3 not-so-simple ways to improve online display advertising

doubleclickIn its battle for display ad supremacy against the likes of Yahoo and Microsoft, Google has just launched its DoubleClick ad exchange, which industry experts are touting as the ‘best advertising base’.

According to a Business Week article, Google hopes to diversify its revenue because it still relies on 95% of its revenue from search ads. Neal Mohan, Google’s vice-president for product management was quoted as saying that “Display advertising is still not living up to its full potential.”

I don’t claim to be an online ad expert, but I get the sense that search ads do very well for certain reasons, and that to ‘live up to their potential’ and level the revenue playing field at Google, display ads will have to adopt the same model as search:

1. Let everyone play
Here’s my beef with ad networks. Generally speaking, they require a minimum spend in order to get your ads served. That can eliminate participation of a good portion of small businesses (under 10 employees) in the US, which make up about 67% of employer firms. So it’s not that small business doesn’t want to get online, it’s that it can be cost prohibitive. The reason why search ads work so well is that there is no minimum spend. If the new ad exchange works this way, then everyone can participate.

2. Eliminate the acronym ‘CPM’
Search ads work incredibly well because you only pay if someone clicks on your text ad. Cost Per Click (CPC) is also a great way to measure ad effectiveness. So why is it that so many display ad networks insist on keeping the CPM model around? It’s basically transferring old world thinking (see: Mass Media) and its metric of ‘impressions’ to Online Media. If Online Media is really so persuasive at converting consumers, then the payment model of display ads should be CPC (or PPC). An effective solve for these ad networks could be a blend of CPM and CPC, which would expire ads after a certain amount of impressions or clicks. This could eliminate types of fraud, or lousy display ads that no one wants to click on.

3. Let us tell you where our ads are going
Many ad networks won’t reveal which sites your display ads are appearing. This shroud of secrecy has to go. Letting advertisers choose where their ads go in terms of sites and geography would be a welcome change, and allow advertisers to use their knowledge of relevant interests/sites for their products. It also allows advertisers to ensure their company stays on brand. Of course for those advertisers who don’t know how to place their ads, offering a behavioral model for a higher CPC could be a suitable option.

Like I said, I’m no expert, but I believe that display ads can do much better by increasing their appeal to advertisers, large and small, if they adopt the previous steps. Display ads will never quite be as effective as search because of their push model, but any online media buyer would tell you that a blend of search and display is critical for campaign success. Here’s hoping this new ad exchange lives up to expectations. If it does, we’ll see Google grab even more of the online spend, and maybe even revolutionize online advertising in the process.

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