Display Advertising Is Broken Says Agency CEO

22% of UK adults now use ad blockers online, according to the latest figures released by IAB/YouGov. A ComScore study found that 10% of US consumers are already using ad blocking. Worldwide, there are approximately 200 million monthly active users of ad blockers.

Consumers are going out of their way to avoid the content they do not want or need. In an increasingly ad-free world, brands who continue to push for display advertising that interrupts the content experience, and believing that this will work on consumers, will want to rethink their marketing strategy. This according to a media agency CEO who has worked in the digital ad industry for more than a decade, on both the client and agency side.

Banner Ads Must Die!

I was once asked for my view on which marketing tactic is like “The Walking Dead” of marketing.

I was honored to be included on the list of contributors along with amazing thought leaders in marketing like Ann Handley, Joe Pulizzi, Doug Kessler, Neil Patel and more.

They suggested some outdated marketing tactics including over-promotion, quantity over quality and a lack of courage. And those are all good ones.

My advice of which marketing tactic was like the walking dead: banner ads!

Why banner ads need to die: They simply don’t work. Your customers ignore them. Your future customers might even hate you for interrupting their content experiences. The only reason spending on banner advertising is not dying faster is because marketers are shifting money from traditional marketing (print, radio, TV) to digital formats. But click through rates on banners are less than .1% (0.08% is the average) in most industries. Eye-tracking studies show that everyone ignores them so even for branding and awareness, this tactic is hard to justify.

7 years back, I found these interesting articles:

October 31, 2014: Hubspot launched this cheeky Chrome extension to replace your banner ads with pictures of baby animals! Brilliant work. Also, more seriously, AdAge reported yesterday that 23% of ads bought on automated exchanges are served to mis-represented urls. This so-called “url masking” is another type of fraud “plaguing automated ad buying marketplaces” said reporter Alex Kantrowitz.

November 7, 2014: The New York Times writer Farhad Manjoo is piling on with his “Fall Of The Banner Ad: The Monster Who Ate The Web” written on November 5th. And in the spirit of equal time, I was pointed to this Defense Of Banner Ads which argues that banner’s awful response rate is as good or better than TV, radio and Billboards. My favorite quote: “advertising ROI is defined by what we catch, not what we spill.”

November 10, 2014: First, in doing a Google search, I found this great article on The Street that does a great job of supporting the same arguments I made. And then today, Tom Goosmann wrote an article “In Defense of Banner Ads” on AdAge. Tom’s main point is that his data shows they work. He didn’t reveal the data, or refute anyone else’s data with any facts. He mentioned “complex analytics” and also that when they stopped using banners, his client’s traffic plummets. Says the ad man. Who makes banner ads.

What marketers should do instead: Marketers need to shift their banner ad investments into brand content marketing experiences. Why interrupt what your customers want, when you can be what your customers want?

Consider the stats:

  • You are 31 times more likely to win the lottery than to have someone click on your banner ad (Business Insider).
  • You are 112 times more likely to complete US Navy Seal training than to have someone click on your banner ad (Business Insider).
  • You are 475 times more likely to survive a plan crash than to have someone click on your banner ad (Business Insider).
  • Around 31% of ad impressions can’t be viewed by users. (Comscore)
  • 8% of Internet users account for 85 percent of clicks. (ComScore)
  • 50% of clicks on mobile banner ads are accidental. (GoldSpot Media)
  • Kraft rejects 75% to 85% of ad impressions due to fraud, quality and other issues (AdAge)

So while banner advertising still represents about 19% of online advertising, and that figure grew in dollar terms from the prior year, the share of banner advertising is slipping (down from 21% the year before.)

OK, Display Banners Were Never Alive

All the hype about “display banner is dead” bugs the media agency CEO, who believes display advertising has never really been alive. The industry itself has perpetuated the belief that display advertising works, since so many jobs and tech players depend on it, and so many businesses are looking to sell or be acquired because of it.

The media agency CEO has never seen any evidence where banner ads have worked for clients, bought programmatically or not on ad exchanges and networks. It’s hard to believe that a $5.6 billion industry has perhaps never contributed to an actual sale – an industry consumers wouldn’t miss at all if it disappeared – and yet is still worth so much today.

“We’ve tried to sex up something that was fundamentally broken,” said the CEO.

If consumers don’t respond or engage with display ads, what’s the point of doing it? The media agency CEO argues that the industry is making something fundamentally broken more sophisticated than it looks. And it is convincing marketers that they need to get on the display advertising bandwagon if they consider themselves to be sophisticated marketers. When in reality, the opposite is true. If marketers don’t understand what it is they are buying, they shouldn’t buy it in the first place.

Many marketers see display advertising as a key component to the success of their marketing strategy because of its high reach. But the bottom line is, in the media agency CEO’s words, the industry “fudges” the metrics to make display advertising look like it has a high ROI.

Pepsi exec Brad Jakeman has made a similar argument at the Association of National Advertisers conference last year. He feels that advertising is based on a broken model of creating “polluting” content that consumers don’t want, and advertisers and marketers know it. But they continue to do it because most marketing organizations are still using outdated measurement systems to evaluate marketing performance, and these vanity metrics show that content like banner ads works.

The media agency CEO had tried explaining this to clients. And surprisingly many of them agree that there is no evidence proving display advertising actually works, and yet they still spend money on it because it is one of the few options available when it comes to running digital campaigns.

Smart Money Will Go To Customer-Focused Content

When asked where marketers should be spending their money on instead of display advertising, the media agency CEO suggests that we need to focus on fewer, more effective formats like digital video.

Two years ago I suggested that marketers should stop doing banner ads and shift their investments to content marketing instead. Back in 2013, click through rates for banner ads were less than 0.1% for most industries, so can you imagine what the stats look like now with so many free ad blockers readily available for use?

Smart marketers will focus their resources on creating relevant, valuable content that their target consumers actually want and need, instead of interrupting their content experiences. Whether it’s written or video content, providing real value is how you can reach, engage and convert consumers.

I think I’ll agree with Lincoln Millstein, the SVP at Hearst, the guy who created Boston.com and helped remake the NYTimes.com. He calls banner ads “the worst performing ad vehicle ever.” He continues to predict that “the smart money will go to create great stories on the Internet, using social and compelling video.” I believe there’s still hope that we will abandon this zombie marketing tactic. What about you?

What do you think? Is display advertising still a part of your marketing strategy? Why or why not?

Michael Brenner  is a Top CMO, Content Marketing and Digital Marketing Influencer, an international keynote speaker, author of "Mean People Suck" and "The Content Formula" and he is the CEO and Founder of Marketing Insider Group, a leading Content Marketing Agency . He has worked in leadership positions in sales and marketing for global brands like SAP and Nielsen, as well as for thriving startups. Today, Michael helps build successful content marketing programs for leading brands and startups alike. Subscribe here for regular updates.

3 thoughts on “Display Advertising Is Broken Says Agency CEO

  1. I must admit, I’ve never been a huge fan of display advertising. I’m wondering, however, if you see a role for using segmented, targeted display ads as part of the mix of ways to offer content? Does it play a role in an account-based marketing strategy? How about if the display ad is offering an e-book, white paper, or other content (rather than brand awareness advertisements?

    1. Hi Mark,

      I do see display as playing a role as long as the “offer” is tested content that has already resonated (social cues) and with targeting / re-targeting. I think “free” content works better than gated but both have a role to play for different objectives (awareness, engagement vs leads). I have helped a couple of clients set this up and it can work depending on the content, the cookie pool and the platform.

  2. I don’t think display advertising is “dead”, but I do think other forms of advertising are both cheaper and more effective. I’d say only bother with it if you’re already utilizing all the other types of advertising that are available.

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