Display Ads for ROI: Hardest-Working Ads Online?

Too often, display advertising has been coddled, while paid search ads will do anything to make the paying customers happy.

While search marketing has often been lauded for its killer ROI and – especially on the paid search side – its incredible capacity for fine-tuning and testing, its cousin on the display side hasn’t always attained the same standard. Perhaps because of past miserable failures, some advocates for the display side simply issued it a different rulebook. Why should it be expected to “perform,” when it clearly can’t?

But what if it can? What if there’s a good chunk of the display world that needs to be tested, optimized, iterated, and forced to run the same gauntlet as “performance media” like search advertising and affiliate marketing?

Too often, display advertising has been coddled like a supermodel: allowed to swan in late to the shoot; paid exorbitant sums for lackadaisical performance…as long as it looks good, someone will go to bat for it and it will get a repeat engagement somewhere.

Paid search ads, meanwhile, have been like James Brown, the “hardest-working man in show business.” Singing, dancing, sweating…there isn’t anything paid search ads won’t do to make the paying customers happy.

Chalk it up to the guilty consciences of publishers and their trade group partners who secretly don’t think their display advertising is capable of performing. As a result, they overcompensate with elaborate measures of brand lift and other indirect metrics. Spokespersons like comScore’s executive chairman, Gian Fulgoni, are congenitally squirmy about true performance measures. Keynoting recently at an IAB Canada industry event, Fulgoni thundered that it’s time we stopped counting the click as a meaningful measure of ad performance.

The click! Call us crazy for still believing that a click may be the first step in getting someone to, you know, visit your website.

Ironically, speakers following Fulgoni earnestly reported not only impressive CTRs (click-through rates), but on-target CPAs (cost per acquisitions) on recent campaign efforts. Recalling the keynote, they’d hasten to add “with all due respect to Gian Fulgoni’s point…in a lot of ways we agree that performance measurement needs to get beyond the click.” Sure. But there has to be some reason you brought your CTRs to the table.

For avid search marketers, the most comfortable place to start in a renewed quest to expand out to display advertising is often the Google AdWords Display Network (formerly called the content network). The principles (and the cookies served to those who visit your site after the click) have much in common with your search campaigns in AdWords.

Two types of advertisers today are paying particular attention to display ads as an additional means of customer acquisition.

1) Traditional e-commerce players, steeped in the measurement of ROAS (return on ad spend) on all segments of their search keyword marketing.

It’s amazing that a significant amount of content has evolved on the web that appears well-aligned with the vast universe of e-commerce sellers. It’s not as easy to find high-intent prospects reading content as it is when they search directly for your products. The ecosystem has been self-optimizing to a degree because relevant publishers are increasingly incentivized through improving AdSense revenues, and irrelevant ones’ earnings are dropping.

These websites have to build their audiences somehow. It doesn’t come out of thin air. Well, because they offer large amounts of relevant – and often practical and action-oriented – content, many of them do pretty well in organic search results. The fact that they can “monetize” the traffic keeps them in business, and allows advertisers to continue facilitating that monetization.

In other words, these aren’t just random matching algorithms going bump in the night; this is an increasingly organized and predictable ecosystem involving symbiotic relationships. Advertisers hope that the “go-to” conversion-driving publishers in the Display Network continue to succeed in building their audiences.

A fascinating development – completely overlooked by the SEO community and the journalistic outsiders commenting on Google’s harsh treatment of some content sites in its recent Panda update – is that websites like Suite101.com, About.com, Squidoo, eHow.com, Answers.com, and many others continue to drive strong conversion volumes in AdWords Display Network stats. These sites were supposedly “hammered” by the Panda update, and that supposedly happened because they offer too much useless, regurgitated, rapidly-written content. Well, they certainly haven’t dropped off the map as far as our e-commerce clients are concerned. They may not be the highest-quality publishers in the world, but in a world short on quality content across many subject areas, they are often “good enough.” Indeed, their visitors appear to be more transactionally-oriented than they would be on high-minded “quality” websites.

For all intents and purposes – although the user behavior dynamic is significantly different – the way that e-commerce publishers use Display Network is often similar to the way they use search. You can tweak bids on segments like publishers, exclude publishers and pages you don’t like, try additional targeting refinements such as demographic-based bidding, and more. And the key metrics (CTR, CPA, and average order size; by ad, source, ad group, etc.) look or can be made to look more or less identical to the metrics you’re tracking on the search side. Sure, if you’ve got fancy attribution models, you might give the display ads additional credit beyond directly attributable performance. But the point is, you can compare apples to apples. For many advertisers, that’s very reassuring.

Such advertisers simply aren’t listening to all of the exhortations about how you’re supposed to treat display radically different from search, and maintain different expectations for it. Perhaps they didn’t get the memo. Or perhaps they’re onto something.

2) Aggressive CPA-focused advertisers who have been mainly rewarding performance in their interactions with publishers and marketing tacticians. Rather than being willing to pay for clicks, they generally “pay out” on a CPA basis to affiliates, websites, and networks. Yet some of the tactics (like aggressive pop-ups, spyware, etc.) employed by publisher sites in the past are drying up because users are rebelling. So now, they are looking into compromise solutions that tap into more mainstream forms of display advertising. Because a number of channels now subject display ads to Quality Score algorithms analogous to those employed on paid search platforms, advertisers may be able to increase delivery and lower costs by optimizing for relevancy to get ahead of less diligent competitors.

For CPA-obsessed performance marketers, the inventory and methodology used by traditional e-commerce players may not apply as well. Instead of hoping that Google’s probabilistic matching technology will find them high-intent matches across many good-quality content sites of all stripes, they may be dialed into a vertical such as gaming, targeted mainly at males in the 15-29 demographic. Here, the campaign deployment may be quite different. A traditional “Automated Placements” campaign, corresponding with keyword terms that are literally being searched for, may not be the way to go. The secret is that the demographic is so large and that there is so much relevant content to sort through, the potential is huge but the process of sorting out high-intent (and deep-pocketed) customers from low-intent audience members is going to be more daunting and more meticulous – and yes, it will definitely involve new channels like YouTube. Large effort, but great rewards, to the companies that can crack that nut.

Here’s my wish for your ROI-focused display ads in the latter half of 2011. You’ll add profitable volume to your campaigns, and – like the hardest working man in show business – be moved to exclaim “so good, so good, I got you…HEY!!!”

Originally posted on ClickZ – Display Ads for ROI: Hardest-Working Ads Online?