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If you’re fed up with online advertising, you’re not alone. A recent survey of 100 advertising agency executives found that their clients are losing patience with digital advertising. When asked why, advertisers noted that such ads don’t work very well. Special ire might be reserved for the banner ad, which, 15 years or so after its introduction, still has a click-through rate of 0.1%, or about 1 in 1,000.
While no one is crowing about such numbers, defenders say that figure is a bit misleading. Nevertheless, the industry is trying out different ideas to make those click-throughs more likely by changing the way consumers think about online ads, or making them more relevant, or maybe just better.
About Those Numbers
Even the staunchest defenders of banner ads concur that an average click-through rate of 0.1% is very low. But the numbers aren’t so bad, they argue, if you take into a account that not all ads are designed to be clicked. While a portion of banner ads contain a so-called “Call to Action” like entry into a sweepstakes, some banners are designed for branding purposes. For instance, if Coca-Cola runs a banner on a youth-skewing site, the brand may be more interested in raising awareness than getting someone to click.
Ted McConnell, Executive Vice President Digital, for the Advertising Research Foundation, says the difference in click-throughs for direct response ads vs. branding ads can be as high as tenfold. David Doty, senior vice president and chief marketing officer with the Interactive Advertising Bureau, meanwhile, points out that banner advertising has been growing at a steady clip. For the first half of 2010, such advertising hit $4.4 billion, a 36% jump over the first half of 2009. That came as other forms of online advertising, like classified ads, contracted.
Still, everyone agrees that getting web surfers to click on more ads would be a good thing. One current idea is to rethink the paradigm of online advertising. Since inception, the idea of online advertising has been a model based on disruption: The ads get in the way of what you’re trying to do. But Scott Kurnit, the founder of About.com, believes that if consumers can store ads away for later, then they’ll eventually click on them.
That’s the premise behind Kurnit’s new company, AdKeeper, which is working with McDonald’s, Best Buy, Sears and Showtime, among others, on ads that consumers can save for later. Kurnit told Mashable recently that, although many industry insiders are skeptical that consumers will ever click on ads, a survey by Nielsen showed 56% of consumers said they would, particularly if the ad is entertaining or offers information about a subject they’re interested in.
The idea that online ads can have value in and of themselves has been embraced by others, notably Digg, which rolled out Diggable ads in early 2009. While initially, the ads ran as sponsored posts, last October, the company rolled out banner ads from Microsoft, Sony and Toyota that featured content related to the brand. For instance, a National Geographic ad promoting a TV program called “Great Migrations” included an article about butterfly migrations that users could access if they dugg the ad. Dan Contento, vice president of sales for Digg, says the ads have doubled click-through rates. The company plans to roll out Diggable ads outside the Digg network in the near future, Contento says.
If consumers don’t want to treat ads as content, another option is bribery. A startup called AdGenesis asks consumers to sign up to watch ads. If they’re selected then they receive rewards like coupons for watching the ads. The company claims a click-through rate of 20%.
While some say that marketers have approached advertising the wrong way on the Internet, others insist that the existing ads aren’t executed well enough. A group of companies including DoubleVerify and AdXpose track banner ads and make sure that they’re running where they should and that editorial content doesn’t clash with the ad (like when, for instance, a story about a plane crash runs next to an ad for an airline.)
As advertisers are aware, context is hugely important on the web. Getting in front of an audience with an interest in what you’re selling is key, but so are more subliminal cues within editorial content. For instance, Dictionary.com saw click throughs rise from 0.5% to as high as 8% with customized “brand essence” campaigns that linked brands to selected phrases a la search advertising. For instance, Adobe chose to run ads when such words like “sublime” and “luminous” appeared.
An Unsolvable Problem?
Internet advertising has been around for more than 15 years, so many of the ideas that entrepreneurs are trying now have been floated before. Perhaps the biggest problem with banner advertising is that it’s not search, which is a more elegant solution to matching consumer interest and inventory. “You have an audience that’s tuning out advertising at an all-time high,” says Jamie Smith, CEO of EngineReady. “They’ve actually trained themselves to ignore ads.”
The industry, however, is pushing ahead. The IAB is currently soliciting better advertising ideas with its “Rising Stars” program that will award would-be entrepreneurs.
But the ARF’s McConnell says that one often overlooked variable is the ads themselves. Maybe he says, they’re not getting click throughs because of what they’re offering. Says McConnell: “If there was an ad saying ‘Click here and we’ll send you a check for $1,000′ how much do you think it would matter if the font isn’t just right?”
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