A VC writes an interesting analysis of a comScore whitepaper on the performance of display/rich-media ads relative to search/contextual ads. The analysis and perspective are primarily from the advertiser’s perspective, but I’ll add my $0.02 on what it means for publishers at the end of this post.

The study coming against the backdrop of falling (click-through) performance of display ads: static image ads fell to an aggregate CTR of only 0.2% in 2006 (0.1% in 2008), while dynamic rich-media variants have fared only marginally better, at 1%. Besides, 2/3 of those exposed to display ads never click on ads, while 16% accounted for 80% of clicks (I wrote on another study of natural-born clickers early this year). The study then wonders if the impact of display ads should take into account more than simple clicks.

Naturally, it does, by using CPM as its pricing model, but there has been an assumption among advertisers and marketers that clicks are what they’re paying for. The study points to some data that underscore the benefit of display ads in a mixed-media online campaign:

• display ads have much higher reach among Internet users: 81% seeing only a display ad in comScore’s study vs 8% seeing only a search/contextual ad
• display ad exposure lifted site traffic (+46%) and brand searches (+38%) over the first four weeks of exposure to an ad
• display ads improved sales, with a 27% lift to online sales and 17% improvement to offline

It’s been commonly understood that while CPC-priced search/contextual ads target conversion and action, CPM-priced display advertising targets awareness and branding. These figures reiterate the tangible (if delayed) benefit in investing in brand/campaign exposure to customers in earlier stages of the buying cycle.

A second part of the study examines the benefit to advertisers to using both search/contextual and display advertising as part of their online ad campaigns. Clearly, a synergistic relationship was noted in the combined-media campaign vs a campaign relying on either search/contextual or display alone. Search/contextual + display outperformed search or display only in terms of:

• visitors making a purchase at the advertiser’s site, providing a +173% lift compared to +42% using display alone and +121% using search/contextual alone
• spend per visitor, with a +124% lift, vs +27% for display only, and +76% for search/contextual by itself

This data is interesting in that in measures a clear, measurable transaction, and the benefit to using both forms of online advertising to improve conversion.

Interesting stuff, but what does this mean to publishers? Display and search/contextual advertising should not be considered a zero-sum proposition by publishers any more than it should by advertisers. Whether it’s because a combination targets different visitor format preferences, or that it targets a broader range of the buying cycle, image and text can work well in concert with each other. As the value gets demonstrated to advertisers and agencies, we should expect that spend in one format should grow alongside the other, not at its expense.

This entry was posted on Tuesday, December 16th, 2008 at 4:47 pm and is filed under Online Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.