Groupon says its focus is on the bottom line, rather than top-line growth.
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What’s driving increased interest in ad networks now is their burgeoning ability to target ads. Targeting enables relevancy. Advertisers can specify geography, demographics, page content and behavior (shopping cart abandonment, for example) to ensure their ads are being viewed by Internet users most likely to be interested in their wares.
“I liken targeting to search six years ago-most advertisers were still going broad, not granular,” says Scott Howe, vice president and general manager at DRIVEpm, the ad network within Microsoft Corp.’s advertiser and publisher solutions group.
This same progression is happening in online display advertising-advertisers are taking a greater interest because now they can make their ad buys much more granular, Howe says.
“Retailers are hearing about targeting and trying something simple. They message to people who’ve shopped their sites but didn’t buy anything,” he says. “Then they’re doing messaging to people shopping specific product categories they carry.”
Ad agencies working with DRIVEpm have reported about 10% of their clients want ad targeting, Howe adds, but the agencies predict within five years virtually all online display ads will be targeted.
Online jewelry auction site Bidz.com decided to try targeting for its Red Velvet online display ad campaign it ran November through January. The e-retailer, which spends 6% of its marketing budget on online display, tasked ad network Casale Media Inc. to target by geography, demographics, page content and behavior.
In behavioral targeting, for example, when an Internet user went to Bidz.com but did not register to become a bidder, Casale displayed different Red Velvet ads to that user as she visited sites in the ad network during the next 30 days. The network is able to follow Internet users through cookies-which keep information anonymous-it places on users’ computers as they visit its partner sites.
“We were trying to reinforce our message. If shoppers were interested enough to browse their way to our site, we felt that a reinforcement message would be enough to convert them to customers,” says Leon Kuperman, chief technology officer and vice president of business development at Bidz.com. “The campaign did well, achieving a return on ad spend of 500% within 30 days.”
Keeping it simple
Like CyberDefender, Bidz.com chose not to incorporate Flash animation, video or other rich media presentations in its display ads. Some experts believe this is a good tactic, saying many consumers are growing weary of disruptive or invasive ads. E-retailers should be cautious about making their ads distracting, says John McAteer, retail industry director at Google Inc.
“Smart publisher sites are starting to move away from disruptive and intrusive advertising such as pop-ups, fly-overs and other ads that are really annoying to consumers,” McAteer says. “They’re opting instead to focus on ads that give the consumer more control. For example, video within an ad that the customer can choose to start or not.”
This is the line of thinking behind online display ad campaigns run by web-only retailer Zappos.com Inc.
“We do little or no intrusive Flash banners because they do not contribute to the customer experience,” says Brian Kalma, director of creative services and brand marketing at Zappos.com. “Display ads are about ensuring we’re there, in front of the consumer, communicating our message simply.”
In its most recent ad campaign, Zappos.com did include video but ensured it was non-intrusive. Many video ads begin playing the moment they are displayed on a site. Zappos.com’s video ad featured a Play icon on the opening frame of the video that allowed Internet users to choose whether to play the video. The campaign, dubbed “Put a Little Zappos in Your Day,” ran in April and May.
The e-retailer chose to incorporate video after testing different ads on the 50 sites it chose for the campaign. The sites were selected in large part because they appealed to women, the desired demographic.
This general type of targeting was handled by its media strategy and buying agency, Gotham Direct, which purchases consumer research from firms such as The Nielsen Co. and Mediamark Research Inc. Gotham also opted to run the ads on the Yahoo Network and AOL’s Platform-A ad networks for broader reach. The tests showed that a banner ad received only a 0.3% click-through rate while 5% of visitors clicked on the video version.
While the inclusion of video within an ad might seem significantly more complex than a static or Flash animation banner ad, Zappos.com found no technical hurdles. The video resides with the rest of the creative at its ad-serving company, Microsoft’s Atlas, which can serve up video as easily as it can serve up Flash, Kalma says.
“The only real challenge with video is determining whether or not a publisher’s site accepts video ads-which the agency can do-and if so, if they have a 30-second or 15-second time limit,” he adds. “In some instances, we had to pare down our 30-second video to 15 seconds. It was a challenge because we couldn’t tell the whole story we designed. What we did was eliminate the first 15 seconds, which included interactions between customers and deliverymen, and kept the key final 15 seconds, where customers are presented with a Zappos package, open it, and all this animation of psychedelic craziness comes out. The message was all about the joy of getting a package from Zappos.”
Kalma declines to provide specific numbers but says the results of the online display ad campaign were good.
Online display, however, has a significant rival for marketing dollars. In online advertising it’s paid search, not display, that sends the greatest number of consumers to e-commerce sites. Since the dawn of e-retailing, Internet retailers have found greater success with paid search and have spent accordingly.
Last year, for example, companies generally spent more on paid search than display-and often a good deal more, according to JupiterResearch. Apparel retailers and consumer brand manufacturers spent $335 million on search and $244 million on display; in games, toys and sporting goods, $319 million on search and $93 million on display; and in computer hardware and software, $871 million on search and $216 million on display.