Putting banner ads out to pasture

by David Spark on November 15, 2009

Here are some interesting statistics for you.

  • Number of people who click on display ads in a month has fallen from 32% of Internet users in July 2007 to only 16% in March 2009.
  • 8% of Internet users account for 85% of all ad clicks.

(Source: comScore)

  • Almost half (48%) of Twitter users who saw a brand’s name mentioned would go on to use a search engine to investigate further.
  • 34% have used a search engine to find information on a product/service/brand after seeing an advertisement on a social networking site.

(Source: Performics and ROI Research. Summary article.)

  • In the 15+ years I’ve been online, I have never consciously clicked on a banner ad.
  • In the 15+ years I’ve been online, I have never consciously clicked on a Google ad.
  • In the 15+ years I’ve been online, I have responded to recommendations, articles, and advice I see from friends via email and on social networks.

(Source: me, and possibly you.)

Note to all brands that only advertise with banner ads. You will NEVER reach someone like me who ignores and never clicks on a banner ad.

If it’s true that display advertising is decreasing and has horrible reach, and that people use social media to effectively learn more about brands, then why do brands still spend so much money in search engine marketing and display advertising?

Thinkstock Single Image Set

Answering my own question, I believe the reason is because SEM and display advertising is a known quantity and easy to purchase. And while the response may be poor, it may be far more costly trying to tackle the unknown beast that is social media.

I believe brands are finally starting to come around and realize that standard display advertising is a waste of money and effort. Over the past two weeks I was reporting at the ad:tech conference in NYC and The CMO Club Summit in San Francisco. And for both conferences, the subject of brands in social media was the buzz all over the floor and repeated in probably every single session. Those companies that were afraid to get into social media are no longer fearful. Their concern now is how to engage in social media effectively.

While I think it’s time to put an end to all banner ads, it’s not the end of the ad network. Ad networks are extremely valuable as they have relationships and placement in key media outlets that brands and advertisers want to be. While social media may be difficult for some, it’s easy to buy access to the network. But instead of putting a static non-relevant advertisement in that rectangular space, why not bring in an RSS feed of some content from your company blog or some other relevant timely information. With timeliness and relevancy, you’re sure to get more attention and click-through than a simple banner ad. Banner ads are a dead communications medium. It’s time for us to put them out of their misery.

{ 7 comments… read them below or add one }

Charlie November 16, 2009 at 3:12 pm

Thanks, Dave for the article. I agree with your point that banner ads tend to be terrible on a direct conversion/ROI level.

However, I think the posting above omits a very important reason why display advertising should exist both now and into the future: Brand advertising.

So many players in the online community (advertisers, publishers, agencies etc…) are focused on the bottom of the funnel selling and immediate conversions that they forget that the basis for many consumer purchases are seeded at the brand association level, days, months or even years before the consumer actually make a purchase.

Think of brands like Coca-Cola, Clorox, Crest, Colgate, McDonalds, Budweiser, Nike, Marlborough, Pepsi, Dial, etc… How would you know which toothpaste to buy or have that “understanding” that drinking Gatorade– and not any other type of electrolyte sugar water — will help your performance if you were not introduced to it through brand-based advertising years before.

I am guessing far less than 8% of people who see an ad for a product in a magazine immediately run to the store to buy the item, and yet most advertisers and agencies will tell you these ads are highly influential. Why are online display ads any different?

I think the bigger challenge moving forward will be to put together the analysis to see in what ways banner ads influence people and then open the minds of online advertisers to realize that advertising online can do far more to improve your market-share than just the results of immediate conversions…

David Spark November 16, 2009 at 3:15 pm

Charlie, great input and yes you’re right. The problem is if you’re ONLY doing static brand ads, you’ll NEVER reach a person like me. And I know there are tons of other people out there that never click on ads.

But, with that said, I’m happily a member of MyCokeRewards, so I actually do have a connection with the brand. They reach me by sending me reminder messages that I need to keep adding points so I don’t lose them.

While I’m happily a member of MyCokeRewards, I’ve never clicked on a Coke banner ad and never will.

Mario Sgambelluri November 16, 2009 at 3:19 pm

if we’re measuring banner effectiveness on clicks, sure, get rid of ’em. however, banners “generate significant lift in brand-site visitation, trademark search (searching for, say, Toyota or Prius) and both online and offline sales among those exposed to the ads,” reported AdAge. More here: http://tinyurl.com/y9eskow

David Spark November 16, 2009 at 3:36 pm

Again, repeating my earlier comment, I think it’s a bad route. You can actually get BOTH (click through and search lift) instead of one. Still advertise using the ad networks, but replace those static ads with something relevant using RSS.

Graham Humphreys November 19, 2009 at 6:28 pm

Dave – thanks for the article. I feel the concept of using advertising real-estate for ‘live’ (rss) feeds has far greater utility for consumers. And folks who know me know I love utility: http://tinyurl.com/yjq2b5k.

But whatever the possibilities of the format, the old-school truths remain: you need ‘brand’ activity to cultivate your market, and ‘direct’ activity to harvest it. (We are badly in need of some new industry vocabulary here).

Beyond this, everything else is just a question of the tools you use. Every job is different. And so there are many, many at our disposal – far more than those in which our risk-averse industry over-invests.

But on some jobs, just occasionally, you need to pick that ‘flash banner’ tool, rusted and cobwebbed, from it’s forgotten corner in the back of the toolshed…

Martin November 22, 2009 at 9:53 pm

Well I think you cannot rule out the effectiveness of banner ads all together. it depends on the banner itself ( I mean the graphics)whether they are attracting the attention of the viewer or not. Flash are better

David Spark November 23, 2009 at 11:24 am

Unless that flashy banner has something timely or relevant about it, it’s pointless in my mind. I know you can probably cite a bunch of click through statistics showing that Flash banners perform better than static banners. And I’ll also show you that current blog posts blow both of them out of the water.

I’m simply saying that there are a lot of people like me that completely ignore online ads yet we spend an inordinate amount of time online. If advertisers want to reach us, they need to stop throwing all their money into static or animated banner ads.

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