Shining a Light on Performance Display Advertising

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heavenlight.jpgADOTAS — As a reader of ADOTAS, you’ve no doubt heard the recent buzz around performance display advertising.

A striking departure from classic ad campaigns measured via clicks and impressions, performance ad campaigns rely on metrics that really matter to retail advertisers, namely conversions and revenue. To boost those metrics, today’s retailers are applying recommendation and targeting technology to display ads. With the in-market relevance of search and the reach of display, this type of performance display advertising is quickly becoming the preferred way to spend ad dollars — and new ‘performance metrics’ the only way to truly measure ROI.

There have been several ADOTAS articles recently that brushed the subject of performance advertising (articles by Zephrin Lasker and Chris Neuner come to mind) but it’s time to go a little deeper into what actually makes this type of display ad perform better, how best to measure its effectiveness and why advertisers need to welcome new attribution models. The holiday shopping season is nearly upon us – there is no better time than the present to get up-to-speed and start testing to find what works for you.

Contrary to what some might say, better display ads are not all about size, better placement and clever campaigns. Grabbing attention is only half the battle. The other half – the half that drives sales—is taking those creative display ads and making them relevant to each consumer who views them. What good is a perfectly branded, perfectly placed, creative ad if it’s for a product the consumer doesn’t need or want?

Regardless of the negative attention on behavioral targeting, research shows that consumers do want personalized recommendations to help them with their purchase decisions. The best performance solutions on the market today are the ones that merge personalization technology with display ads. These solutions rely on actual shopping data from advertisers to create ads with immediate, in-market relevance for each individual shopper. As more shoppers go online to look for deals and to research their purchases, e-retailers (Overstock, Zappos) and multichannel retailers (JC Penney’s, Staples) will look to this breed of technology to drive conversions and boost their sales both online and off-line.

The case for performance ad technology is clear, but it’s not only about finding the right performance solution. There are two other key factors that advertisers need to embrace in order to truly make an impact on ROAS:

Advertisers must make better use of shopping data to learn from every interaction with consumers. To capitalize on performance technology, you need to really understand each shopper’s tastes and preferences by analyzing all of the behavioral and shopping data you have available. That includes purchase data (both online and in-store), loyalty card transactions, online click and browsing behavior, etc. You’re missing a huge opportunity if you’re not learning from every engagement a customer has on your site, in your store and with your brand. It’s that precious data that enables personalization and creates unique occasions to purchase for each shopper.

Advertisers must use more robust performance metrics and models of attribution. Advertisers that focus solely on traditional metrics like clicks and viewthroughs are missing the big part of the revenue picture. Those metrics do impact ROI; but there are also other, less direct, metrics that are just as important. While every campaign should stand on its own in terms of direct performance metrics, understanding the indirect impact of display advertising is critical to making the best investment decisions when allocating dollars.

Quantifying metrics such as an ad’s impact on search engine traffic, social media buzz and message boards are all important in valuing ads correctly. For example, according to a recent study by Forrester Research, almost as many Internet users respond to online display advertising by performing a search on a search engine (27%) as by clicking on the ad itself (31%). This finding speaks to the symbiotic relationship between the two channels, and the power of display advertising to boost search engine traffic. If marketers are going to invest in online display, they should consider the broader impact of their campaigns to help them track their full value.

Unfortunately, this type of comprehensive attribution tracking is not the norm for online display advertising. These metrics can be hard to measure, but they’re not impossible. Online advertisers need to understand the value of measuring immediate, ad-specific actions (e.g., clickthroughs) as well as in-direct behaviors (e.g., performing an ad-related search on a search engine or message board). This will help advertisers come up with a system that provides correct attribution to their web marketing initiatives across the board.

There have been a lot of changes this year in the industry – it’s great to see performance-based advertising help advertisers go beyond the click and start paying attention to what actually drives results. The next steps are to ensure that we use all the data available to us to put the right products in front of the right shoppers and to fine-tune revenue attribution so that it provides a more comprehensive view of the impact of display ads. Once we do that, we’ll all be seeing display advertising in a whole new light.

1 COMMENT

  1. Ed — great thoughts — we’re not hearing this story nearly enough. The click should be replaced as the success metric and channel metrics measured before and after a display campaign to really see the value created. We’ll be seeing this a lot more in the coming year, and vendors who are able to capture and quantify these metrics have a long and successful road ahead of them.

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