emarketer webinar: keys to online display advertising

David HallermanSenior Analyst

J U N E 2 4 2 0 1 0

N E W Y O R K NY

The Keys to The Keys to Online Online Display Display AdvertisingAdvertising

What we’ll What we’ll look atlook at today… today…

Display ad spending trends (meaningmeaning)

Display and other ad formats (blendingblending)

Brand marketing goals (display’s placedisplay’s place)

Creative’s central place (best practicesbest practices)

Metrics for branding (beyond the clickbeyond the click)

Ad targeting (a mixed baga mixed bag)

Clive ThompsonClive Thompson, Wired magazine, , Wired magazine, May 2010May 2010

We often say, rightly, that literacy is crucial to public life: If you can’t write, you can’t think. The same is now true in math. Statistics is the new grammar.

Ad Spending TrendsAd Spending Trends

US US Internet Internet Advertising Spending, Advertising Spending, 2009 - 2014 (billions)2009 - 2014 (billions)

Source: eMarketer, May 2010

Wide RangeWide Range: Growth of total US : Growth of total US Internet ad spending in 2010 (% Internet ad spending in 2010 (% change)change)

Source: eMarketer, May 2010; others, Nov. 2009 – May 2010

Some of the Some of the reasons reasons for eMarketer’s for eMarketer’s Internet ad spend estimatesInternet ad spend estimates

Diverse Internet ad universe (not all doing the samenot all doing the same)

Branding shortfalls & shifts (leading 100 advertisersleading 100 advertisers)

Pricing trends (more performance, less CPMmore performance, less CPM)

Ad networks (make banners into commoditiesmake banners into commodities)

More inventory than ever (also commoditizes, but…also commoditizes, but…)

Historical downturn and revival (the IAB/PwC datathe IAB/PwC data)

Google, Yahoo!, other revenues (mix of mix of downdown and and upup)

Privacy & safety concerns (esp. limit brand spendesp. limit brand spend)

One-Way Street: US Internet ad One-Way Street: US Internet ad spending’s spending’s share of total share of total media…media…

Marketers spend more on Internet ads, as they look to engage audience, plus get fuller measurement and targeting.And they spend less on ads in other media — especially print — as they seek greater accountability.

Balance of ad dollars are Balance of ad dollars are shifting toshifting to the Internet because…the Internet because…

Furthermore: Brand marketers see need, and viable channels Current economic and societal forces reinforce

new ad models and make them more permanent

Display DiversityDisplay Diversity

US display ad spending growth will US display ad spending growth will continue to continue to outpace total outpace total Internet Internet gainsgains

Source: eMarketer, May 2010

Large part of that display growth will Large part of that display growth will come from an come from an evolving Webevolving Web

Source: company reports, April 2010, eMarketer, May 2010

While While impressions impressions do not equal do not equal dollars, they dollars, they point to point to trend of trend of greater greater diversitydiversity for for display display placements placements ((banners & banners & rich media rich media herehere))

Video is the Video is the prime source prime source of display ad of display ad growth, but banners healthy, toogrowth, but banners healthy, too

Source: eMarketer, May 2010

Factors behind the (Factors behind the (ongoingongoing) ) steadiness of banner ad spendingsteadiness of banner ad spending Becoming interchangeable commodity

Networks help reach but lower inventory pricing across sitesNetworks help reach but lower inventory pricing across sites Users ignore, more intrusive ads needed

Pushes marketers to use video and social marketingPushes marketers to use video and social marketing One-time display dollars go to social media marketing

Don’t show up on charts, more difficult to evaluateDon’t show up on charts, more difficult to evaluate Targeting improves as it can reduce total spend

Fewer impressions give possibility for same effectivenessFewer impressions give possibility for same effectiveness However… banners are foundation for campaigns

Banners fill-in for search, video, offlineBanners fill-in for search, video, offlinePlus, more Websites and more page inventory = more salesPlus, more Websites and more page inventory = more sales

More banner dollars over next few More banner dollars over next few years, but years, but video trend video trend will take overwill take over

Source: eMarketer, May 2010

Factors that indicate the (Factors that indicate the (futurefuture) boom ) boom of online video ad spendingof online video ad spending

Broadband now reaches “critical mass”Although ISPs could stymie full growthAlthough ISPs could stymie full growth

“Rich” advertisers still seeking brand messagesWith only 7% of measured media budgets going to displayWith only 7% of measured media budgets going to display

Desire to replicate sound, motion — emotion — TVBut with better measurability and ability to target adsBut with better measurability and ability to target ads

Hope among Web publishers for greater revenuesNeed to supply compelling and brand-safe video contentNeed to supply compelling and brand-safe video content

Acceptance of ads among audienceBut content and delivery channels must be valuedBut content and delivery channels must be valued

Local ad Local ad spending spending will will increasingly increasingly shift online, shift online, as both as both marketer marketer need and need and more more sophisticatesophisticated geo-d geo-targeting targeting come come togethertogether

Perspective…Perspective…

Still step-sister among online ad methods Harder to gauge success with display than with

search or e-mail Self-cannibalizing category, money shifting from

one to the other Brand safety concerns, about nature of content

that appears along with the ads Privacy concerns, especially for some types of

targeting (esp. behavioral) Complexity, with many vendors in this market

Display ad spending (aka, online Display ad spending (aka, online brand brand advertisingadvertising) looks healthy, but…) looks healthy, but…

According to According to some some marketers, marketers, display display spending spending trailedtrailed e- e-mail and mail and search in search in 20092009

Display spending Display spending less than less than search and search and e-mail in another survey e-mail in another survey (convergence)(convergence)

Perhaps fewer dollars for display Perhaps fewer dollars for display because e-mail & search because e-mail & search perform perform betterbetter

Even when Even when video video increases, increases, some dollars some dollars will will come come from banner from banner ads and rich ads and rich media — so media — so overall overall display display market market suppressedsuppressed

Fears about ability to Fears about ability to protectprotect brand brand image also inhibit display ad spendingimage also inhibit display ad spending

Over 60% said display spending would Over 60% said display spending would grow by 10%grow by 10% or more if brand safety… or more if brand safety…

Marketers say “We Marketers say “We spend lessspend less on on behavioral targeted ads due to behavioral targeted ads due to privacy…”privacy…”

Source: Ponemon Institute, April 2010

The portion of marketing dollars going The portion of marketing dollars going to to nonmedia spendingnonmedia spending is rising is rising

Brand Marketing GoalsBrand Marketing Goals

Direct response Direct response objectives rank high objectives rank high for many marketers onlinefor many marketers online

Direct Direct response response focus focus echoed echoed (somewhat) (somewhat) by by steady steady increaseincrease of of performance performance pricingpricing

However, However, change is change is coming: coming: Branding’s Branding’s shareshare of the of the total online total online pie is pie is gaining on gaining on direct direct response response dollarsdollars

Buzzwords Buzzwords and trends and trends indicate indicate mindshare, mindshare, and in that and in that regard regard branding branding even more even more centralcentral than than “hot” topics“hot” topics

Key variable for display ad performance Often best combined with targeting, to vary

message to audience by group, location, or their place in the purchase funnel

Development of automated systems for picking creative, changing it over course of campaigns

Innovation can thrive within standardization — and perhaps needs some degree of standards (it’s not the frame but what’s within it that counts)

Testing creative online easier than other media

The importance of The importance of creative creative for for effective branding just as true online effective branding just as true online as offlineas offline

Kathryn KoegelKathryn Koegel, marketing , marketing practice lead, Primary Impactpractice lead, Primary Impact

In other media, there is little discussion of the size of the units, the arcana of targeting techniques

or whether something is a branding or DR‐based ad. Instead, marketers and agencies focus on

creating the most memorable and compelling messages and

finding the appropriate audiences and context for that creative.

Poor creative can even Poor creative can even negatively negatively affect affect brand metrics (not just do lesser brand metrics (not just do lesser good)good)

Persistent branding — use logo a lot, highlight brand throughout the ad

Simple, direct, communicate at a glance — people are busy and don’t pay attention to details

Don’t let numerous formats make creative generic “Reveal” ads rarely work — except for some

video and entertainment — so get to the point No more than two messages per execution Use people — human faces are appealing

Dynamic Logic’s recommendations for Dynamic Logic’s recommendations for better performing display better performing display creativecreative

Integrating DisplayIntegrating Display

Conversions come from Conversions come from a mix a mix of of display and search, and vary by display and search, and vary by industry (goals)industry (goals)

Source: Eyblaster, February 2010

Display leads to search Display leads to search — not always, — not always, but typically positive, incremental but typically positive, incremental gainsgains

Banners Banners encourage actionsencourage actions — less than — less than search or e-mail, but part of wholesearch or e-mail, but part of whole

Perspective…Perspective…

Main metrics used are not really for Main metrics used are not really for branding — branding — not useful not useful for display adsfor display ads

More More marketers marketers deem deem conversions conversions very very important important than any than any other metric other metric ((so where so where does does branding fit branding fit in?in?))

Counting the Counting the sheer sheer number of number of people people exposed to exposed to an ad an ad (impressions(impressions) is main ) is main way way display-display-ad ad performance performance gets gets measuredmeasured

Measuring traditional brand metrics Measuring traditional brand metrics highly useful (but highly useful (but costs more costs more to do)to do)

How much do display ads drive search results? Can display ads online support offline elements? If you don’t measure it, is it still there? What metrics best measure impact of display? Reach/frequency vs. engagement Measure brand-search or site-traffic gains while

display campaign runs Consider non-purchase conversions (video,

social media, subscribe, share, play game)

Holistic advertising Holistic advertising — look at whole, — look at whole, not parts — especially needed for not parts — especially needed for brandingbranding

Audiences & TargetingAudiences & Targeting

Display more appreciated when the Display more appreciated when the audience audience trade-off is explicit trade-off is explicit

More than ¾ of marketers using More than ¾ of marketers using display display target their audiences target their audiences or plan or plan to targetto target

Classic Classic demographic demographic targeting targeting still used by still used by more more advertisers advertisers than than interactive interactive targeting targeting such as such as behavioral behavioral (70% vs. (70% vs. 59%)59%)

Far more Far more marketers marketers use use plain plain display display advertising advertising than than behavioral behavioral targeted targeted displaydisplay

No single type of targeting is “best” Consider the following factors:

Data available (accurate, fresh, relevant) Objectives, persuasion or awareness Types of goods or services being sold Where audience is found in purchase funnel

The intertwined issues of data usage and audience privacy will affect display targeting for the next several years

To reach the audience with display To reach the audience with display ads, targeting needs to be ads, targeting needs to be multiple multiple choicechoice

TakeawaysTakeaways

Consider thisConsider this……

Display spending growth (use diversityuse diversity)

Banners add (supplement other techniquessupplement other techniques)

Video invest, experiment (branding onlinebranding online)

Measure whole process (integrate displayintegrate display)

Focus on creative (test ad content, not techtest ad content, not tech)

New paradigm (search, e-mail relevant modelssearch, e-mail relevant models)

““Thank Thank You!You!””

About AdReady

© 2009 AdReady, Inc. Confidential

Automated Buying System

© 2009 AdReady, Inc. Confidential

Creative Automation

© 2009 AdReady, Inc. Confidential

Precision Campaigning

© 2009 AdReady, Inc. Confidential

Whitepaper OfferWhitepaper “Precision Campaigns: Integrating Creative

Automation & Micro Targeting”

E-Mail: JKHancock@adready.comThank You

© 2010 AdReady, Inc. Confidential

Powering a Better Internet © 2008 Akamai

Thank you for tuning in to the eMarketer Webinar:Keys to Online Display Advertising

Presented by:

David HallermaneMarketer Senior Analyst

Questions & Answers

Sponsored by:

Access to the playback and slideshow will be sent to all Webinar registrants via e-mail.

eMarketer CoverageLearn more about online advertising with eMarketer Total Access.

Visit: www.emarketer.com/productsCall: 800-405-0844 E-mail: sales@emarketer.com

Recent Reports:US Ad Spending: How Big Is the Bounceback?Hispanics Online: Demographics and Media UsageUS Portal Advertising RevenuesAudience Ad Targeting: Data and Privacy IssuesBoomer Demographics and Media UsageSocial Network Ad Spending: 2010 OutlookOnline Ad Spending in Western Europe

All reports are available to Total Access clients.