Greetings from Steak in New York. Today we’re talking about display advertising – those fun little ads (text, images, video, rich media) that appear on most websites you visit. These ads are crucial to making money on the web, but are they used to their best efficiency?

Perhaps they could with real-time bidding (RTB): an auction-based media model that’s driven huge growth for SEM, both for accountability and cost efficiency. RTB gives advertisers more control of their ads and costs, and consumers more targeted display ads.

So how does RTB put more power back into the advertiser’s hands? Instead of buying impressions in bulk, they buy per impression. The caveat? You need more data insight to create targeted ads to enhance both ROI and the consumer experience.

Still fuzzy? Check out the Steak synopsis below. We’ve also included thoughts from a Steak SEM Manager, Charlie Roraback. With six years of digital marketing experience, four of which included rocking the search marketing world. Charlie has hands-on experience implementing search engine marketing campaigns for Fortune 400 clients, and more importantly on today’s topic: bid strategies.

Display Challenges for Search

With the recent rise in RTB and demand side platforms (DSP), display publishers can finally claim that the hallmarks of search – accountability and measurability – are coming to display.  Make way for auction-based economies, real-time dynamic creative assets, and variable-based pricing models.  Yet as display attempts to bridge the divide, the differences between the two channels are still very pronounced.

“Perhaps the biggest challenge will be bridging the gap between interest and intent,” says Roraback, “Display has primarily functioned as interest-based advertising, whose main function was to create ‘interest’ and demand for a product or service. Search has functioned to capture the ‘intent’ of the user.”

Unless display publishers can learn to overcome these challenges, display will continue to remain a secondary channel for response-driven advertising.

Bridging the Gap #1:  Attribution

Click Through Rate Search plays in a very binary mode: Either someone clicked on an ad or they didn’t.  But display is more nebulous.  You have both click-through attribution alongside view-through attribution.  While click-through is easily enough to document, click-through-rates (CTR) remain exceedingly low.

And, frankly speaking, view-through has little measurable value.  A user doesn’t even have to scroll down to the bottom of the page.  Yet if an ad is present and the user executes an action, that non-view is still counted as a view-through and is perceived by the display community to have some sort of value.


Bridging the Gap #2:  Measuring Results

Money Cash from Computer

Because the search channel (especially pay-per-click, or PPC) is so measurable, you can determine a very exact return on investment (ROI) and manage advertising budget accordingly.  Yet customer acquisition budgets are routinely dwarfed by brand budgets. “Brand awareness” is the biggest unknown to advertisers, for which agencies don’t have the ability or understanding to measure an action.

This is refuge in the unknown; marketers and agencies can gain access to more ad dollars without being held accountable.  Because brand awareness isn’t measurable to an exact ROI, the dollars spent can be much larger than paid search, all in the hopes of achieving some retention or engagement.

“Along with measuring comes optimizing!” says Roraback, “The main challenge is how to optimize for people and behaviors versus prices and pages. For display to truly perform in its new format, media buyers need to better understand how their ad relates to the targeted user (i.e. aligning creative messaging with interests of a particular user).  Display optimizes based on pages and ad sizes, search optimizes based on users, intent, and actions: So how does one translate ‘awareness’ into ‘action’ or ‘engagement’ measurements?”

Bridging the Gap #3: A Disconnect on Value

Due to the auction model, paid search remains the most efficient way to align ad price with its value to an organization.  Yet the only way an advertiser can get bid-based pricing with display is to navigate the world of remnant and inconsequential inventory.  Furthermore, with some CPA (cost per action)-based buys, you have to sacrifice transparency at the site level and deal with limited inventory amounts.  We have yet to see a top-tier advertiser embrace the auction economy.

Roraback agrees. “Many of today’s ad exchanges profit from arbitrage pricing models, where they buy remnant ads at a lower CPM (cost per mile, impression, or “thousand”) and drive the value of the inventory higher by overlaying some third-party data sets onto their audience targeting.”  This sounds pretty sneaky.

“Until more premium inventory becomes available or better transparency is given to the targeting models behind the exchanges, much of the ‘potential’ in the new model will remain unrecognized or under utilized.”

Yahoo headquarters in Sunnyvale California

(Note:  We would be Buyer #1 when Yahoo decides to say “hell with it” and makes all its inventory available via auction!  Will it ever happen?  No.  But it sure would shake things up in Sunnyvale!)

In the end, display still represents a solid, worthwhile channel for advertisers to explore.  New tracking and audience targeting tools continue to improve performance across the channel.  But until we see the widespread adoption of performance-based pricing and accountability in display, it will continue to languish as a secondary channel in my marketing plans.

Where search is text-based, display is image-centric.  Where search is purchased on a performance model, display remains largely bought on a CPM.  The list goes on and on.