25th Anniversary Issue: Banner Advertising Is Here to Stay

A long with DM News’ anniversary, online advertising reaches a milestone of its own this fall: the 10th anniversary of the banner ad.

The banner dates to October 1994, when a site called HotWired launched with the Web’s first ads from AT&T, Sprint, MCI, Volvo and others.

The Web’s early days attracted some big brands. Ragu, for example, is considered one of the first packaged-goods marketers to establish an online presence. In 1995, Procter & Gamble awarded Grey Interactive an account for Web-based media, and AT&T hired agency Modem Media to run its interactive account.

It’s common knowledge that dot-com, technology and telecommunications companies were the real early adopters of the online medium. All spent heavily well into 2000, when the recession hit the technology sector particularly hard. By 2002, the surviving dot-coms maintained a strong presence in the top 25 volume advertisers. These included Amazon.com, Classmates Online, AOL, eDiets and X-10 Wireless.

But in 2003, cell phone number portability, the stock market’s return and low interest rates drove credit card and mortgage marketing, and those advertisers took to the Web with renewed vigor. That was the year traditional advertisers more fully embraced the online medium, and all indicators point to it being the year online advertising came back. IAB found that online ad spending grew 20 percent year-over-year to $7.2 billion.

Online Advertising’s Influence

Everyone agrees that the online medium has made marketing more accountable, which is a good thing for business. In the early days, the ability to measure clicks was a revolutionary and welcome concept for advertisers, and it promised to turn the medium into a direct marketer’s dream.

When click-through rates dropped and then stabilized, some naysayers worried about the demise of online advertising. Soon, the branding debate took center stage, and online proponents rightfully noted that direct response is not the goal for all advertisers. Since then, reams of research have shown online advertising’s branding effectiveness. And recent DoubleClick research with Continental Airlines has shown that more conversions – sales or e-mail registrations – tend to happen over a 30-day window after someone sees but doesn’t click on an ad.

Accountability in online advertising has not gone away. Performance-based marketing plays a larger role, branding effectiveness has become easier to measure and click-throughs still matter to DMers.

Marketers are recognizing that achieving a more balanced mix is critical, and online advertising increasingly is finding a place at the table. Some think that the shift in information consumption is causing the effect of tried-and-true marketing tactics, such as broadcast media and print advertising, to diminish. This is good news for online advertising.

So while broadcast media continues to lead in creating awareness, with notable exceptions in travel and personal finance, online marketing and Web sites are having an effect on the research and purchase-decision phases of the process. Where else would a marketer want to be than where customers make their actual purchase decisions?

Studies also show that online campaigns can drive offline sales, so more marketers are reallocating dollars to online advertising. Marketers not only are more willing to spend money online, they are increasing investment in newer, more creative ways to get their message across, including half-page ads, rich media and full-motion video.

Down the Road

First, expect ad formats to become larger and more engaging. The average ad area is now 71,834 pixels. In comparison, the standard banner is 26,280 pixels. Rich media use, long hampered by slow connectivity, is a growth story, with 39 percent of all U.S. users logging on through broadband in 2003, according to Nielsen//NetRatings.

Today, rich media accounts for more than 42 percent of DoubleClick’s ad inventory on the Web and has proven more effective in conversions and branding than non-rich media.

Another growth story is performance-based advertising, a relatively risk-free proposition for marketers. Notable among such vehicles are affiliate marketing, which sends traffic from content sites to relevant retailers and typically drives 5 percent to 20 percent of their online sales, and search engine marketing, which has attracted much attention and elicited optimistic growth projections. Note that search marketing’s increasing complexity drives the need for technologies such as keyword bid management and optimization.

Also, it’s safe to predict that advanced targeting and campaign optimization will play a bigger role over the next several years.

So with new dimensions to online advertising, will the standard banner go away? Unlikely. It is an easy size to implement, many publishers have configured their pages to incorporate them and pure direct response advertisers tend to buy these types of units in bulk from inventory aggregators. It likely will stay a classic amid newer alternatives, some of which we have yet to imagine.

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