Beyond the banner: Is display advertising about to go bust?

Published on the 02/11/2017 | Written by Jonathan Cotton

Banner advertsing going bust

Online ad spend across Asia/Pacific continues its upward trajectory but that may be about to change...

On the surface things look good. Online ad spending has once again delivered double-digit growth in Australia (11.7 percent increase over the prior financial year) increasing by $799 million to reach $7.6 billion says the IAB’s latest online ad spend figures, close to 50 percent of the entire advertising spend in Australia. In New Zealand the appetite for online eyes is even greater – digital advertising spend increased almost 28 percent in 2016, according to Standard Media Index.

Right now it’s a modest boom time for digital marketing, and as mobile takes an increasingly significant slice of that pie – mobile advertising stood at AU$721 million for Australia in Q2 – and it’s a trend that looks set to continue.

“Mobile contributed 54.7 percent of General Display expenditure, marginally growing its contribution from 53.5 percent in the March 2017 quarter,” said IAB (that’s the Interactive Advertising Bureau).

Media buyers are loving it of course, but the bubble may be about to burst. Juniper Research is predicting that online advertising spend growth will slow to just 4 percent globally by 2022.

Why? It could have something to do with another rapidly growing element of the online advertising market: ad blocking software. 2016 saw a 30 percent annual increase in ad blocking software globally (according to ad software and analytics service PageFair). That includes ad blocking for mobile, a staggering 94 percent of which takes place in Asia/Pacific.

As ad prices fall, click-through-rates drop, and ad blockers penetrate, is this the death of the banner ad? (At an average click-through rate 0.5 percent a more appropriate question might be: What counts as ‘alive’?)

It’s not all over yet of course. Display advertising in general is still plenty popular, and those cognisant of the threat ad blockers pose are wondering if salvation may come by way of ‘Acceptable Ads’, a concept that looks to break the vicious cycle via an uneasy compromise: Non-intrusive ad formats (ads that meet strict criteria regarding placement, distinguishing marks, size etc) that are allowed to pass through ad blocking software and allow content creators to monetise their content.

“Ad platforms will seek a greater degree of control over the types of ads being blocked through increased involvement in ‘Acceptable Ad’ initiatives,” said Juniper. “Through these initiatives, platforms are beginning to shift focus to encouraging the use of adverts that are not blocked.”

“While revenue loss owing to ad blockers will account for 17 percent of online advertising spend in 2017, this loss will be mitigated and increase by only 2 percent over the next five years, reaching 19 percent by 2022.”

Sure, it’s a solid idea, but one wonders if perhaps the writing is on the wall: Display-centric strategies are proving less effective over time.

And it’s a rapidly evolving – and growing – landscape. There are a lot of channels to consider – Smart Insights lists over 120 – and new mar-tech/ad-tech solutions out there (nothing truly exists in the tech world without a catchy portmanteau) are likely to make cross-channel strategies more accessible to smaller buyers. As the martech gets smarter – did we mention that by 2022, 75 percent of all the advertising delivered online will be managed by AI? – advertisers do too.

“Data sharing partnerships will enable publishers to increase targeting efficiency, utilising acquired data, such as geolocation, browsing cookies, and cross-device identification, to provide end-users with highly tailored digital ads,” said Juniper.

“Despite objections to perceived invasions of privacy, platforms will continue to seek innovative means of data collection to provide personalised online ads.”

Could that mean that banner advertising is down but not out? Is there life beyond the banner?

Maybe the time has come to truly embrace that ‘integrated content’ strategy (read: a story worth telling, delivered across channels) Whatever the case, advertising that continues to be perceived as intrusive or irrelevant will be displaced by content viewed as ‘valuable’.

Perhaps, in that sense, there’s a lesson to be learned – for advertisers and publishers alike – from the sudden ubiquity of ad blocking applications: If your bandwidth-hungry banner ads are being blocked because they’re irrelevant, intrusive or just plain annoying, maybe you’re doing something wrong.

And the remedy for that problem is most likely the same as it ever was: Have something valuable to say.

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