For most of the history of Internet advertising, display advertising has been dominated by two types of advertisers: brands and highly sophisticated lead gen companies (just think about how many LowerMyBills banner ads you’ve seen in your lifetime). That is beginning to change, primarily due to the rise of ad exchanges and DSPs (demand side platforms). Over the last few years, Google acquired the DoubleClick Ad Exchange and Yahoo acquired Right Media. Both of these are essentially marketplaces where publishers can place unsold inventory and advertisers can bid on this inventory.

    The problem with ad exchanges historically has been the complexity and cost of participating in them. Unless you had years of experience with display media buying and perhaps a few good engineers to build a “real time bidding” or RTB algorithm, you could quickly waste a lot of money on an ad exchange (or more likely, you just wouldn’t participate in the first place).

    Enter the DSP. DSPs are basically agencies that help non-savvy advertisers participate in ad exchanges. They can do everything from bidding, tracking, optimizing and even designing ad creative in some instances. DSPs remove the knowledge barrier to entry and also reduce the minimum investment to get involved in exchanges (some will take clients who want to spend just a couple thousand dollars).

    So does this mean you should immediately take 20% of your online marketing budget and throw it toward display advertising? Probably not; at least not yet. Display advertising is still a top of the funnel, demand creation medium. That means that the direct ROI from display buys will almost always be much lower than your paid search investment. Moreover, unless you can set up proper attribution to determine how display influences future purchase behavior, you really can’t determine the true ROI of a display campaign.

    There are, however, some trends in display advertising that will soon make display much more viable for all advertisers. First, in the near future (perhaps late 2011) we will start to see self-service platforms through which you can interact with ad exchanges. This will further reduce the cost of advertising on display, and it will likely evolve into an AdWords-like system, where you can target specific inventory and bid to your own CPA metrics. Second, automated display ad builders are improving, which will enable you to create decent ads without paying a designer or DSP to do it for you. Google has been working on their display ad builder for several years and it is improving rapidly.

    The one trend in display that you can – and should – take advantage of in 2011 is retargeting (or, in the parlance of AdWords, remarketing). Retargeting allows you to serve up an ad to a person who visited your site but did not convert. For example, if you are selling widgets and someone adds some widgets to your online shopping cart and then leaves before completing their purchase, you can actually serve up an ad that says something like “Come Back and Complete Your Order and Save 20%!”. While some consumers find this a little creepy, the data definitely suggests that retargeting increases your conversion rates (plus, you can combat the creepiness factor by reducing the frequency in which you serve ads to an individual, as well as potentially reducing the personalization of the ad).

    Retargeting opportunities abound. You can do retargeting through AdWords (your account rep can set that up for you, though it does require a little extra code on your site); you can use DSPs to do retargeting for you; and you can also work with retargeting specialists like Retargeter and FetchBack.


    1. Terry Whalen March 22nd, 2011

      Hey David, w

      I’ve been involved in a dozen or so retargeting campaigns, and I’ve been consistently underwhelmed by relative performance versus our keyword and contextually targeted display ad campaigns.

      I think retargeting can be worth doing, but I try to set expectations low so that clients are not disappointed.

      As one anecdotal data point, one of our larger clients spent $100,000 over 12 months with one of the 3rd-party retargeting companies you mention. After 6-9 months, it was unclear whether they were getting any benefit from the retargeted ads, so a “blind” test was constructed, which consisted of running ads for a well-known non-profit on a portion of the ad inventory. When tested against the actual retargeting ads of the advertiser, it was a dead heat. After 12 months and $100k, the advertiser bailed.

      Retargeting companies seem to often point to ‘view-through’ conversions, but I have a difficult time attributing value to a view-through conversion when it comes to a user who has already visited an advertiser site before getting a retargeting ad served up to them.

    2. davidzhawk March 22nd, 2011

      It definitely doesn’t work for everyone but we’ve seen some good results for some.

      Sent from my iPhone

    Leave a Comment

    David Rodnitzky
    David Rodnitzky is founder and CEO of 3Q Digital (formerly PPC Associates), a position he has held since the Company's inception in 2008. Prior to 3Q Digital, he held senior marketing roles at several Internet companies, including (2000-2001), FindLaw (2001-2004), Adteractive (2004-2006), and Mercantila (2007-2008). David currently serves on advisory boards for several companies, including Marin Software, MediaBoost, Mediacause, and a stealth travel start-up. David is a regular speaker at major digital marketing conferences and has contributed to numerous influential publications, including Venture Capital Journal, CNN Radio, Newsweek, Advertising Age, and NPR's Marketplace. David has a B.A. with honors from the University of Chicago and a J.D. with honors from the University of Iowa. In his spare time, David enjoys salmon fishing, hiking, spending time with his family, and watching the Iowa Hawkeyes, not necessarily in that order.