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David Hallerman Senior Analyst J U N E 2 4 2 0 1 0 N E W Y O R K NY The Keys to Online Display Advertising

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What we’ll look at today… <ul><li>Display ad spending trends ( meaning ) </li></ul><ul><li>Display and other ad formats ( blending ) </li></ul><ul><li>Brand marketing goals ( display’s place ) </li></ul><ul><li>Creative’s central place ( best practices ) </li></ul><ul><li>Metrics for branding ( beyond the click ) </li></ul><ul><li>Ad targeting ( a mixed bag ) </li></ul>

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Clive Thompson , Wired magazine, May 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.

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Ad Spending Trends

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US Internet Advertising Spending, 2009 - 2014 (billions) Source: eMarketer, May 2010

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Wide Range : Growth of total US Internet ad spending in 2010 (% change) Source: eMarketer, May 2010; others, Nov. 2009 – May 2010

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Some of the reasons for eMarketer’s Internet ad spend estimates <ul><li>Diverse Internet ad universe ( not all doing the same ) </li></ul><ul><li>Branding shortfalls & shifts ( leading 100 advertisers ) </li></ul><ul><li>Pricing trends ( more performance, less CPM ) </li></ul><ul><li>Ad networks ( make banners into commodities ) </li></ul><ul><li>More inventory than ever ( also commoditizes, but… ) </li></ul><ul><li>Historical downturn and revival ( the IAB/PwC data ) </li></ul><ul><li>Google, Yahoo!, other revenues ( mix of down and up ) </li></ul><ul><li>Privacy & safety concerns ( esp. limit brand spend ) </li></ul>

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

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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 shifting to the Internet because… <ul><ul><li>Furthermore: </li></ul></ul><ul><ul><li>Brand marketers see need, and viable channels </li></ul></ul><ul><ul><li>Current economic and societal forces reinforce new ad models and make them more permanent </li></ul></ul>

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Display Diversity

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US display ad spending growth will continue to outpace total Internet gains Source: eMarketer, May 2010

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Large part of that display growth will come from an evolving Web Source: company reports, April 2010, eMarketer, May 2010

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

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Video is the prime source of display ad growth, but banners healthy, too Source: eMarketer, May 2010

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Factors behind the ( ongoing ) steadiness of banner ad spending <ul><li>Becoming interchangeable commodity </li></ul><ul><ul><li>Networks help reach but lower inventory pricing across sites </li></ul></ul><ul><li>Users ignore , more intrusive ads needed </li></ul><ul><ul><li>Pushes marketers to use video and social marketing </li></ul></ul><ul><li>One-time display dollars go to social media marketing </li></ul><ul><ul><li>Don’t show up on charts, more difficult to evaluate </li></ul></ul><ul><li>Targeting improves as it can reduce total spend </li></ul><ul><ul><li>Fewer impressions give possibility for same effectiveness </li></ul></ul><ul><li>However… banners are foundation for campaigns </li></ul><ul><ul><li>Banners fill-in for search, video, offline </li></ul></ul><ul><ul><li>Plus, more Websites and more page inventory = more sales </li></ul></ul>

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More banner dollars over next few years, but video trend will take over Source: eMarketer, May 2010

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Factors that indicate the ( future ) boom of online video ad spending <ul><li>Broadband now reaches “critical mass ” </li></ul><ul><ul><li>Although ISPs could stymie full growth </li></ul></ul><ul><li>“ Rich” advertisers still seeking brand messages </li></ul><ul><ul><li>With only 7% of measured media budgets going to display </li></ul></ul><ul><li>Desire to replicate sound, motion — emotion — TV </li></ul><ul><ul><li>But with better measurability and ability to target ads </li></ul></ul><ul><li>Hope among Web publishers for greater revenues </li></ul><ul><ul><li>Need to supply compelling and brand-safe video content </li></ul></ul><ul><li>Acceptance of ads among audience </li></ul><ul><ul><li>But content and delivery channels must be valued </li></ul></ul>

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Local ad spending will increasingly shift online, as both marketer need and more sophisticated geo-targeting come together

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Perspective…

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<ul><li>Still step-sister among online ad methods </li></ul><ul><li>Harder to gauge success with display than with search or e-mail </li></ul><ul><li>Self-cannibalizing category, money shifting from one to the other </li></ul><ul><li>Brand safety concerns, about nature of content that appears along with the ads </li></ul><ul><li>Privacy concerns, especially for some types of targeting (esp. behavioral) </li></ul><ul><li>Complexity, with many vendors in this market </li></ul>Display ad spending (aka, online brand advertising ) looks healthy, but…

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According to some marketers, display spending trailed e-mail and search in 2009

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

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

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

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Fears about ability to protect brand image also inhibit display ad spending

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

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Marketers say “We spend less on behavioral targeted ads due to privacy…” Source: Ponemon Institute, April 2010

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The portion of marketing dollars going to nonmedia spending is rising

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Brand Marketing Goals

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Direct response objectives rank high for many marketers online

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Direct response focus echoed (somewhat) by steady increase of performance pricing

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

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

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<ul><li>Key variable for display ad performance </li></ul><ul><li>Often best combined with targeting, to vary message to audience by group, location, or their place in the purchase funnel </li></ul><ul><li>Development of automated systems for picking creative, changing it over course of campaigns </li></ul><ul><li>Innovation can thrive within standardization — and perhaps needs some degree of standards (it’s not the frame but what’s within it that counts) </li></ul><ul><li>Testing creative online easier than other media </li></ul>The importance of creative for effective branding just as true online as offline

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Kathryn Koegel , marketing practice 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.

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

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<ul><li>Persistent branding — use logo a lot, highlight brand throughout the ad </li></ul><ul><li>Simple , direct, communicate at a glance — people are busy and don’t pay attention to details </li></ul><ul><li>Don’t let numerous formats make creative generic </li></ul><ul><li>“ Reveal” ads rarely work — except for some video and entertainment — so get to the point </li></ul><ul><li>No more than two messages per execution </li></ul><ul><li>Use people — human faces are appealing </li></ul>Dynamic Logic’s recommendations for better performing display creative

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Integrating Display

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Conversions come from a mix of display and search, and vary by industry (goals) Source: Eyblaster, February 2010

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

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

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Perspective…

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

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

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

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

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<ul><li>How much do display ads drive search results? </li></ul><ul><li>Can display ads online support offline elements? </li></ul><ul><li>If you don’t measure it , is it still there? </li></ul><ul><li>What metrics best measure impact of display? </li></ul><ul><li>Reach/frequency vs. engagement </li></ul><ul><li>Measure brand-search or site-traffic gains while display campaign runs </li></ul><ul><li>Consider non-purchase conversions (video, social media, subscribe, share, play game) </li></ul>Holistic advertising — look at whole, not parts — especially needed for branding

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Audiences & Targeting

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Display more appreciated when the audience trade-off is explicit

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

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

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Far more marketers use plain display advertising than behavioral targeted display

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<ul><li>No single type of targeting is “best” </li></ul><ul><li>Consider the following factors : </li></ul><ul><ul><li>Data available (accurate, fresh, relevant) </li></ul></ul><ul><ul><li>Objectives , persuasion or awareness </li></ul></ul><ul><ul><li>Types of goods or services being sold </li></ul></ul><ul><ul><li>Where audience is found in purchase funnel </li></ul></ul><ul><li>The intertwined issues of data usage and audience privacy will affect display targeting for the next several years </li></ul>To reach the audience with display ads, targeting needs to be multiple choice

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Takeaways

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Consider this … <ul><li>Display spending growth ( use diversity ) </li></ul><ul><li>Banners add ( supplement other techniques ) </li></ul><ul><li>Video invest, experiment ( branding online ) </li></ul><ul><li>Measure whole process ( integrate display ) </li></ul><ul><li>Focus on creative ( test ad content, not tech ) </li></ul><ul><li>New paradigm ( search, e-mail relevant models ) </li></ul>

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“ Thank You! ”

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About AdReady © 2009 AdReady, Inc. Confidential

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Automated Buying System © 2009 AdReady, Inc. Confidential

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Creative Automation © 2009 AdReady, Inc. Confidential

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Precision Campaigning © 2009 AdReady, Inc. Confidential

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Whitepaper Offer <ul><li>Whitepaper </li></ul><ul><ul><li>“ Precision Campaigns: Integrating Creative Automation & Micro Targeting” </li></ul></ul><ul><li>E-Mail: [email_address] </li></ul><ul><li>Thank You </li></ul>© 2010 AdReady, Inc. Confidential

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Thank you for tuning in to the eMarketer Webinar: Keys to Online Display Advertising Presented by: David Hallerman eMarketer Senior Analyst Questions & Answers Sponsored by: Access to the playback and slideshow will be sent to all Webinar registrants via e-mail.

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e Marketer Coverage Learn more about online advertising with eMarketer Total Access. Visit: www.emarketer.com/products Call: 800-405-0844 E-mail: sales@emarketer.com <ul><li>Recent Reports: </li></ul><ul><li>US Ad Spending: How Big Is the Bounceback? </li></ul><ul><li>Hispanics Online: Demographics and Media Usage </li></ul><ul><li>US Portal Advertising Revenues </li></ul><ul><li>Audience Ad Targeting: Data and Privacy Issues </li></ul><ul><li>Boomer Demographics and Media Usage </li></ul><ul><li>Social Network Ad Spending: 2010 Outlook </li></ul><ul><li>Online Ad Spending in Western Europe </li></ul>All reports are available to Total Access clients.