You are exposed to an average of 362 online display ads a day. How close are you to buying anything when you see those ads?
Online display ads have been around for over 20 years. They’re nothing new. But over the past 2 decades, the content, format, and messaging of display ads have changed dramatically—because they have had to!
The click-through rate of that first banner ad in 1994 was 44%. CTRs have steadily declined, and were sitting at around 0.1% in 2012 for standard display ads (video and rich media excluded), according to DoubleClick. Advertisers had to do something to ensure that their ads were seen, and engaged with—ads had to be a useful resource, and not an annoying nuisance.
It’s important, however, that the focus is not firmly fixed on CTRs. Yes, online display ads have largely been considered a tool for direct response advertising, but more recently, advertisers are understanding the importance of reaching the right person, in the right mindset, with an ad that can be seen. This ad may not be clicked on, but does that mean it wasn’t noticed and remembered? Advertisers are increasingly opting to pay for performance as opposed to clicks and/or impressions. Advertisers want their ad to drive action that leads to purchase—and that isn’t always in the form of a click.
Mediative recently conducted and released a research study that looks at how display ads can drive purchase behaviour. If someone is browsing the web and sees an ad, can it influence a purchase decision? Are searchers more responsive to display ads at different stages in the buying cycle? What actions do people take after seeing an ad that captures their interest? Ultimately, Mediative wanted to know how indicative of purchase behaviour a click on an ad was, and if clicks on display ads even matter anymore when it comes to driving purchase behaviour and measuring campaign success. The results from an online survey are quite interesting.
1. The ability of online display ads to influence people increases as they come closer to a purchase decision.
In fact, display ads are 39% more likely to influence web users when they are researching a potential purchase versus when they have no intent to buy.
Advertiser action item #1:
Have different ad creatives with different messaging that will appeal to the researcher and the purchaser of your product or service separately. Combined with targeted impressions, advertisers are more likely to reach and engage their target audience when they are most receptive to the particular messaging in the ad.
Here are a few examples of Dell display ads and different creatives that have been used:
This creative is focusing on particular features of the product that might appeal more to researchers.
This ad injects the notion of “limited time” to get a deal, which might cause people who are on the fence to act faster—but it doesn’t mention pricing or discounts.
These creatives introduce price discounts and special offers which will appeal to those in the market to buy.
2. The relevancy of ads cannot be understated.
40% of people took an action (clicked the ad, contacted the advertiser, searched online for more information, etc.) from seeing an ad because it was relevant to a need or want, or relevant to something they were doing at the time.
Advertiser action item #2:
Use audience data or lookalike modeling in display campaigns to ensure ads will be targeted to searchers who have a higher likelihood of being interested in the product or service. Retargeting ads to people based on their past activity or searches is valuable at this stage, as potential customers can be reached all over the web while they comparison shop.
An established Canadian charitable organization ran an awareness campaign in Q2 2015 using retargeting, first and third party data lookalike modeling, and contextual targeting to help drive existing, and new users to their website. The goal was to drive donations, while reducing the effective cost per action of the campaign. This combination helped drive granularity in the targeting, enabling the most efficient spending possible. The result was a 689% decrease in eCPA—$76 versus the goal of $600.
3. Clicks on ads are not the only actions taken after seeing ads.
53% of people said they were likely to search online for the product featured in the ad (the same as those who said they would click on the ad). Searching for more information online is just as likely as clicking the ad after it captures attention, just not as quickly as a click (74% would click on the ad immediately or within an hour, 52% would search online immediately or within an hour).
Advertiser action item #3:
It is critical not to measure the success of a display campaign by clicks alone. Advertisers can get caught up in CTRs, but it’s important to remember that ads will drive other behaviours in people, not just a click. Website visits, search metrics, etc. must all be taken into consideration.
A leading manufacturer of PCs, laptops, tablets, and accessories wanted to increase sales in Q2 of 2014, with full transparency on the performance and delivery of the campaign. The campaign was run against specific custom audience data focusing on people of technological, educational, and business interest, and was optimized using various tactics. The result? The campaign achieved a post-view ROI revenue (revenue from target audiences who were presented with ad impressions, yet did not necessarily click through at that time) that was 30x the amount of post-click revenue.
4. Clicks on ads are not the only actions that lead to purchase.
33% of respondents reported making a purchase as a direct result of seeing an ad online. Of those, 61% clicked and 44% searched (multiple selections were allowed), which led to a purchase.
Advertiser action item #4:
Revise the metrics you measure. Measuring “post-view conversions” will take into account the fact that people may see an ad, but act later—the ad triggers an action, whether it be a search, a visit, or a purchase—but not immediately, and it is not directly measurable.
5. The age of the target audience can impact when ads are most likely to influence them in the buying cycle.
- Overall, 18–25 year olds are most likely to be influenced by online advertising.
- At the beginning of the buying cycle, younger adults aged 18–34 are likely to notice and be influenced by ads much more than people aged over 35.
- At the later stages of the buying cycle, older adults aged 26–54 are 12% more likely that 18–25 year olds to have made a purchase as a result of seeing an ad.
Advertiser action item #5:
If your target audience is older, multiple exposures of an ad might be necessary in order to increase the likelihood of capturing their attention. Integrated campaigns could be more effective, where offline campaigns run in parallel with online campaigns to maximize message exposure.
6. Gender influences how much of an impact display ads have.
More women took an online action that led to a purchase in the last 30 days, whereas more men took an offline action that led to a purchase.
- 76% more women than men visited an advertiser’s website without clicking on the ad.
- 47% more women than men searched online for more information about the advertiser, product, or service.
- 43% more men than women visited the advertiser’s location.
- 33% more men than women contacted the advertiser.
Advertiser action item #6:
Ensure you know as much about your target audience as possible. What is their age, their average income? What sites do they like to visit? What are their interests? The more you know about who you are trying to reach, the more likely you will be to reach them at the right times when they will be most responsive to your advertising messages.
7. Income influences how much of an impact display ads have.
- Web users who earned over $100k a year were 35% more likely to be influenced by an ad when exposed to something they hadn’t even thought about than those making under $50k a year.
- When ready to buy, people who earned under $20K were 12.5% more likely to be influenced by ads than those making over $100K.
Advertiser action item #7:
Lower earners (students, part-time workers, etc.) are more influenced by ads when ready to buy, so will likely engage more with ads offering discounts. Consider income differences when you are trying to reach people at different stages in the buying cycle.
8. Discounts don’t influence people if they are not relevant.
We were surprised that the results of the survey indicated that discounts or promotions in ads did not have more of an impact on people—but it’s likely that the ads with coupons were irrelevant to the searcher’s needs or wants, therefore would have no impact. We asked people what their reasons were behind taking action after seeing an online ad. 40% of respondents took an action from seeing an ad for a more purchase-related reason than simply being interested—they took the action because the ad was relevant to a need or want, or relevant to something they were doing at the time.
Advertiser action item #8:
Use discounts strategically. Utilizing data in campaigns can ensure ads reach people with a high intent to buy and a high likelihood of being interested in your product or service. Turn interest into desire with coupons and/or discounts—it will have more of an impact if directly tied to something the searcher is already considering.
In conclusion, to be successful, advertisers need to ensure their ads are providing value to online web users—to be noticed, remembered, and engaged with, relevancy of the ad is key. Serving relevant ads that are related to a searcher’s current need or want are far more likely to capture attention than a “one-size-fits-all” approach.
Advertisers will be rewarded for their attention to personalization with more interaction with ads and a higher likelihood of a purchase. Analyzing lower funnel metrics, such as post-view conversions, rather than simply concentrating on the CTR will allow advertisers to have a far better understanding of how their ads are performing, and the potential number of consumers that have been influenced.
Rebecca Maynes, Manager of Content Marketing and Research with Mediative, was the major contributor on this whitepaper. The full research study is available for free download at Mediative.com.