Digital Display Advertising—Where Art Thou?

Digital display advertising is a bit of a misnomer in our new era. It actually comprises not only rich media images—traditional “display”—but also video content and interactive applications. As such, it aligns more closely with the user experience focus of consumer IT devices than does search advertising. The reason why is that search advertising, at the end of the day, is primarily about the acquisition and monetization of end users. It is inherently transaction focused, and it generates far more misses than hits, leaving a residue of spam wherever it passes. By contrast, digital display advertising is primarily about the engagement and enlistment end users. It is inherently relationship focused, and its content generates far more hits than misses, leaving a positive afterglow. In sum, no one watches a TV show about greatest search ads, but many will tune in to see an hour’s worth of the greatest Super Bowl ads.

That said, digital display marketing is at present largely an unfulfilled promise, for the most part because it is being held hostage on two fronts. On the IT infrastructure front, the Web is still a largely opaque environment, one consequence of which is that it is hard to report with any certainty about the M in CPM. The short-term fix for this is to simply lower the C, in effect commoditizing what ought to be a highly differentiated medium.

But that fix simply papers over the real problem, which is that many display advertising programs massively violate their frequency caps, that is, the maximum number of times that a given user should be presented with a given ad. The net result is that up to 80% of digital display spend can be chalked up either to showing the same ad to the same people over and over and over, or worse, having it served up a gazillion times to a farm of robots. Empirically advertisers experience this as low yield, and conclude, without knowing exactly why, that digital display of the Web “doesn’t work.” This alone could explain why only a smidgen of the overall brand marketing budget is going to the Web today.

But there is a second, more pervasive, and potentially even more debilitating force that is retarding the migration of brand marketing dollars to the Web, and that is a legacy business model in which an advertising agency’s revenues are tied to a percentage of the client’s media spend. Agencies are neither staffed nor capitalized to execute digital media buying at any significant scale, and there is no reason to believe they can or should retain this responsibility. But for the time being, this is the primary way in which they are getting paid, and so it is no wonder they are clinging to it desperately. Unfortunately, this misalignment of economic interests actually reinforces the disgracefully sub-optimal results noted above, thereby further impeding the transition to digital.

This state of affairs simply cannot last. End users have overwhelmingly redirected their attention from analog to digital sources of content, and the smart mobile device is rapidly becoming the primary portal to gaining their attention. If brand marketers know one thing, it is that they must be present to win. Moreover, the new mobile medium—and in particular the tablet—is a gorgeous platform for display imagery, video, and interaction, in many ways better than a TV. It is crazy not to be exploiting this resource, but that is the current state. Clearly, something or someone has got to give.

But before I propose what and who, I’d love to hear what you think.

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Geoffrey Moore | Escape Velocity | Geoffrey Moore Twitter | Geoffrey Moore YouTube

(Photo: Tablets, prlog.org)