Is the Banner Ad Dying?

Online ad revenues remain on a hockey stick trajectory, clocking in at a record $9.6 billion in the first quarter of this year (yes, a bunch of this is search and video, but still). Yet the demise of the banner ad has long been predicted, and some say the deathwatch is imminent — possibly before the end of the year.

That banners aren’t working very well is common knowledge. You’ve seen the stories: You’re more likely to survive a plane crash/become a Navy Seal/summit Everest/be the next Beatle or Elvis than to click on a banner ad.

That consumers don’t interact with banners is no secret. In fact, it’s entirely possible that most clicks are robot and/or click farm generated. Then there’s the banner experiment the ARF‘s Ted McConnell cooked up, a totally blank ad (no copy, no image, no nothing) that saw interaction rates that in many cases exceed those of “real” campaigns.

The result of all this inefficiency, unsurprisingly, is severe downward price pressure on banners, much to the chagrin of online publishers. As one publisher put it in a recent conversation, “It’s more expensive to get readers, and then when we do we can sell them for less.”

Yet at the same time, publishers speak of a “voracious appetite” for display ads and banners. “As publishers we’d tell advertisers that we’re unique and special, but really we’re not,” one publisher confided just this morning, “When demand for banners was too high, we’d just rent an audience. We’d rent from Google, from telemarketers, or rent email lists. The performance isn’t that different, and the advertisers don’t really care.”

So let’s get this straight: Display advertising doesn’t work, it yields ever-diminishing revenues, and advertisers can’t get enough of it?

Houston, we’ve got a problem.

Read the rest of this post on iMediaConnection, where it originally published.

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