Standard display advertising generally does not work well. It provides the majority of revenue for most of the top-100 sites, but doesn’t serve advertisers, publisers, or consumers particularly effectively. From an advertiser perspective, interaction rates are generally very low, partially because of irrelevant positioning and poor creative, but mainly because standard formats separate off advertising into boxes that are now subconsciously ignored by most online consumers.
For consumers, display advertising is a necessary evil, ignored or blocked at every opportunity. The most interruptive formats have received considerable backlash from users, and in most cases the less interruptive formats are just background noise on the page.
For publishers, things also do not look so good. CPMs are declining, as available inventory rises. The huge inventories of the major social networks have contributed to an overall depression in achievable CPMs, as supply simply outstrips demand. When unable to sell directly to brands, publishers achieve fractions of a dollar per thousand views, via the large advertising networks that deal in mass-volume remant inventory.
It is certainly not all doom and gloom however. Countless companies are still experimenting with contextual and behavioural targeting technology, which generally demonstrate improved click-through rates. Improved formats, including those that integrate with conversations on social networks (Social Media is leading the space here) are likely to prove more enticing to consumers. However the biggest trend, is that of sponsored content (sometimes called branded content). This ranges from the much-maligned “pay-per-post” approach, which blurs the boundaries of advertising and editorial by paying for coverage without requiring clear disclosure, to the creation of valuable content (especially research, video, and announcements) on behalf of, or by brands, for disclosed insertion into media properties.
From the metrics I have seen, on our sites and others, it really works. If properly disclosed, branded content can be valuable to the reader, effective for the advertiser, and can produce a lot more revenue than standard banners for the publisher. The resistance is that it takes a lot more thought, and often significant technical integration. Here are a few good examples of sponsored content:
The Daily Beast, a very popular aggregator and curator of news, has started moving its brand messaging from the confines of ad boxes, and mixing it more closely with content. You can see the range of formats on offer here, which range from large rich-media units, to full sponsored stories like this one.
On idiomag we run sponsored content, which can range from viral videos, to sponsored artist profiles, to full flash games. This article and video by Ford highlights the street art of Banksy et al around the East End of London, and then links off to an edgy campaign for the new Ford Ka, which includes a 3D mobile app. Formats like this on idiomag regularly achieve click-through rates around 5% (which is pretty impressive given that display advertising usually returns a CTR of around .25%.
Digg have just started trialling their new advertising format – allowing brands to pay to promote stories on the Digg homepage (more details here). It works a little like Google’s AdWords, with the more popular sponsored stories costing the advertiser less. Although the Digg community is notoriously resistent to advertising, this looks like it will really fly as it finds a good balance between the necessity of brand involvement, and giving the community power.
The VP of popular blog network Gawker was recently quoted on saying that in a few years time sponsored posts will bring in “the majority of our advertising revenue.” The network has just started running posts about the HBO vampire series True Blood (see an example here). The issue is that their sales department thought that the topic of vampires would allow them to be “looser with the disclosure and create a little disbelief” – in other words, there is no disclosure that the content is sponsored. This has obviously caused some concern, although interestingly not so much from readers.