The first banner ad ever sold appeared on the site Hotwired, a digital off-shoot of the magazine Wired, for AT&T Corp on October 27th, 1994. It generated a click-through rate of 44% according to its creator Jo McCambley. Today, it is estimated that 4 trillion rectangular and box-shaped ads of varying sizes were served in 2012 to the tune of $23 billion. This constitutes roughly a quarter of the total annual global digital spend. It would appear that this component of digital advertising the simple ad banner has come a long way. Or has it?
Firstly, in a recent report by the UK company Onscroll, it is estimated that 54% of banner ads are never seen, for various reasons, totaling a staggering $11.7 billion in wasted annual ad revenue.
Secondly, if the first ever ad banner creative generated a CTR of 44%, today’s response metrics or numbers are much more sobering, somewhere between 0.05 and 0.1%. The media industry coined the phrase “banner fatigue” some years ago with many reports from neuroscientists testifying to the fact that the human brain had virtually no reaction when exposed to a banner ad. If the purpose of an ad is to engage the user, make an emotional impact or appeal, then are banner ads being either too small, too simple or not up to the job?
Firstly, let’s focus on ads that are viewable or seen. The IAB definition of a viewable ad impression is that 50% of the ad is seen for at least a second. While even this measure is not very reassuring for any advertiser who is seeking online engagement with their ad creative this makes the Onscroll estimate of unseen but paid for ads even more staggering in terms of advertising impact and efficiency. Agencies in the UK and the US are beginning to demand that they only pay for seen or viewed ads, and publishers/site owners are under increasing pressure to prove that this is the case.
“The Viewable Impression is the most realistic view of internet ads that will move the business. It’s the new currency that will move the business forward,” said David Cohen, CEO of Universal McCann. The key word here is currency as view-ability of ads moves from being a measure to a currency which agencies/the buy side of media will trade on. It’s a distinction that will fast become a reality here in Canada as well as Chris Williams, President of IAB Canada, commented in his recent post.
As digital fast becomes the most dominant media channel by spend in Canada, both the demands for measurement and efficiency will increase and ad view-ability will become a currency as it is fast becoming in other digital-dominant media economies. The question for this market is how quickly agencies will adopt this currency and it will be interesting to see the results of the beta-testing with publishers, agencies and exchanges that companies like Onscroll are conducting in the UK, the US and even here in Canada.
The other focus on engagement levels and responsiveness of banner ads is equally as important and an opportunity for brands to stand out across the many digital platforms on offer. There may be some truth in banner ads being too small and too simple to have the same effect as TV advertising, but I believe that this is missing the point entirely.
Banner ads have been around now for 18 years, but to call time on them now is both alarmist and premature. Newspaper ads haven’t changed a great deal in terms of size and functionality since they first appeared in the early 18th century. Internet advertising is still in its early years of development and true potential. The issues discussed here of ad viewability and increasing ad engagement are not signs of digital advertising losing its way or impact but simply growing pains. New research, insights, initiatives, products and platforms will only make this sector stronger and more impactful. Banner ads will not be disappearing from view any time soon. They’ll just be more efficiently served and more appealing.