Display And Search

Recently it has become apparent that display and search advertising are converging.  Search agencies are entering the traditional display agency world (see iProspect’s acquistion of Range Online Media).  Search and display platforms are merging (eg, Google’s merging of the Adsense and DFP platforms in its AdExchange 2.0 due to debut next month).   Numerous studies (examples here and here ) over the last year or so have aimed to prove the impact display advertising has had on search – driven primarily by frustrated display marketers struggling and starting to succeed in proving the worth of the medium.

But the convergence has been driven and demonstrated by more than just actions of marketers and sellers trying to expand or defend their businesses.  Fundamental changes in the industry, primarily technological, are giving display marketers access to many of the tools and techniques that have made search marketing so successful.

Here are just some of the changes that are driving display advertising to a more accountable, scalable, lucrative, and “search-like” future.

1. Intent -  Search, by its nature, reveals the consumer’s intent.  Display has focused on building awareness while the consumer’s mind is on something else.  Display technologies that have tried to directly respond to user intent (eg, contextual adware like WhenU and Claria) or to interrupt the consumer’s focus (eg, interstitials) have been met with consumer anger and frustration.  Advances in behavioral technology, particularly the decoupling of behavioral tracking from media through data exchanges like Exelate and Blue Kai, are now allowing marketers to target display ads based on user intent in a much less aggressive, more consumer friendly manner.
2. Creative -  The flexibility of text ads allows for virtually unlimited versions according to the particular targeting.  These versions can be quickly optimized based on performance data.  Historically display ads were expensive to create and to optimize quickly and economically.  Adready and Google’s Ad Bullder, among others, now make it easy and quick to create display ads that are good enough to test a marketing concept.  Tumri, Teracent and Dapper allow smart marketers to optimize the creative in real time and make sure that the most relevant and best performing offer is presented to the consumer at the right time.
3. Granularity -  Display has been sold by site, network, or by channel within a network.  A buyer could add additional targeting parameters like age/gender, geography, etc, but the mere challenge of trafficking and measuring display limited the incentive for both the buyer and seller to try for more than high-level granularity with the maximum of a few variations.  Search, on the other hand, encouraged the creation of many granular placements and SEM firms often market their value in the ability to create an unbelievable number of placement variations.  Exchanges and marketplaces are allowing display marketers to break down display campaigns into increasingly precise and refined targeting placements.  This is allowing them to de-average inventory and find value where before there did not appear to be any.
4. Biddable Pricing – Biddability has allowed search marketers to pay the price that will make the particular marketing concept meet the advertiser’s goal.  If they start with a bid price that does not work, they can quickly change it to make the campaign work – so, theoretically, any idea can be made to work.  Search buyers can bid what they want and will get the impression volume that their bid deserves.  On the flip side, the display marketer has had to negotiate his price, generally through phone calls and emails, with no transparency into what others are paying and if the price was based in any way on reality.  You also can’t underestimate the price inertia caused by needing to talk to someone to change a price – what with the expected push-back and misinformation given by the seller trying to convince the buyer not to reduce the price.  Now, the display buyer can log in to many interfaces, place a bid and get the volume that the bid merits, and then return at any time, day or night, and change the bid.
5. Workflow -  Display workflow has been and remains time and resource consuming.  Lack of standards and use of multiple technologies across the entire chain has caused ad operations to remain a people-heavy process with about the only real efficiency gained by outsourcing the real repeatable work offshore.   This has limited the number of channels that a marketer can reasonably test.  It has also created costs to switching to other channels during a campaign – which, like offline channels, has made relationships more important than they likely deserve to be since they can help to get a channel on the plan.   Compare this to search where all that is needed is to type up new copy, add keywords and, in the only remotely technical step, pull another conversion pixel and place it on the thank you page.  Exchanges and marketplaces are allowing marketers to quickly and easily access thousands of sites and many ad networks while only trafficking one or a few sets of ad tags.
6. Cycle-time - Display advertising has been weighted down from remnants of magazine, tv and radio advertising.  Long IO’s, long out clauses, high minimums, creative requirements all caused advertising to have very long cycle times for improvement.  Even an advertiser with a moderate budget might only get a few or only one round of optimizations in a typical buy before running out of budget.  The tools available in search, however, allowed the search marketer to make multiple revisions per day and to break out budget across many different test groups.  A search marketer could go from concept to testing in media within a day.  Now, display marketers are able to manage display in a search-like fashion and to churn through optimization rounds quickly and effectively – which allows them to find value quickly and with minimal cost and waste.
7. Low-risk investment – Finally, all of this can now be done with a minimal commitment and investment.  Most display campaigns still have many characteristics of the offline contracts upon which they were based – high minimums, long out clauses, etc.  Yes, there is some investment needed to launch a new campaign, so some small minimum and out clause is warranted.  High-demand and unique placements like Yahoo’s home page also deserve a higher level of commitment simply due to how in-demand and unique they are. But a 14 day out clause makes no sense in the digital world.  This practice is more reflective of print where once the magazine went to print it was physically impossible to change or remove the ad.  Display marketplaces are allowing buyers to do small tests and to get out quickly if the performance is not there.  This has caused a fundamental change in the mindset of the display buyer, and one which these buyers are pushing hard through the rest of the industry.

These developments are driving display advertising to new heights in effectiveness and this evolution has only just begun.  Display is now able to compete on a much more even playing-field with search and smart marketers are realizing it.  What’s most exciting is that while display is getting more effective at driving response, it still brings with it the effectiveness in building brand and generating awareness further up the funnel that it has had for years.

About all we can be sure of is that things are going to continue to change rapidly and a year from now we’ll be amazed at how much changed in one year.  This blog will focus on this convergence of display and search advertising that is radically changing the online advertising business.  It’s going to be a fun ride.

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