Digital Media Summary Readings
Lecture 1
HBS: 2.1.2 Display Ads
Display Ads
Search Ads:
• Designed for immediate action or sale
• Industry: A few top search engine companies dominate the landscape
Display Ads:
• Goal: Immediate action/sale
• Goal: Increase brand awareness
• Can appear on a website that the brand may consider relevant for its target audience
• Industry: Fragmented industry comprising many different players in a variety of roles
along the value chain.
Display ads come in various formats:
• Banner ads: Appear at the top of a web page
• Interstitial ads: Appear as full web pages before users are directed to the original page
they requested. Capture greater attention, but likely to be more intrusive to users
• Expendable banner ads: Automatically expand to a large portion of user screen. Size and
impact: between banner and interstitial ads.
• Overlay: Similar to interstitial ads, but transparent background so user can still see
original web page
• Rich media: Ads include interactive components
such as video, audio, or hyperlinks to click
• 360-degree ads: Specifically designed for mobile
phones and provide 360 degree view to the user
as she moves her phone around
Process in following Exhibit – from the marketer
(left) to the people consuming the ad (right) – starts
with the advertisers who wish to buy digital space for
ads. It ends with an ad that is displayed by the content
publisher and ultimately reaches consumers.
Large companies: Hire agencies to help manage
campaign and purchasing processes
Small companies: Use online tools available through Google Ads and similar services
Content publishers sell space to advertisers on their websites. Large online publishers (New
York Times) to small website or personal blogs do this. Reach rite depends on factors such as
traffic, prestige, demographics of customers.
Exhibit 11 also highlights two types of intermediaries that connect advertisers (buyers) with
publishers (suppliers): ad networks and exchanges.
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,Ad networks (AdSense by Google): Aggregate supply of advertising space from a variety of
publishers and match it with the advertiser’s demand. In addition to buying and selling ad
space, ad networks help develop proprietary algorithms to help their clients optimally place
ads on various websites.
Ad exchanges (Rubicon): Automate
the matching between advertisers and
publishers, often called programmatic
buying, which uses real-time bidding
(RTB) process. Ad exchanges decide
the placement and pricing of
advertisements by using the supply and
demands of the ads.
There are several demand-side
platforms (DSPs) and supply-side platforms (SSPs) that act as brokers connecting various
players in this complex landscape.
DSPs: Work as buyers’ brokers, helping buyers (such as ad agencies) managed ad inventory
across multiple exchanges and networks through one interface
SSPs: Are the connection between ad networks and publishers. SSPs are the content
suppliers’ or publishers’ brokers, and they help publishers get the best prices for their ad
space inventory from various buyers.
Data Management Platform (DMP)
There are also many data management platforms (DMPs), which collect, interpret, and sell
customer browsing and other information that may help advertisers more effectively target
their ads. These, along with specialists in areas such as privacy, tag management, and
analytics, round out the roles in this sprawling landscape.
A data management platform (DMP) collects, organizes, and activates first-, second-, and
third-party audience data from various online, offline, and mobile sources. It then uses that
data to build detailed customer profiles that drive targeted advertising and personalization
initiatives.
Assessing the Effectiveness of Display Ads
Display ads can be bought in two ways, depending on their goal:
1. On the basis of impressions – commonly using the CPM (Cots-per-Mille: cost per
thousand impressions) metric. Every time a consumer sees a display ad, company incurs a
cost, whether or not consumer clicks through.
- Advertiser may choose CPM pricing if its goal is to build brand awareness or image.
2. Pricing system based on clicks – running a direct-response campaign.
- Advertiser with goal of maximizing clicks and conversion rates.
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, Research company Millward Brown used test-control methodology to measure impact of
display ads on brand metrics such as brand awareness, favourability, and purchase intent. The
researchers found significant impact of display ads on brand measures. Another study by
Internet Advertising Bureau (IAB) found that display ads increased unaided brand awareness
up to 12%, improved brand perceptions by 2%, and increased purchase intentions by 3%.
If goal of display ads is to generate clicks and conversion, their effectiveness can be
measured using the same metrics used for search ads, such as CTR and conversion rate.
Profitability of display ads that are priced as cost per thousand impressions (CPM) can be
calculated as follows:
CPM display ad profit = Impressions x [(click-through rate x conversion rate x margin) -
cost per thousand impressions or CPM / 1000]
CPC display ad profit = Impressions x click-through rate x [(conversion rate x margin) – cost
per click]
Improving Effectiveness of Display Ads
• Companies often use contextual ads – ads that match the website topic – to improve a
display ad’s effectiveness. Attract target customer and also useful info to consumer.
• Highly visible ad: pop-up or auto-play. Although consumers find them annoying, high-
visibility media are effective in grabbing consumer attention. However, they do not
contribute incrementally toward ad effectiveness if an ad is already contextual.
• Retargeting ads: Display ads shown to consumers who have previously visited a
company’s website (play cookie, ad appears when Googling something else). Retargeting
works best when the consumer is actively searching in the product category.
Overenthusiastic retargeting ads can be perceived as stalking and create adverse feelings
toward the brand.
• Morphing display ads: These display ads vary for different individuals vising the same
web page. They are algorithmically selected from a portfolio of potential ads on the basis
of known consumer attributes (e.g., websites visited and demographics).
- Matching display ads to inferred cognitive style (how person processes info) based
on which pages people chose to look at, almost doubled click-through rates.
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