough rates on online banner ads have been in the dumper for years now – well before the explosion of tablet and smartphone usage.

Helpfully, a research study conducted by Praveen Kopalle, a Dartmouth marketing professor, gives us insights as to why mobile ad engagement is so low.  Here are the reasons cited most often in that survey:

  • Mobile screens are too small – 72% of respondents cited this as a reason why they steer clear of mobile ads.
  • Too busy for ads – 70% claimed they don’t have time for ads when they’re on-the-go.
  • Can’t return easily to the content originally being viewed – 69% found this aspect irritating enough to avoid taking action on an ad.
  • Ads take too long to load – 53% cited this factor, which is clearly dependent on the type of mobile device or service available.
  • Not in the mood for ads – 42% identified this as a factor (some things never change).

Other findings in Dr. Kopalle’s survey underscore the fact that mobile advertising needs cut to the chase, because mobile device owners are generally not in “browse” mode while using them.  Consider these contrasting findings between mobile device users and people using desktop or laptop computers:

  • The typical mobile consumer is on his or her smartphone or tablet eight times a day for approximately 15 minutes per session.
  • Desktop and laptops users are more likely to be engaged only once or twice per day – but spend around two hours per session.

Moreover, when mobile devices users are performing information-seeking tasks, nearly half of them reported that ads “do not register” with them. 

The takeaway message for marketers:  In addition to targeting ads to the right audiences, the advertising messages themselves better be super-compelling, because mobile users won’t be paying attention for very long – if at all.

The ad-supported web: Will it fall under its own weight?

Banner advertisingFor the past (nearly) 20 years, the biggest thing that’s kept the Internet free for users is advertising – banner display advertising in particular.

Bloggers and other online publishers large and small rely on revenue from web banner ads to fund their activities. That’s because the vast majority of them don’t have pay walls … nor do they sell much in the way of products and services.

Because of this, the temptation is for publishers to serve up as many display ads as possible on each page.

It’s not unusual to see web pages that tile ten or more ads in the right-hand column. Usually the content of these ads has no relevance to readers, and the overall appearance isn’t conducive at all to reader engagement, either.

And that’s the problem.

Because of conditioning, people don’t even “see” these ads anymore. The advertising space has become one big blur – as easy to gloss over as if the ads weren’t even there to begin with.  (When’s the last time you clicked on a banner ad?)

Attempts to come up with other display advertising types – pop-ups and pop-unders, animations and other rich media, skycrapers and so forth – haven’t done much to change the picture. Indeed, they’re so ubiquitous – and so predictable – we don’t even consider the ads to be annoying anymore; they’re just part of the “décor.”

I’ve blogged before about how clickthrough rates on banner advertising are bouncing along in the basement, making them less and less valuable for advertisers to consider placing. And ads that are priced on a pay-per-click basis can’t be giving advertisers much in the way of revenue either, since relevance and engagement rates are so abysmally low.

The bottom line is that we now have a “lose-lose-lose” situation in online advertising:

  • Advertisers lose because of near-zero user engagement, thereby limiting their potential to drive business.
  • Publishers lose because ad revenues aren’t sufficient to bankroll their activities.
  • Readers lose because of lack of relevance and an incredible degree of page clutter.

So it seems that the ad-supported online publishing model is in a bit of a fix – and the question is how things can evolve to create a more satisfying result for all parties.

I’d be interested in hearing your thoughts on this issue:  What will online publishing look like in another five or ten years?  Anyone willing to hazard a guess?

How are things clicking in Internet marketing at the moment?

What’s happening with clickthrough behaviors on online ads these days? According to comScore, Inc., a digital market intelligence and measurement firm, activity today versus 2007 reveals that ~50% fewer people are clicking on Internet ads now compared to then. In fact, fewer than 10% of all Internet users accounts for ~85% of all ad clicks.

This may call to mind the old adage: “When a tree falls in the forest, does it make a sound … and does anybody know?”

On the other hand, it’s good to remember that banner advertising can have branding value. In fact, comScore research also shows that one in five users who click on an ad go on to conduct a search about the advertiser … and one in three visit the brand’s own web site.

Unfortunately, determining just how effective online advertising is can be a challenge to measure – reflective to some degree of the “bad old days” of print advertising. One reason for the difficulty is because of evolving consumer behaviors regarding “cookies.” When consumers delete tracking cookies from their computer, they’re counted as a “new customer” when returning to the site. Interestingly, comScore’s latest data find that nearly one-third of web users delete cookies – many as often as five times per month. And with the steady stream of news items warning of “Big Brother”-type information harvesting, it’s hardly a surprise that cookie deletion has grown by ~20% since 2007.

What’s the implication? Not accounting for cookie deletion can lead to an overstatement of unique visitors, reach and frequency – by about 2.5 times. (Relying on IP addresses doesn’t solve the issue either, because the typical computer in the U.S. has a multiple number of IP addresses.)

Of course, these hurdles don’t mean that an attempt to measure the effectiveness of online advertising is an exercise in futility. Just as in print advertising, there are clues marketers can hone in on that point to whether an online advertising campaign is a success. And prudent companies will discount web traffic statistics by a certain degree in order to paint a more realistic picture … not to mention incorporating conversion tracking triggered by specific actions on the web site such as a purchase, a customer query, or registering to download an informational document.