It seems we have a major shift brewing in the online advertising world: as click fraud and smarter users (deleting cookies, getting more resistant to ads) make the current pay per click model less and less relevant, advertisers are going back to “display banners”.
Business Week: Wiser about the web
Online advertising breaks roughly into two camps. The fastest-growing side has been search-engine advertising, led by Google and Yahoo. […]
But advertising executives predict that the display banners and videos that appear on Web pages will outpace search this year.
If this happens it will be a fundamental shift, with mainstream portals getting the nod over search engines in the advertising business. The consequences?
• ads are going to move to the mainstream sites. The long tail will have a hard time competing with the big sites. From Joanne Bradford, MSN’s chief media revenue officer: “the niche sites are going to have a harder time competing, [the demand outside the elite] will start cooling off in 18 to 24 months.”
• there will be changes at the top of the food chain. If this is true you might want to put your money or NYT.com, mySpace or Yahoo rather than on Google. Big guys will still be big guys, just maybe not in the same order than today.
• new metrics will emerge to quantify the quality of ads. Instead of measuring success through the number of clicks, indicators will be time spent with the ad, movements of the mouse to know which parts of the banner appear to interest visitors, etc… Contrary to what I thought there is a lot of collectible data with these ads. “We have so much data that agencies are hiring teams of analytic people, PhDs in statistics, to make sense of it all,” says Greg Rogers, director of strategy and insights at a New York media agency.
• new advertising tactics will appear. The article cites an interesting way of optimizing a campaign by doing “advertising arbitrage”, “making money on the spread between premium relevant placements and cheap sites”.
What advertisers really want is premium targeting at the price of cut-rate sites. That’s the premise behind behavioral advertising […] Agencies […] track the online sessions of Web surfers. By tagging them with a cookie when they visit one of the agency’s thousands of affiliate sites, the system can follow a single surfer, say, from Yahoo to popular auto site […] to an obscure hobby site on winter gardening. While the agency’s computers don’t know the surfer’s identity, they can deduce from the stop at Autobytel that they’re dealing with a potential car buyer. But that site is pricey […] so the behavioral system hits the viewer with a car ad when he’s on the much cheaper gardening site.”
Bottom line is that one of the most fundamental assumption of the contextual advertising industry might not be as true as it seems: maybe the best ads are not those related to the content a user is currently reading.
TACODA’s researchers recruited 30 human guinea pigs [and] hooked them to an eye-scanning camera and recorded every darting movement as the subjects were shown 50 identical Web pages. The result: The ads placed on pages unrelated to the advertisements’ message actually attracted 17% more looks.
Surprise, stupid ads are the better ads again!