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Online Advertisers Spent 23% More in First Half 2011, But They Continue to Want Ads Targeted to Lower-Income Click-Happy Types

According to the latest from the IAB and PricewaterhouseCoopers,

Display-related advertising — which includes banner ads, rich media, digital video and sponsorships — totaled more than $5.5 billion in the first six months of 2011. Display increased 27.1 percent over the same period in 2010, substantially exceeding the previous year’s growth rate of 16 percent. Digital video once again commanded double-digit growth — up 42.1 percent over a year ago, and moved close to the $1 billion mark with $891 million in half year 2011 revenue.

Good news, right? The numbers do paint a rosy picture for “display advertising,” which is often considered the “brand advertising” side of digital. Just because the ad unit is graphical, though, doesn’t mean its intent is brand building. (More of my thoughts on the difference between “graphical ads” and “display advertising” here). When you break down the IAB / PwC data based on the contract structure — whether the advertiser is buying impressions (on a CPM basis) in order to affect brand metrics, or it’s buying clicks (on a CPC basis) to drive transactional or direct-response metrics — you get a different picture. David Kaplan at PaidContent explains it this way:

The latest figures for online ad spending looked pretty good for the first half of the year, but as the Interactive Advertising Bureau’s report shows, even though display is rising, the “premium” impression-based ads still have a long way to go to catch up to performance-based ads, which tend to be of the cheaper, “click here” variety.

This is troubling, and not just for publishers who prefer to get paid for every impression they give away to an advertiser. It’s also bad news for the advertisers. If, through the structure of the contracts they sign, they motivate publishers and ad networks to push ads to people more likely to click on them, they are incentivizing their partners to deliver their ads to end users who are less likely to have disposable income to buy their wares. Those click-happy types (Natural Born Clickers, as they are called in a series of Comscore / Starcom studies) — the 8% of internet users that are responsible for 85% of the clicks on display ads — aren’t the audience that most brands want to reach. They are more likely than the average internet user to make less than $40,000 and to visit gambling and get-a-job sites.

A bad, self-reinforcing cycle appears to be underway. Advertisers demand that publishers and ad nets sell them inventory on a per-click basis — because advertising on the internet doesn’t impact brand metrics among the upscale audience they’re targeting. Meanwhile, to make the economics of those CPC contracts work out, publishers and ad nets are forced to target the lower-income (perhaps unemployed) audience that is more likely to click on banners.

If A Friend Recommends An Ad, You Are More Likely to Pay Attention

Sometime in the past year you’ve probably seen an ad in Facebook that lists, at the bottom of the ad, the names of a few of your friends who “liked” it. “Social context,” as Facebook calls it. It turns out (no surprise) ads that have earned social-context votes work significantly better than the same ads that are presented to you unliked by any friends.

From ClickZ:

“Facebook insists endorsements have the potential to dramatically improve ad recall and engagement. In research conducted on Facebook’s behalf, Nielsen reported people who have seen an ad with social context are 68 percent more likely to remember it, and twice as likely to recall its content, compared with ads that have no ‘likes.’ Additionally, the researcher found purchase intent was four times higher when Facebook users were exposed to ads with social advocacy.”

Hello, social targeting. Anyone have similar data on the lift from contextual targeting, behavioral targeting or retargeting?

Making Ad Targeting Less Creepy

Great suggestions by Battelle (Searchblog) on improving online ad targeting — both for those who feel stalked and for the stalkers.

“As I’ve said a million times, marketing is a conversation. And retargeted ads are part of that conversation. I’d like to suggest that retargeted ads acknowledge, with a simple graphic in a consistent place, that they are in fact a retargeted ad, and offer the consumer a chance to tell the advertiser ‘Thanks, but for now I’m not interested.’ Then the ad goes away, and a new one would show up.

Facebook already does something similar, as Battelle points out. So do the story-list ads on Digg (“DiggAds“).

Hide Button on DiggAds

“And when a consumer says ‘no thanks,’ as any good salesperson knows, that’s an opportunity to learn. No rarely means no forever. Marketing is a conversation, one with more than one exchange. Just because the first one isn’t a sale, doesn’t mean the next one (or the one after that) can’t be. Especially if you have the good graces to know when to pull back into the wings for a while.”

Amen.

Natural Born Clickers and the Rest of Us

A study by Comscore, AOL’s Tacoda and Starcom back in February 2008 showed that 50% of all clicks on banner ads were done by just 6% of Internet users. A repeat of the study, published in October 2009, shows the core group of heavy clickers (8% now) are responsible for 85% of ad clicks.

And these “natural born clickers” are not the most desirable demographic for most advertisers: They skew toward Internet users with household incomes below $40,000 who spend more time than average at gambling sites and career advice sites.

Digg’s lead scientist, Anton Kast, recently shared with me an analysis of who’s clicking on Digg Ads, the ads on Digg that give readers the option of Digging and burying them like regular Digg stories. Since advertisers buy Digg Ads on a cost-per-click basis, I was eager to see the results.

Who Clicks on Banners v Who Clicks on Digg Ads

Instead of concentrated click activity by a small group of (inexplicably) click-happy individuals, clicks on Digg Ads (red line) are spread across a wide population of light clickers. In other words, the branded content items promoted by Digg Ads units is appealing to lots of people, each of whom clicks on an occasional ad. The profile of these Digg Ads clickers roughly matches Digg’s upscale demographic, unlike the “natural born clickers.”

Digg Ads (still in beta) doesn’t yet offer much targeting, so relevance can’t entirely explain these better results. Digg Ads do, however, offer advertisers an opportunity to speak to Digg readers in the “local vernacular” of Digg — blue headlines that point to content next to yellow boxes with numbers in them, and the option to Digg and bury the sponsored content just like organic content stories on the site. Kind of like the paid search ads on Google results pages, which I bet have a diversity of clickers that goes well beyond the “natural born clickers” too.

Targeting (relevance) is great. But finding ad formats that are native to content experiences may be just as important.

Too Much Targeting Ignores Value of Tire-Kickers

Patricia Hursh at SearchEngineLand reminds marketers that neglecting or attempting to avoid prospects early in the buying cycle — those kicking tires but not yet ready for the salesperson’s pitch — are “short-sighted and [this approach] ultimately leaves a lot of money on the table.” Amen.

(Thanks, Pete!)

Disney Offers More For Contextual Mis-Targeting File

Caught in the act by AdRants, Disney family resorts ads have been running alongside near-porn photos and content at sites such as Egotastic.

“Last Fall, some contextually placed Disney ads appeared in a webcam video of ‘Andrea’ fondling her breasts. Now, a series of banner ads are appearing on celebu-porn site Egotastic next to Keeley Hazell covering her breasts, images from a Kristen Davis ‘sex tape,’ images from a Lindsay Lohan sex tape, Denise Richards displaying her crotch and more. Screenshots are here. No nudity per se but possibly NSFW. More than likely the ads appeared on Egotastic as a result of a blind buy with neither the agency nor Disney having knowledge. It’s yet another reason why blind buys are rarely a good thing for most brands, especially one so very conscious of its family-friendly image.”

Disney Ads Next to Nudes

Honda Targets Ads to Tag Clouds

As part of their “Power of Dreams” campaign, Honda has roadblocked pages of Boing Boing that are tagged innovation, environment, and safety. It lets Boing Boing do what it’s always done — create a quirky “directory of wonderful things” — while connecting the Honda brand with an authentic conversation about themes core to its identity.

Boing Honda

Make is part of the fun, too.

More Than 80% Online Ad Inventory Sells for Less Than $1 CPM

That’s from JP Morgan’s Imran Khan in his Nothing But Net report (covered here by TechCrunch). Early last year, I argued that the challenge of identifying quality content and predictably delivering ads near that content continues to weigh down prices.

New, More Personal Ads from Facebook?

That’s the rumor, according to Ad Age.

Disruptive Ads Still Effective

New research from Yahoo and MediaVest (see Ad Age) says out-of-context ads work about as well as ads that are relevant to the adjacent content.

Marlboro billboard

I forget the term for it, but there’s an old-fashioned advertising tactic (and lots of research that supports its effectiveness) where ads are designed to break outside the boundaries of the ad space. Like billboards that have objects hanging off them. The thinking is: When you are trying to interrupt people, do it loudly. Jar us into noticing.

To me, though, the question is, what’s the success metric you’re looking to drive? If you want clicks, naked women and blinking offers to win a free motorcycles work great. Interruptive ads also have a long and successful record in the pre-Tivo era. But if you want to spark up a dialog that might lead to a long-term positive customer relationship, you may want to go with polite and relevant.