Display Advertising: The Future or The Great Digital Hype?

Display advertising. It is a very funny thing.

Fifteen years ago, display advertising was the king of the world. Any site that could garner enough traffic to warrant an advertiser’s purchase of banner space on said site was bringing in the dough. Display advertising is essentially what imitated the internet bubble in the late 90’s, as traffic-garnering site after traffic-garnering site began to get over appraised and eventually oversold to the tune of billions of dollars in cash and/or stock. But eventually, people got smart, realized that display advertising did not have the ROI we all though it had, and the bubble burst.

In the years following the bubble, display did very well on the well-produced sites that still held on to the traffic, because after all, content is king. As recently as 2005, many popular sites were charging CPMs that approached $40 for a simple article page, and as much as $100 for a home page. Those days are long gone. Through the advent of ad networks and the introduction of TV channels sending viewers to their own sties in droves, the value of one-thousand banner impressions just isn’t what it was any more. In a NYTimes article a couple of years ago, the NYTimes itself suggested that its best CPM prices (likely on the homepage) were no higher than $25. And currently, NYtimes.com offers CPM prices to any Tom, Dick and Harry at a rate of $8.

Thus, it’s suffices to say that display isn’t what it was. Certainly, it still has value, but it doesn’t have the value we thought it had or think it should have. And yet, it’s still the king of digital media. Say for maybe pre-roll video ads, display conjures up more interest, more love and more buzz than any other part of online advertising. This happens in spite of the fact that that Google makes a killing with CPC ads, and search engine optimization allows people to bring in traffic organically.

The problem is that SEM and SEO aren’t sexy. There are no parties when a news site unleashes a new way to roll out their internal CPC ads, and SEO is usually the bane of most premium content provider’s existence.

But I understand the love for display. There’s nothing even wrong with it. Black Oak Enterprises, Inc. is essentially founded on display advertising, because without it, our crown jewel, TheSportsWatchers.com, would be nothing but a bag of ashes. Also, as someone who contributes to the display advertising efforts of advertisers, I know that display has its purpose from the purchaser’s standpoint. If you’re a major brand with money to burn in marketing, there’s no way you can allow you competitors to be advertising though a medium that you are not taking advantage of.

However, we have to be honest with ourselves. With its high-resolution pictures, rich media and funny animations, display advertising is cool, but the ROI on it just isn’t the best option out there. And if you are a company looking to strictly grow your business with the highest ROI possible, display advertising is not going to do that for you.

Yet, with every display media advocate I talk to, they promise me that this is just the beginning—that display will make a comeback and be bigger and better than ever. I have heard it all; from rich media being involved in half the banners out there to real-time bidding changing the industry, everyone that stands to benefit from display says it’s going to be the best thing out there. It’s funny though, that when they talk about it, they tend to overlap display into other areas of online advertising.

For example, a lot of display advocates like to group display in with video-ads. Excuse me, those aren’t the same thing. A video ad is a commercial, an online commercial, and entity unto itself. Saying video ads and display are the same thing, is like saying TV billboards and commercials are the same thing. They’re not.

Also, display often wants to mix itself up with mobile too. Surely, a banner ad on a mobile device is essentially the same thing is a banner ad on a PC. However, a commercial that I watch at home has more of an effect to me than a commercial I see during a game I watch at the bar. Those two experiences of the ad just aren’t the same, and I think display and mobile are two unique entities of their own.

But the prognosis aside, it’s funny how the only people advocating for the future of display are the people the stand to make the most from it. Certainly, the media will get the best ROI from the growth of display, since they get the money and they control the content that warrants the display ad business. Publishers want display to grow, grow and grow, because it means higher revenue for them with very little work. If real-time bidding, social profiling and rich media technologies are developed around the proposed increasing influence of display, it will automate the role of serving ads for the publisher while increasing the CPM rates. Essentially, the growth of display ads would allow publishers to go back to the bubble of 2000.

Then there are the middle men—the agencies and technology companies. Oh, they stand to make a killing! Google’s CEO Eric Schmidt recently predicted that display ads would be a $200 billion business in ten years. That’s funny how he believes that less than a year after Google launched a new display network and some time after they bought one of the world’s most promising real-time bidding technologies. Between Google and all of the other display ad-serving technologies, these tech industrialists stand to make a killing if display grows to be that big.

As do the agencies, the true middlemen. Many agency departments were founded on the advent of display advertising. The traditional agencies of the late 80’s and 90’s loved the idea of having another sexy medium from which to charge a commission for. So in the late 90’s, many companies were taking advantage of advertisers’ propensity to jump into the display waters. And while agencies continue to make money off display, it’s not what it used to be. The publisher parties and happy hours aren’t nearly as grandiose and as often as they were in 2000. But if display were to boom to $200 billion, boy would the fun come back.

While the media, agencies and tech companies stand to make a killing off a potential boom in display advertising, you know who probably doesn’t? The advertisers who make this whole thing possible!

It’s funny, with all the predictions I hear about display, none of them have come from the world’s leading marketers. Neither Wal-Mart, nor GM, nor Pepsi is pushing display to the forefront of their media objectives, and why should they? They know better than anyone that display hasn’t provided the ROI that they want. And if it hasn’t, why would they be interested in display, while things like social media, an almost equally ROI de-railer, at least allows them to speak directly to their audience?

As an avid follower of the media industry, I see plenty of advertisers get behind commercials and SEM. Whether it’s GM touting their relationship with CBS, or J.C. Penny’s telling everyone how much they have benefited from Google, the praise for display is rare, if not damn near non-existent. And you know why? It’s because everything you get from display is available elsewhere, only with a better ROI.

Why would I go after display for ROI when SEM, SEO, direct marketing and late-night television commercials do it better?

Why would I go after display in the hopes of interacting with customers, when social media, micro-sites and community sponsorships do it better?

And even display’s wheelhouse, branding, can be done more efficiently elsewhere. Whether it’s through pre-roll ads, television commercials or a good old fashion event sponsorship, there are much better ways to brand your products than with display ads. Granted, display sometimes offers a reach that those other mediums don’t always provide, but if the future of display is immersed in the idea of direct targeting, then whose to say that reach is really that much better?

So if you can’t tell, I’m down on display advertising. And I think saying that as a media company that sells and serves display ads should warrant some level of attention—then again, who the hell am I?

I will, however, reiterate that display has its purpose, but that purpose is limited in its ability to make an advertiser a better company after the display campaign is over. And at the end of the day, while media companies like mine stand to make money off the growth of display, and ad agencies stand to collect huge service fees, it’s the advertiser that will have to buy into display ads as the future of media. And from the looks of it, I’m not so sure they are willing to invest.

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