Web Advertising

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

Phillip Nones Advertising, Business, Marketing, Marketing Communications, Media , , , , , ,

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.

The fundamental problem with newspapers’ online endeavors.

Phillip Nones Advertising, Business, Content Creation and Content Management, Marketing, Media, Media Consumption, Publishing , , , , ,

olnIt’s no secret that the newspaper industry has been struggling with finding a lucrative business model to augment or replace the traditional print medium supported by subscriptions and advertising.

The problem is, their efforts are thwarted by market realities at every intersection, setting up the potential for head-on crashes everywhere.

In October, the results of an analysis conducted by several University of Texas researchers were published that illustrate the big challenges involved.

The researchers pinpointed 2007 as the year in which most large newspapers’ online versions had been available for about a decade, meaning that they had become “mature” products. The evaluation looked at the total local online readership of the Top 50 American newspapers, and found that nearly all of them have been stagnant in terms of growth over the past decade.

Even worse, since 2011 more than half of the papers have actually lost online readership.

The issue isn’t that people aren’t going online to consume news; the precipitous drop in print newspaper subscriptions proves otherwise. The problem is that many consumers are going to news aggregator sites – places like Yahoo News, CNN.com and other non-newspaper websites – rather than to sites operated by the newspapers.

That leaves online newspapers attracting disappointing advertising revenues that can’t begin to make up for the loss of those dollars on the print side. To wit, the University of Texas study reported that total newspaper industry digital ad revenues increased only about 15% between 2010 and 2014, going from ~$3 billion to ~$3.5 billion.  That’s pretty paltry.

The problem goes beyond ad revenue concerns too. In a market survey conducted in 2012, two-thirds of newspaper subscribers stated that preferred the print version of their daily newspaper over the web version.

I find that finding totally believable. I am a print subscriber to The Wall Street Journal whereas I read other newspaper fare online.  My daily time spent with the print WSJ ranges from 30 minutes to an hour, and I peruse every section of the paper “linearly.”  It’s an immersive experience.

With online newspaper sites, I hunt for one or two topics, check out the headlines and maybe a story or two, and that’s it. It’s more a “hit and run” operation, and I’m out of there in five minutes or less.

The notion of carefully picking my way through all of the menu items on an online newspaper’s navbar? Forget it.

And with such a tentative relationship with online newspapers, do I want to pay for that online access? Nope.

Magnify that to the entire market, and the web traffic stats show the same thing, which is why online advertising revenues are so underwhelming.

Once again, the optimistic goals of newspaper marketers are running up against cold, hard reality. The fact is, people don’t “read” online in the traditional sense, and they’re quick to jump from place to place, in keeping with the “ADD” most all of us have developed in our online behaviors.

There just isn’t a good way that newspapers can take their product and migrate it to the web without losing readers, losing ad revenue – and indeed, losing the differentiation they’ve built for quality long-form journalism.  And so the conundrum continues …

What about your print vs. online newspaper reading habits?  Are your experiences different from mine?  Please leave a comment for the benefit of other readers.

Bing Plays the Bouncer Role in a Big Way

Phillip Nones Advertising, Business, Creative and Production, Marketing, Marketing Communications, Marketing Research, Media, Media Consumption, Publishing, Sales , , , , , ,

untitledMicrosoft Bing has just released stats chronicling its efforts to do its part to keep the Internet a safe space. Its 2015 statistics are nothing short of breathtaking.

Bing did its part by rejecting a total of 250 million ad impressions … banning ~150,000 advertisements … and blocking around 50,000 websites outright.

It didn’t stop there. Bing also reports that it blocked more than 3 million pages and 30 million ads due to spam and misleading content.

What were some of the reasons behind the blocking? Here are a few clues as to where Bing’s efforts were strongest (although I don’t doubt that there are some others that Bing is keeping closer to its vest so as not to raise any alarms):

  • Healthcare/pharma phishing attacks: ~2,000 advertisers and ~800,000 ads blocked in 2015
  • Selling of counterfeit goods: 7,000 advertisers and 700,000+ ads blocked
  • Tech support scams: ~25,000 websites and ~15 million ads blocked
  • Trademark infringement factors: ~50 million ad placements rejected

Bing doesn’t say exactly how it identifies such a ginormous amount of fraudulent or otherwise nefarious advertising, except to report that the company has improved its handling of many aspects based on clues ranging from toll-free numbers analysis to dead links analysis.

According to Neha Garg, a program manager of ad quality at Bing:

“There have even been times our machine learning algorithms have flagged accounts that look innocent at first glance … but on close examination we find malicious intent. The back-end machinery runs 24/7 and used hundreds of attributes to look for patterns which help spot suspicious ads among billions of genuine ones.”

We’re thankful to Bing and Google for all that they do to control the incidence of advertising that carries malicious malware that could potentially cause many other problems above and beyond the mere “irritation factor.”

Of course, there’s always room for improvement, isn’t there?

Banner Ads Turn 20 This Year …

Phillip Nones Advertising, Business, Marketing Communications, Media, Media Consumption , , , , , , , , , , , , ,

… 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.

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

Phillip Nones Uncategorized , , , , , , , , ,

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?

Getting a Read on Viewer Engagement with Online Advertising

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Online advertising effectiveness -- findings from Casale Media (2011)One of the great aspects of online advertising is that every jot and tittle of users’ experiences can be tracked and analyzed.

Much of the findings confirm what we might already suspect in terms of the ways people interact with online advertising … but having confirmation and quantification helps in planning and carrying out advertising program tactics.

Take new research conducted by Casale Media, a Canadian-based online advertising network which specializes in promoting brands via banner, rectangle, tower, hover and pop-up ads. The company analyzed nearly 2 billion ad impressions generated during the first quarter of 2011.

Based on this research, Casale has come to three key conclusions:

 Online display ads appearing “above the fold” – in other words, in the area that’s visible before the user starts scrolling the page – are nearly seven times more effective in generating clickthroughs compared to ads appearing below the fold.

 Viewers are three times more likely to “act” on an ad if it is the first or second one they encounter during their web session.

 The more times someone sees a particular ad, the more likely he or she will be to click through and take action. Casale finds that ads served five times to a user are 12 to 14 times more effective than ads shown less frequently.

The Casale conclusions support the findings of other studies utilizing eye-tracking data, where it’s been found that site visitors spend the vast majority of their time looking at information positioned within the web page’s initially viewable zone.

As for the finding that ads served to users later in their browsing session are much less likely to get attention and be acted upon … industry practitioners refer to this as “banner blindness.” It’s a phenomenon that has an antecedent in the print magazine world, where “far forward” positions were often the place everyone wanted to be.

And as for greater ad frequency generating more viewer actions, this also mirrors the offline advertising world, where multiple ad exposures are needed to achieve a degree of familiarity and to “register” with users.

Awareness and familiarity are the first steps in generating action. Of course, too much frequency can be counterproductive – but again, the tracking capabilities of online advertising enable marketers to experiment with different exposure levels to determine the optimum frequency that’ll generate the best level of engagement.

More Insights on Online Display Ad Effectiveness

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Ad clickthrough rates
Clickthrough rates are only part of the story in online display advertising.
Last week, I blogged about the low level of clickthroughs on online display ads – basically a cipher at 0.09%.

In a conversation with a business colleague of mine who is with one of our healthcare client accounts, she mentioned that it’s also important to consider the branding aspects of online display advertising. The idea that people may not click through at that precise moment in time, but are favorably disposed to pay a visit later on.

This got me to looking for additional research into the matter. What I found from several advertising digital media marketing and data reporting companies – MediaMind (Eyeblaster) and comScore – confirms this impression.

An analysis by comScore of consumer clickthrough behavior covering ~140 online display ad campaigns found that only about 20% of the conversions came after clicking on a banner ad. The remaining 80% of conversions happened among those who had seen the ad but not clicked through at the time. Instead, they converted at a later date.

Other interesting points from comScore’s analysis include:

 Online display ad campaigns yielded nearly 50% improvement in advertiser website visits as measured over a 30-day period.

 Users who were exposed to the online advertising were ~38% more likely to conduct an advertiser-related “branded” keyword search in the subsequent 30-day period.

 Users who were exposed to the online advertising were ~17% more likely to make a purchase at the advertiser’s retail store.

Similarly, MediaMind’s analysis of ~100 million conversions from thousands of online ad campaigns has found concurring results – namely, that only ~20% of conversions are the result of a clickthrough, while the vast majority of the conversions happen at some point after viewing the banner ad without clicking on it at that moment.

The takeaway from all this: It’s a mistake to consider online advertising clickthrough rates in a vacuum. Because at best, it’s only a partial measure of the effectiveness of an online ad program.

Online Display Ad Clickthrough Rates Finally Bottom Out … Near the Bottom

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Online Display Ad Clickthrough Rates Bottoming Out
Online display ad clickthrough rates have stopped declining ... bottoming out at 0.09%.
The latest news in online display advertising is that ad clickthrough rates have now leveled off after an extended period of decline – one that was exacerbated by the economic downturn.

So reports digital media marketing firm MediaMind (Eyeblaster). According to a report released this past week, one key reason for the decline being arrested is the greater sophistication of advertisers in targeting online advertising to audiences and groups that are more likely to be interested in them.

That being said, the overall clickthrough rate has leveled off at an abysmal 0.09%.

That is correct: less than one tenth of one percent. In any other business, this would be a rounding error.

If that statistic seems difficult to believe, consider this factoid: The average Internet user in America is delivered more than 2,000 display ads over the course of a single month. We might think that users would be inclined to click on more than just two or three of these ads during a month’s time.

But it’s important to realize that when users are in the mood to shop and buy, they’re typically going straight to the sites they like … or they’re using Google, Bing or some other search engine to find their way.

And it turns out there’s really no such thing as an “average” Internet user, anyway. Research conducted by digital marketing auditing and intelligence firm comScore, Inc. has found that around two-thirds of people on the Internet never click on any display ads during the course of a month. Moreover, only 16% of Internet users are responsible for around 80% of all clicks on display ads.

All the more reason why search marketing continues to be the online advertising powerhouse that it is. And why not? It’s putting your business in front of the customer when s/he is in “search-and-buy” mode … not when s/he’s doing something else.

Where are Newspapers Now?

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Newspaper ad revenues continue in the doldrums.John Barlow of Barlow Research Associates, Inc. reminds me that it’s been awhile since I blogged about the dire straits of America’s newspaper industry. The twin whammies of a major economic recession along with the rapidly changing ways Americans are getting their news have hammered advertising revenues and profits, leading to organizational restructuring, bankruptcies, and more.

But with the recession bottoming out (hopefully?), there was hope that the decline in newspaper ad revenues might be arrested as well.

Well, the latest industry survey doesn’t provide much cause for celebration. A poll of ~2,700 small and mid-size businesses conducted this summer by Portland, OR-based market research firm ITZBelden and the American Press Institute finds that ~23% of these businesses plan to cut back on newspaper advertising this year.

The kicker is that these revenues are being spent, but they’re being put to use in other advertising media.

The ITZBelden survey found that a similar ~23% of companies plan to up their 2010 digital ad spending anywhere from 10% to 30%. This compares to only about 10% planning to increase their print advertising by similar proportions.

Moreover, the survey findings reveal that small and mid-size U.S. businesses have moved into digital marketing in a significant way. Not only do more than 80% of them maintain web sites, they’re active in other areas, including:

 ~45% maintain a Facebook or MySpace page
 ~23% are engaged in online couponing
 ~13% are involved with Craigslist
 ~10% are listed on Yelp! or similar user-review sites

One area which is still just a relative blip on the screen is mobile advertising, in that fewer than 4% of the respondents reported activities in that advertising category.

Where are these advertisers planning to put their promotional funds going forward? While newspapers should continue to represent around one quarter of the expenditures, various digital media expenditures will account for ~13% of the activity, making this more important than direct mail, TV and Yellow Pages advertising.

There was one bright spot for newspapers in the survey, however. Respondents expressed a mixture of confusion and bewilderment about the constantly evolving array of digital marketing communications options opening up … and they’re looking for support from media experts to guide their plans and activities.

And where do they see this expert advice coming from? Newspaper ad reps.

Perhaps the Yellow Book’s “Beyond Yellow” small business advertising campaign – you know, the one that touts not only the Yellow Pages advertising but also web development, online advertising, search marketing and mobile advertising – is onto something.

Craigslist riding high … but clouds on the horizon?

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Craigslist logoNow here’s an interesting statistic about Craigslist, the online classified advertising phenomenon and bane of newspaper publishers across the country. Online publishing consulting firm AIM Group is forecasting that Craigslist will generate nearly $125 million in revenues this year.

But here’s the real kicker: Craigslist is on track to earn somewhere between $90 million and $100 million in profits on that revenue. That kind of profit margin is basically unheard of – in any industry. And the fact that it’s happening in the publishing industry is even more amazing.

What’s contributing to these stratospheric results? After all, Craigslist bills itself as a “free classified” site. That may be, but the publisher derives a huge portion of revenue – more than 50% – from paid recruitment advertising, much of it coming straight out of the pockets of the newspaper industry.

And the rest? Chalk up most of that to advertising let’s euphemistically label “adult services.” (AIM Group calls it something else: “Thinly disguised advertising for prostitutes.”)

Of course, these lucrative revenues and profits have come at a price. Craigslist has developed a reputation – not wholly undeserved – of being a virtual clearinghouse for anonymous hook-ups and other forms of vice. Complaints of Craigslist becoming a haven for scam artists, thieves – even the occasional murderer – have become more common as the site has expanded its reach into more cities and regions — now in excess of 500 communities.

And here’s another interesting finding from AIM Group. It reports that Craigslist’s traffic peaked in August of last year (~56 million unique visitors that month), but has fallen since then. In fact, monthly traffic has dropped and now plateaued at ~48 million since February.

Why? AIM speculates it’s the result of an “antiquated” user interface, along with a proliferation of “spam & scam” advertising. You start getting a lot of that … and you’re bound to start driving some people away.

Still, it’s pretty hard to argue with profit margins hovering around 75%.