“The report of my death was an exaggeration”

Mark Twain

In 2016, the amount of money spent on display advertising in the US surpassed what was spent on Search for the first time ever.

In 2017, spending on display in the US will hit $40.86 billion . But even with positive news like that, there are still a few problems display still hasn’t solved.

In this article, we’re going to discuss what I see as the three biggest problems that display is facing: banner blindness, ad-blocking extensions, and fraud.

Banner Blindness

[Image Source: thefirstbannerad.com]

The first banner ad ever was purchased by AT&T and ran on Hotwired.com back in 1994. Interestingly, about 44% of the people who saw the ad clicked on it. Nowadays, a 44% click-through rate (CTR) is practically unheard of.

According to Smart Insights , the average ad click-through rate (CTR) across all ad formats and placements is just 0.05%.

[Image Source: smartinsights.com]

There are a lot of explanations for the low CTR of modern day banner ads. One factor is “banner blindness”. The term “banner blindness” refers to a phenomenon where website visitors consciously or subconsciously ignore banner ads.

The facts are sobering: 86% of consumers suffer from banner blindness and only 14% of users are able to recall the last display ad they saw.

To combat the problem, advertisers have attempted to create better placements. In one eye tracking study it was revealed that “Native ads—units delivered within core content areas—were seen 47% more quickly than banner ads in traditional locations on the same pages.”

Statistics like that reveal why many advertisers are shifting spend to native advertising. User simply notice native ads more because native ad placements are located inside main content blocks of publisher sites. As a result, they also enjoy a higher CTR than standard display banners.

[Image Source: businessinsider.com]

Advertisers also created new ad types that are harder to miss. Welcome-page ads, for example, appear before the user is able to see the main website content. Forbes.com is a large publisher that uses this ad format liberally.

[Image Source: forbes.com]

There are also website-skin ads or page take-over ads that are designed to fill in the negative space on a publisher site with branded content.

The frame around the main page is a website-skin ad

[Image Source: imdb.com]

Both of these types of ads are more or less impossible to ignore and are just two examples of how the industry is taking action to solve the banner blindness problem.

AdBlock is Strangling Publisher Revenue

A recent report from PageFair says that AdBlock is now installed on 615 million devices . A real and emerging threat to online advertising, in 2016 AdBlock usage grew by 30% globally.

According to Juniper Research, digital publishers are going to suffer a loss of over $27 billion by 2020 due to AdBlock.

Randall Rotenberg, CEO of the Interactive Advertising Bureau (IAB), a business organisation that develops ad standards, says this about the situation with AdBlock:

“I’m really not worried about whether advertising will be able to find its way through digital channels. I am concerned — very, very concerned — that costs of ads will go up and up and up from this unethical obstruction”.

With some publisher sites having so many ads they look like Times Square on a Saturday night, it’s no wonder ad blocking is continuing to grow.

[Image Source: wikipedia.org]

Creating ads that are easier for users to tolerate is the name of the game right now. And that’s just what advertisers and the industry as a whole is working towards. We elaborate more on the topic of ad blocking extensions and how the industry is responding in our blog here.

Ad Fraud

The Association of National Advertisers (ANA) and WhiteOps recently released their third annual report dedicated to digital ad fraud. According to the report, losses due to bot fraud are estimated to reach $6.5 billion dollars in 2017.

While this represents a 10% improvement over the previous year’s $7.2 billion dollar ad fraud loss , the amount is still staggering.

Here are a few more alarming statistics on ad fraud :

For every $3 spent on digital ads, fraud takes $1 1 in 5 ad-serving websites are visited exclusively by fraud bots. The ad fraud botnet “Chameleon” costs advertisers over $6 million a month. Smartphone click fraud increased 102% from January – April 2017.

In a 2015 Wall Street Journal article IAB CEO Randall Rothenberg said the following:

“I’ve always believed that once we established a real compliance program with teeth across the industry, it [display ad fraud] can be contained relatively quickly. It’s in its early stages now.”

Two years later in a 2017 AdAge article on ad fraud he was more explicit: “We can’t deal with this shit anymore. This is serious.” said Rothenberg.

The above-mentioned report by the ANA suggests some action steps for the industry to fight fraud. Among them is joining the Trustworthy Accountability Group (TAG), an organization whose goal is the elimination of fraudulent traffic. From the TAG website:

“TAG works to combat the negative impact of fraudulent traffic by developing anti-fraud standards and protocols for all types of entities in the digital advertising supply chain.”

IAB makes registration at TAG mandatory for all of its 650 members. This is a huge step forward for the industry as members of the Interactive Advertising Bureau account for 86% of online advertising in the United States.

The ANA is also demanding transparency for sourced traffic and for refusal to pay for non-human traffic to be written in media contracts.

Takeaways

Regardless of the problems we’ve outlined above, display advertising is still going strong. According to Statista, spending on display ads in the US is projected to be $46.7 billion dollars in 2019 . In addition, Native ads are projected to continue to grow as advertisers move towards the higher engagement they’ve been shown to produce.

[Image Source: emarketer.com]

What are your thoughts on the current state of display advertising? Are you planning on investing in a display ad campaign in the near future? Please tell us what you think about the current state of display advertising.