Display advertising—where to?

The current hope for the display ecosystem is the emergence and growth of 'programmatic advertising'

What comes to your mind when I talk about advertising on digital? For most people, it is various forms of banner ads, which have a way of irritating most of us. Display advertising at one point in time used to be the largest form of advertising on the digital medium.

By definition, display advertising is the form of advertising that uses images, rich media along with audio and video to make digital ads into a brand-building utility. Essentially, it is any non-text advertising communication to connect brands with consumers, as distinct from search advertising, which has largely been around text advertising. The evolution of the digital medium and hence advertising has given rise to newer and specialized formats and, therefore, in the current age, display advert excludes video advertising (pre-rolls, mid-rolls, etc. that you get to see on video platforms like YouTube) and social media advertising (Facebook, Twitter, etc.).

Over the years, the digital medium has got commoditized and that has been the bane of the industry. Unlike other media like television, print, outdoor or radio, digital media allows one to track user behaviour right from the time an ad is served (exposed) to the user till there is any form of action, be it someone clicking the ad or visiting the brand website (and “bouncing" out of it with or without making a transaction). While this should have been an ideal reason for the growth of digital advertising, it has actually been counterproductive. Marketers found it an easy way to hold publishers, media owners and media sellers accountable to deliver “results" from clicks to visits to transactions.

Eighteen years ago, two nerds from Stanford started something—Google Search—that was going to redefine how we “searched" for information around the world. And marketers found great utility value when they could tag along with “user intent behaviour", as brands “keyworded" themselves to search queries and placed themselves beside relevant results. Campaign performances soared like never before and Google became the darling of marketing managers. Ad spending earmarked for digital campaigns witnessed dramatic movement towards search.

Almost a decade later, another phenomenon that sucked away further revenues from digital publishers was the emergence of social media, chiefly Facebook. The rich user data with demographics and beyond, along with the scale of presence that they operated on, meant huge opportunity for marketers to reach and precision-target audiences groups.

Between Google and Facebook, a large part of digital ad spending got eaten away, leaving little crumbs for the rest of the digital publishers. And marketers, since they had an easy way to measure results on Google and Facebook, continued to expect similar results from display vehicles as well. This put pressure on publishers because their yield got affected, as advertisers demanded more clicks, more conversions for every buck.

Along with search and social, brand managers found a brand-building messiah akin to television in online videos. This meant a further downgrade to the perceived value of display advertising. Brands paid less and less for banner ads.

Even though brands saw lower value in standard banners, increased consumption of content by audiences meant that inventory kept increasing with less fill-rates—the rate at which a publisher has successfully sent and received a request for a full ad impression from an ad network. This brought forth aggregators of unsold inventory, who started selling these at dirt-cheap prices and even linked them to performance beyond “impressions" like clicks, leads, etc.

The current hope for the display ecosystem is the emergence and growth of “programmatic advertising"—the automated process of purchasing digital advertising, as opposed to the traditional process that involves human negotiations and manual insertion orders. This has helped to bring rich audience data to supplement inventory, helping publishers demonstrate better value for their inventory.

While the growth outlook for programmatic advertising seems positive with lots of enthusiasm and backing from large agency networks (and their trading desks), the same seems mostly to benefit only the intermediaries. The bottom of the pyramid with all the publishers continues to languish, if market sentiment around these companies are any indication.

Facebook’s expansion of its Instant Article project, which enables digital publishers to load an article at 10 times the speed of the standard mobile Web on the Facebook platform, with more publishers signing up, seems a good short-term solution for the digital publishing world. However, the flip side is that there will be fewer platforms on which content is consumed over a period of time, leading to monopoly and, therefore, a probable not-so-healthy situation for most publishers.

As we try looking far into the tunnel for some light, we have been hit by the latest threat of ad blockers. And that, my readers, is an altogether different ball game. Maybe, for later reading.

Praseed Prasad is chief growth officer at IceCream Labs. His monthly column will explore facets of digital media affecting consumers and marketers.