Marketing basics: what is display marketing?

From banner ads to pop ups: display advertising is unavoidable, and every internet user, whether using a desktop or mobile device, encounters it on a daily basis. As the original means for online advertising, display ads have undergone a drastic transformation in recent years. Thanks to real-time auctioning, retargeting strategies, and the arrival of other new techniques, this traditional form of advertising is still an integral part of a robust marketing mix. Find out more about the basics of display marketing, the latest trends that are driving the industry, and the growing resistance against ad blockers.

The term display advertising encompasses all marketing techniques that involve graphic elements within the advertisements. These include video and animation as well as more traditional media, like banners and images.  

The most important players in display marketing are advertisers and publishers. Advertisers seek to promote their companies, products, or services, while publishers offer up their resources (ad space) in exchange for money. Different advertising forms are booked via a display network on third-party websites. These ads are then displayed according to the terms and conditions that were agreed upon by both buyer and seller prior to the purchase. But before this step can be carried out, a thorough target group analysis needs to be done in order to make sure that the ads are displayed in the proper environment.

The principles behind display marketing function in a similar way to those of the print advertising sector: advertisers book advertising space and the publisher then runs an ad there. The billing process used for display advertising is more exact; here, different parameters are involved. If calculated according to the performance marketing model, then the CPM (cost per mile) is used. In theory, the advertiser pays in units of 100 individuals who’ve been exposed to their ads. Recently, success-based billing models have become more common; these only require advertisers to pay when users click on an ad or finalize a purchase or contract (CPS).

Typical billing models for display advertising are:

• CPM = cost per mile
• CPC = cost per click
• CPL = cost per lead
• CPS = cost per sale  

Launched over 20 years ago, the first banner ads had CTRs (click through rates) of 44%. No doubt many advertisers long for these golden days, as today’s average CTR is only a measly 0.1%–meaning that out of 1,000 users, only one person will end up clicking the display ad. The main reason for this is that users have become desensitized. Some marketers refer to this phenomenon as banner blindness. Advertisements, especially poorly designed ones, are immediately negatively perceived by viewers, and this is especially true for pop-ups.

The rise of ad blockers has put a further dent into the visibility of run-of-the-mill banner ads, which has made display marketing an increasingly difficult practice. But instead of prophesizing an end to display advertising, experts are beginning to observe a change in the quality and efficiency of advertising.

One particularly important fad that’s trending nowadays is native advertising. Embedded in editorial content, the current direction of online advertising is one that increasingly seeks to appear credible while still remaining discrete to viewers. Mobile advertising in particular has been quick to adopt this strategy. This is due to the constraints that the smaller smartphone screens put on the visibility of traditional banner advertisements. User behavior for mobile devices also doesn’t lend itself as well to banner ads as traditional desktop search patterns. This is where native advertising can be a viable solution.  

A further shimmer of hope for display marketing is the use of videos as marketing instruments. The boom in video advertising seems to be maintaining its course, and in-stream video ads have proven to be particularly promising. The latter feature functions by running ads before or after the desired content is played.

In terms of quantity, automated advertising markets seem to be especially lucrative sources of growth. A recent flood of ads, and hence an increase in supply, has driven down prices and resulted in more and more websites being bombarded with ads. Programmatic advertising and real-time advertising are key to more efficient campaigns. Higher advertising costs are compensated for through better quality, less scatter loss, and increased visibility.