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The world’s largest search engine is branching out. Google has spent the last year building up its display advertising products. Considering how thoroughly Google dominates search advertising, its recent obsession with digital advertising’s less profitable arm has perplexed many. But Google thinks the $20 billion that comprises the display ad market is just a penny in the well of what it could be….

Google made its name (and billions) by streamlining the search advertising process and increasing revenues. And that’s exactly what they want to do with display advertising now… How? By making the “overall display buying and selling process that much more effective.”

Display can certainly benefit from increased efficiency. According to Google, 28% of a media dollar gets eaten up by friction (administrative costs) in the display ad market. If that sounds high, consider this. Neal Mohan, vice president of product management points out that the old school method purchasing TV advertising only wastes 2% of a dollar.

In addition to increased efficiency, Google is excited about the swaths of content moving online. As video and mobile products become more advanced and more media creators are working on content for the digital world, the advertising opportunities are expanding.

Not to mention Google’s in-house advancements and key acquisitions + the scale of properties like YouTube. Google’s video site surpassed Yahoo in the summer of 2008 as the world’s second most popular search engine. Over the last year, the number of display advertisers running ads on YouTube has increased 10 times. In North America alone, 50 million impressions are served on YouTube’s homepage each day. Which means inventory on the homepage is often sold out.

Today at Google’s New York headquarters, the company wanted to reiterate that selling display advertising is not an experiment for the company. According to Barry Salzman, managing director of media and platforms in the Americas, display advertising is “a major part of Google’s business.”

“We’re bringing search together with display,” he says. The company is able to combine their media power with an impressive technology offering. “That’s the power of Google display.”

Flash and rich media a substantial portion of US ad impressions

To underline why Google is making this move a recent study from comScore shows that US ad impressions are up 15 percent over the same period last year

Key findings are that overall ads are getting bigger. Leaderboard banners (728 x 90) were the most commonly viewed display ad by size. While the study takes pains to point out subtle differences in whether the square is more popular than the rectangle as a creative format, it’s more notable that pop-ups continue to be near-extinct,

Jeff Hackett, comScore SVP pointed out that ”One of the several drivers of strength in this market has been the innovation occurring with respect to ad units, as larger and more engaging creative ad formats are employed.”

Source: eConsultancy

Just read this interesting article over at Imedia Connection, thought I would share it. Some key take out’s from the article:

• Advertisers apply two methods to their ad spend: direct response and brand advertising
• Display ads and paid search pull dollars from different budgets, and have different goals
• Paid search simply doesn’t have enough viable inventory in any given category to enable any significant advertiser (large spender) to move large portions of their budget to paid search.
• Ultimately, paid search matters far more to the search engines than it does to any one advertiser.

Do you agree? Read the full article here.

To start of the week, two great blog posts…

One describes very much the truth about how most Client/Agency relationships. The other gives an indicator on how people perceive advertising.

You can read the two blog posts here:

• http://sethgodin.typepad.com/seths_blog/2009/03/license-to-stall.html
• http://www.attentionmax.com/blog/2007/09/blog_sentiment_visualization_reveals_skepticism_toward_advertising.php

Have a great week!

Yesterday Google introduced their new “interest-based” advertising system. Basically these ads will associate categories of interest — could be sports, gardening, cars, pets — with your browser, based on the types of sites you visit and the pages you view. Then Google ad system uses these interest categories to show you more relevant text and display ads.

Of course questions about user choice and privacy  arise, when a system like this is presented. Google try to answer these questions by launching their interest-based advertising with three important features:

• Transparency - We already clearly label most of the ads provided by Google on the AdSense partner network and on YouTube. You can click on the labels to get more information about how we serve ads, and the information we use to show you ads. This year we will expand the range of ad formats and publishers that display labels that provide a way to learn more and make choices about Google’s ad serving.
• Choice - We have built a tool called Ads Preferences Manager, which lets you view, delete, or add interest categories associated with your browser so that you can receive ads that are more interesting to you.
• Control - You can always opt out of the advertising cookie for the AdSense partner network here. To make sure that your opt-out decision is respected (and isn’t deleted if you clear the cookies from your browser), we have designed a plug-in for your browser that maintains your opt-out choice.

Don’t know if this is just another way of saying behavioural targeting but you can read more about the new system over at Google

In a new report published in December 2008, comScore gives us their views on how online advertising works – is clicks and click through rates really the right metric for measuring an online campaigns success?

In today’s economically challenging times, advertisers and their agencies appear to be moving their online display ad dollars from CPM campaigns that require payment based on the number of people exposed to the campaign to “payfor-performance” programs (“CPC” or “CPA”) that require payment when the consumer performs some desired action such as clicking on an ad. Data from Competitive Media Reporting shows that total online display advertising spending (CPM and CPC/CPA) increased by 8% Y/Y during the first half of 2008, while the Internet Advertising
Bureau reported a 15% increase. In contrast, Nielsen, whose data only includes CPM spending, reported a 6% decline in display advertising over the same time period.

Click rates have fallen dramatically in recent years to levels under 0,1%. The comScore research* revealed that two-thirds of Internet users do not click on any display ads over the course of a month and that only 16% of Internet users account for 80% of all clicks. ComScore’s research also showed that the demographics of clickers are skewed towards younger users aged 25 to 44 earning less than $40,000 per year. Even search ads, presumably the most effective form of online marketing, are only clicked on 4% of the time at Google, and 2% at MSN and Yahoo!, according to comScore statistics.

But are low click rates evidence that an ad has not had any impact on consumer behavior? Or, does online display advertising work in a similar manner to traditional offline advertising with multiple exposures over time being needed to effect a change in consumer behavior? Below you’ll find the key findings from the report:
It’s clear that display advertising, despite a lack of clicks, can have a significant positive impact on:

• Visitation to the advertiser’s Web site (lift of at least 46% over a four week period)
• The likelihood of consumers conducting a search query using the advertiser’s branded terms (a lift of at least 38% over a four week period)
• Consumers’ likelihood of buying the advertised brand online (an average 27% lift in online sales)
• Consumers’ likelihood of buying at the advertiser’s retail store (an average lift of 17%)

In the Retail category, it is also clear that while the lift in sales from a display ad is lower than the lift from a search ad, the reach of a display campaign is typically far higher than that of a search campaign. When the sales lift is weighted by reach, display campaigns generally outperform search campaigns. However, the combination of a display and search campaign delivers substantial synergy, with the sales lift from the combined strategy being greater than the sum of the individual components.

By not relying on cookies and instead tracking computers that have comScore’s monitoring software installed, comScore research also shows that online advertising can have a substantial latency effect on consumers’ online behavior while also having the ability to drive increased traffic into retail stores, resulting in meaningful increases in offline sales.

The report provides great insights into who clicks on online display ad’s and shows that display advertising really have an impact on consumer behavior. If we combine these findings with ad serving & tracking technology from companies like eyeblaster we can move the evaluation of online campaigns to a whole new level. When it’s possible to see the time spend interacting with a rich media ad on top of clicks, click through rates, CPC etc., then online display advertising really get’s comparable with TV. Furthermore online advertising still have the clear advantage that you can directly interact with the media.

Hopefully the findings of this report will help us move budgets to online advertising and get marketing people to really see the advantages and possibilities of using online advertising.

You can download the full report from comScore’s website.

*The research is based on comScore’s proprietary panel of 2 million global Internet users and does not rely on cookies to track users. The data is statistically weighted and validated through comparison to 3rd party data.