September 30, 2008, 12:00 AM

Attracting shoppers

Online display ads—especially when targeted—can be an effective way to draw consumers to a retailer’s site.

When it comes to online display ads, CyberDefender Corp. aims to be a chameleon. The e-retailer of anti-virus, anti-spyware and other software doesn’t want to be flashy, or Flashy. It wants to blend into web pages-not just visually, but contextually. Its goal is to make its ads look like they belong.

One text-oriented display ad for anti-spyware software shows the CyberDefender name and logo and focuses on bulleted messages and calls to action. These include: Protect your identity. Free spyware scan. Remove viruses, adware and more. Download now.

The goal is to make the ad appear to be just another part of the page, another piece of content, not something that intrudes on the user experience, says Janielle Denier, e-marketing analyst at interactive marketing firm WebMetro, which CyberDefender uses to help formulate strategy and place its display ads.

To further ensure its ads blend in, CyberDefender uses contextual targeting technology through ad network Google Content Network. The e-retailer and its marketing firm set up “ad groups,” a collection of one to 50 keywords, for each display ad it runs.

Google spiders search the Internet for web pages that contain the keywords. When a user goes to a web site within the Google Content Network, Google places the appropriate ad on the page with the keywords.

The results are in

The e-retailer pays for display ads by the click. Since it launched the anti-spyware ad in mid-May, the ad has received a 1% click-through rate and 1% conversion rate. In June, this particular ad group-the e-retailer runs hundreds-produced 7,950 sales of the anti-spyware software. “Using the ad network to run all our ad groups and different display ads has proven to be very powerful,” says David Bruggeman, vice president of marketing at CyberDefender.

Many retailers place online display advertising low on the list of marketing priorities-if they do any online display advertising at all. As successful as it has been, online display only accounts for 8% of CyberDefender’s total marketing spend-though it’s rising. Instead, most retailers focus on paid search, e-mail marketing and affiliate marketing, and sometimes television and other media advertising.

But the landscape is changing. Internet users are spending more time online, and thus seeing more display ads. In May the average American used the Internet 26 hours and 26 minutes, up 9% from May 2007, according to research from The Nielsen Co. And companies are expected to grow their online display spends. JupiterResearch says online display spending hit $7.4 billion last year and will increase at a compound annual growth rate of 14% to $16.4 billion in 2013.

What’s more, consolidation of the online display advertising industry is creating monolithic ad networks with great reach and targeting technology that outshines the conventional method of buying placement across an ad network’s sites with little or no targeting by demographic, context or behavior. AOL, Google, Microsoft and Yahoo all have purchased numerous companies-ad networks, ad servers, targeting technology providers and others-to create one-stop shops for companies looking to use online display more effectively.

Advertisers pay for display ads in various ways: by thousand impressions, by click or by acquisition (also referred to as cost per sale). Broad buys cost less than targeted buys because they give ad networks the flexibility to place ads in a wider array of slots in their inventory.

The average price for an online display ad fell 1% from $0.37 per thousand impressions in May to $0.36 in June, according to research from online display ad automation and optimization services provider PubMatic. That’s for ads sold by ad networks, and not individual web sites.

“While ad dollars are moving from traditional sources, such as TV, print and radio, to online as consumers shift more of their time to the web, we do see a moderation in ad pricing as the economy slows; and the summer season also has an effect,” says Rajeev Goel, co-founder and president of PubMatic. “As we move into the holiday season, ad pricing likely will go up, though it’s anybody’s guess as to what will happen in the broader economy and to what extent that will affect online advertising prices.”

Retailers and other companies can approach individual sites, request media kits, and place advertisements on just those sites. But it is more common, experts say, for companies to use the dozens of ad networks, some large with huge reach and others small with focused themes, to place online display ads.

Ad networks establish relationships with hundreds of thousands of sites, ranging from enormous media sites to social networks to comparison shopping engines to small blogs. They do the research and line up the inventory.

Tracking behavior

They also anonymously cookie Internet users visiting sites within the network to track their activity and behavior, noting for instance which sites they visit and when a consumer puts an item into a shopping cart and then abandons the transaction.

Some ad networks are closed, meaning advertisers can only get a list of sites used within the network and very basic reports on how an ad is performing in impressions and clicks. Other networks are open, meaning they show advertisers the sites and even web pages where their ads appear and supply advertisers with detailed reports on what kinds of Internet users are seeing their ads. Ad networks that offer geographic, demographic, contextual, behavioral and other kinds of targeting methods typically are open.

“There are hundreds of thousands of web sites we want to be on. Do you know how long it would take us to call each site publisher and learn about their audience and specs?” says Michael Behrens, vice president of e-marketing at WebMetro. “The ad networks’ ability to spider across millions of pages and find the content that is relevant to my clients’ businesses is invaluable.”

Ad networks typically have aggregated countless sites, gathered specs on ad sizes and available slots, and in the past often dropped ads in anywhere, oftentimes on sites with little relevance to the advertiser. This is a large reason retailers and other companies have been turned off by online display ads.

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