In the first quarter of 2011, more than 1.11 trillion display ads were delivered to US Internet users. With recent advancements in remarketing and behavioral targeting technology, it’s clear that display advertising is making a huge comeback. And according to Forrester’s recent US Interactive Marketing Forecast, by 2016 advertisers will spend as much on interactive marketing as they do on television advertising today. Display ads in particular will grow from $10.9 billion this year to $27.6 billion in 2016!
So the future of display looks rosy right? Indeed, but marketers still have some big challenges to come to terms with over the next year if they truly want to master display and profit from behavioral and remarketing targeting.
Here at Impact Radius we’ve been actively talking to our clients, and other digital marketers, and have some thoughts about our predicted challenges for display advertising in 2012.
Display and Remarketing
A big reason for display’s resurgence can be attributed to advancement in remarketing and behavioral targeting technologies.
Remarketing is based on the premise that people who have already visited your website’s key pages (like checkouts and product pages) are much more likely to buy, and therefore should warrant targeted marketing efforts. Using a small piece of code, you can create relevant ads that follow the visitor around the web, reminding them of your awesome product or enticing them back to your website with a special promo or free trial.
Remarketing can be used for reaching out to. . .
- Potential customers who visited your site but did not convert
- Customers who converted and who you want to resell to
- Prospects who signed up for your email newsletter
- Lost customers who abandoned your shopping cart
- Freemium customers who signed up for a trial subscription
In 2012, remarketing and behavioral targeting (behavioral targeting is a more advanced version of remarketing using a multitude of data points and sophisticated algorithms) will continue to be used. That said, consumers have no idea nor do they care how remarketing works so it’s up to you to find the right balance between relevance and annoyance.
In 2012, digital marketers will need to tread carefully insofar as respecting user’s privacy, exposure frequency (seeing the same ad for weeks gets annoying and can prompt a negative brand association), and transparency as to why a user keeps on seeing an ad. Otherwise, the “$20 off” coupon that the consumer received in exchange for handing over their email, phone number and annual household income starts looking like a bum deal. And if a customer resents your marketing, then it’s not really marketing is it?
Display Converts. But When and How?
In recent years, digital marketers have come to understand that we are blinded by last-click attribution. According to comScore’s projections for digital marketing spend, search and SEO will still take the lion’s share of digital marketing budgets over the next 5 years.
While paid search and SEO continue to dominate, this does not mean that they represent an accurate picture of how your visitors actually discover, become interested, and then finally become customers.
Consider that the Atlas Institute found that 44% of those who clicked on sponsored search are exposed to display ads prior to the click (study here). But, if you only look at the source of the last click, then your analytics data is telling you to invest more in pay-per-click rather than display. The reality is that they’re likely working together to influence online conversions. Moreover, an Atlas Institute study from a few years ago found that users who clicked on sponsored search and were exposed to a display ad from the same advertiser, on average, converted 22% more often than those users who clicked on sponsored search only.
Clearly, display helps conversion. And marketers are now realizing that conversion doesn’t happen in a single stage: customers are often not ready to buy and may still be in the research stage when they abandon. It’s not just about optimization. It’s not just about picking better PPC keywords. And it’s not just about creating a more enticing offer. It goes deeper than that.
In 2012, the challenge will be to revise our understanding of the process of online conversion, identifying and attributing conversions to the correct media source and creating the right mix of display campaigns, remarketing, in addition to tried and tested direct response channels like search and email.
So Where to Invest? What to Cut?
If you have multi-channel attribution reporting, you’ll know that there are overlapping influences between branded display campaigns and direct response channels such as paid search. But figuring out where to allocate your budget won’t be easy. Consider, for instance, that your SEO and search agencies are presenting suspect data about the ROI of your campaigns.
According to Atlas, 71% of sponsored search clicks are navigational in nature, meaning that while search and SEO have typically been able to report high ROI, they also ignore the contributing factors of those conversions (read the study here). This means that marketers will continue to pour their budgets into search advertising and SEO in 2012 and will continue to have an incomplete understanding of how display ads, search ads, and other marketing events are working together. Sadly, most are unaware of the problems and repercussions of last click attribution.
We have the technology to gather the data, but we aren’t really using it correctly. Click tracking has been mastered. Now, the next issue to address is measuring and correlating impression data back to conversions and even post-conversion brand recall. How much does do impressions really contribute to customer lifetime value?
The Future of Display Advertising Is. . . Creepy?
For marketers, it’s great we can use behavioral targeting for display ads. Suppose we figured out that females between the age of 35 and 45 who regularly visit mountain climbing sites also purchase Mini Coopers (it’s plausible right?). And so, we decide to create display ads that follow them around the Internet with messages like “Hey! Instead of reading mountain climbing articles today… why not check out our great financing on the all new Cooper S!”
This is relevant messaging. But for a consumer it can be annoying or even creepy.
As the public becomes more aware of how marketers are tracking them online, regulations and public backlash is inevitable. In California, the “Do Not Track” bill, which is expected to deploy regulations by July 01, 2012, aims to force any business that uses, collects, or stores data online to offer the option of “a method to opt out of that collection, uses, and storage of such data.”
If given this option, it will be a hard sell for marketers to get the consumer’s buy-in. “Do you mind if we store your behavioral data so that we can follow you around the web with banner ads for the next 120 days?”
“No? Then no coupon for you!”
Optimization Won’t Fix Everything
A study by Forrester shows that 88% of web buyers report that they have abandoned an online shopping cart without completing a transaction.
If you read the slew of webinars, blog posts, and whitepapers about the “best optimization practices” published every week, you’ll know that optimization is seen as the industry’s answer to almost everything. But what is striking about Forrester’s study is that this percentage (the 88% of web buyers that have abandoned) is the same as it was 5 years ago, meaning that this is not simply an optimization or consumer confidence problem.
Clearly, there is something that demands a more innovative marketing solution that just another A/B landing page test. Your customer is showing a high interest in your product, but might simply not be ready to buy. Perhaps investing in earlier stages of the sales cycle with display campaigns and soft-sell remarketing might improve your conversion rate?
Display Advertising Solutions Coming Soon
Those are the challenges we at Impact Radius are monitoring across the display advertising landscape. Subscribe to our RSS feed and stay tuned for our solutions report designed to help you overcome display and other digital marketing challenges predicted for 2012.
In the meantime if you’d like to learn more about how Impact Radius can help you accurately track and attribute conversion to your display campaigns, or if you just want some free advice, message us on Twitter or drop us a note at firstname.lastname@example.org to all blogs