A few situations have come up at work recently which sent me off on a research project to try and answer a question: Which form of online advertising works best for branding and which is most appropriate for generating more sales/product awareness?

Pay per click advertising seems to focus on creating more sales due to the nature of it’s text based ads. That’s not to say that it doesn’t increase the exposure of one’s brand however there is only so much “awareness” one can obtain through a text only ad that’s typically 2-3 lines long containing 70-80 characters.

The Internet search engine is an indispensable tool of modern life and an advertising gold mine for Google, the favorite first stop on the Web but searching accounts for only about 5 percent of the time people spend online; the other 95 percent is spent on the wider Web, where a different advertising landscape looms. Instead of the short text ads that appear on a Google results page after a search, visitors often find display ads that are the Internet’s equivalents of glossy magazine ads or television commercials. - New York Times

So, 95% of the time people are online without being exposed to the Pay Per Click ads in the search engines. To overcome this the Google Content Network promises to reach “3 out of every 4 internet users” through partnerships with online news portals and major websites. However… this exposure is still conducted via text based ads.

Enter online display advertisements. These rich media/video/flash ads seem to be a better opportunity to advertise one’s brand as long as they are placed in relevant, niche websites. Ensuring display ads reach the proper target audience is much more complicated than matching a search phrase keyed into Google, matching relevant text ads, and delivering the results to the user (Pay Per Click). When a company targets a very specific audience or location the display ads become even more difficult to manage as the risk of empty reach (reaching out to the wrong audience) increases.

The effectiveness of each ad campaign must also be trackable. Pricing and effectiveness of display ads are generally measured by… Cost per Thousand Exposures [CPM] or Cost Per Click [CPC] with less of a focus on actual sales generated from the ad campaign.

The new science of online display advertising involves a potent mix of behavioral targeting, social networking algorithms, predictive economics, pricing optimization and other mathematical strategies. These geeky tools are used to address the marketer’s quandary, well articulated by John Wanamaker, the 19th-century Philadelphia merchant who said that half the money he spent on advertising was wasted, but he didn’t know which half. - New York Times

Let’s compare a text based ad with a display ad both run by the same company:

Pay Per Click Text Ad in Google:
A search for the term “computer” returns:

Rich Media Display Ad:
Delivered on a Technology News Portal:

If you look at the examples above in terms of aesthetics… the display ad clearly does more for branding than the pay per click ad.

Many still argue that paid search will still out pace display ads in the realm of online advertising. With people spending an inordinate amount of time on popular social destinations like Facebook and MySpace… it’s not likely they are getting the same amount of exposure from text ads in Google, Yahoo, and MSN. Google’s recent purchase of Double Click (a company with experience in managing display ads) and this most recent news on Facebook both support a bright future for display advertising (when it comes to branding).

Related:
http://www.nytimes.com/2007/05/16/business/smallbusiness/16behave.html
http://www.marketingvox.com/archives/2006/12/06/tns-online-display-ad-spend-up-1-billion/
http://en.wikipedia.org/wiki/Online_advertising
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003646285
http://www.our-hometown.com/valuation.html
http://www.noahbrier.com/archives/2007/09/why_online_display_advertising_is_like_crack.php
http://www.businessweek.com/technology/content/apr2007/tc20070430_987177.htm
http://www.marketingpilgrim.com/2007/05/why-online-display-advertising-is-hot.html#comment-32808

Categories: Business, Tech.

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