Microsoft, Others Say Online Banners Trump Search AdsDisplay ads have fallen on hard times. The graphic ads that border a Web page are among the slowest-growing formats in the online-ad marketplace, and they are seen by many marketers as stodgy and ineffective.
But some ad-technology and Web-measurement companies are trying to engineer a comeback for display ads, offering data that they say show display advertising is more effective than marketers think. Microsoft is the latest company to make this declaration, with new evidence coming next week that it says proves display ads are actually better than searches at triggering consumers.
Microsoft is the latest company to make a case that online display ads are ripe for a comeback, claiming new data proves that they are more effective than search ads.
Companies like Microsoft have a financial interest in pushing online ad formats besides searches. Google has what would appear to be an insurmountable lead in the search business, the biggest online-ad medium. Meanwhile, Microsoft, Yahoo and Time Warner's AOL have invested billions of dollars in new display-advertising technology hoping to lure advertisers that have poured money into search ads.
Still, there is a burgeoning debate about whether display ads have been overlooked amid the euphoria over searches. "Obviously, Microsoft has a motive to shift dollars from search to display advertising because it is getting creamed in the search space," says Ben Winkler, a director of interactive media at the Martin Agency, a unit of Interpublic Group. "But this does help us get a much better picture of how our online advertising is working."
The debate revolves around what leads consumers to take actions on the Web: buying something, printing a coupon or visiting a Web site. Up to now, most advertisers judged the effectiveness of an ad campaign by what consumers did after they clicked on the ad. But some marketers say they are now using research not only from Microsoft, but also independent Web-measurement firms like comScore and Omniture, to figure out what happens before people click on ads -- even in situations where they don't end up actually clicking on the ads.
The major conclusion of this research: By the time consumers search for a product or service, they've often already made up their minds to buy it. And display ads are often an important factor in their reaching that conclusion.
Part of the reason display has fallen out of favor is that it's been hard to prove that the ads work. Skeptics point to low click-through rates -- a fraction of a percent, at best -- and scientists have coined the term "banner blindness" to refer to the way Web surfers ignore display ads.
Nielsen Online on Thursday reported a 6% year-over-year decrease in display advertising during the first half of 2008, including a 27% decline in spending by financial-services companies. Meanwhile, spending on so-called rich-media ads increased 60% overall in the first half of the year, and overall online ad spending -- including search-ad dollars -- increased 11% during the first half of the year, Nielsen says.
ComScore and Omniture work with dozens of marketers to find out which pages customers visit before landing on an advertiser's site. That research shows that the full impact of display advertising isn't always taken into account, says comScore analyst Andrew Lipsman.
Microsoft's research comes from the Atlas Institute, the research arm of its ad-serving unit Atlas, and was started more than two years ago before it was acquired by Microsoft. It has looked at the various components of a marketer's ad spending to see the relative effectiveness of each. (Microsoft sells both search and display ads, but the latter is a much bigger piece of its business.) Atlas's latest round of research was a month-long study of ad campaigns from 500 marketers appearing on 1,000 sites.
One limitation with the research, according to marketers, is that it only takes into account ads that run on Atlas, which is usually a subset of any marketer's total ad spending.
Earlier this year, Atlas conducted a study with Alltel Wireless that it says showed people who were exposed to both search and display ads were 56% more likely to purchase an Alltel phone or wireless plan than those who clicked only on a search term without any exposure to its display ads.
Some digital-ad executives say the new research won't change their trust in searches, but it may help them persuade more marketers to move from traditional advertising to online. "Search is still just as powerful. But things like display that looked really bad before aren't as bad. Now we can prove it," says Jennifer Zola, partner and director of strategy and insights at WPP Group's Mediaedge:cia.
Microsoft plans to use its research as a sales pitch to get more publishers and advertisers to use its ad technologies.
By: Emily Steel
Wall Street Journal; September 19, 2008
