How to improve the effectiveness and ROI of display advertising

Last week, I was searching for a hotel for my trip to Hong Kong. I was randomly surfing the web doing some research on the hotels and visited some of the travel portals but could not find any great offers. As the trip was still not due for another two weeks, I left my search for later.

Over the next few days, however, I found a lot of Hong Kong hotel offers from leading hotel providers and online travel agents appearing on ads when I was reading the news or randomly web surfing. Pleasantly surprised, I clicked on a couple of offers, zeroed in on one and confirmed my booking.

I’m sure many of you have noticed this similar phenomenon.

Display advertising has become extremely sophisticated - it can be precisely targeted and equally performance driven, if not more. The display ad ecosystem has been completely transformed over the last 12 to 18 months.

A quick look at the facts to put things into context. Referring to charts 1 & 2, the following observations are noted:

Display spends are projected to grow at over 20 percent for next 3 years to US$ 35 bn (ZenithOptimedia worldwide statistics and projections)

Display Ad share is expected to grow from 35 percent in 2011 to 41 percent in 2013 (Wall Street research 2010)

Converting the Online Consumer and Data Driven Audience Targeting

Consumers are savvy and are highly discerning about purchasing decision, and conversion of the online shopper to customer remains a key challenge for any marketer. The only way advertisers can navigate this complexity would be to create Data-Driven audience segments that leverages on not only users profile but also on User Interests and Behavior.

Data-driven audience targeting leverages on simple observations of audience behavior such as –

1. User registrations
2. Ad views and Clicks
3. Actual Searches
4. Price comparison platforms
5. Real Transactions
6. Type of publishers visited
7. Other online behavior

More importantly, all these attributes are available on a single platform (much like a unified system) that allows advertiser to create relevant audience segments. Imagine an integrated audience platform that is collecting all this audience behavior data from multiple sources such as website owners, affiliated sites, client’s own user data and other third  party data exchanges.

How does audience-targeting work for advertisers

Audience targeting, as the name suggests, is about identification of segments of best customers for a specific ad or a campaign that can be used to effectively reach sales, acquisition and branding goals.

To outline a few examples –

1. Potential Travelers to Singapore could be defined as consumers who have done a Flight or Hotel search to Singapore, have clicked on Singapore related travel offers or have visited Singapore related pages on Travel publishers.

2. Stock Traders could be defined as consumers who actively follow financial news and services websites, track specific stocks and visit a major financial or brokerage site.

Once the audience segment is defined and identified, one could reach them through any ad network that’s connected to audience platforms. All prominent Ad Networks and Exchanges are now integrated with audience platforms and that’s what makes this a potent combination.

This means that one can reach out to these audience segments whenever and wherever they surface in the network. In the above example, one could connect with the ‘Potential Singaporean Traveler’ on a news channel of a publisher rather than a Travel Portal that may charge a premium CPM for the same audience.

Search re-targeting and Site re-targeting

Search re-targeting and Site re-targeting are the new tools available to Advertisers that work on the principles of Audience targeting.

Search re-targeting allows advertisers to reach out to prospects that made a relevant search in product category but never made it to the advertiser’s website. The search could be made from any general search engine, Meta-search or a price-comparison platform. The users are identified with a cookie and as soon as they appear back on any website in the network, they will be served with a relevant offer or ad from the advertiser.

Site re-targeting follows the similar process but the prospects are identified as visitors to advertiser’s website who left without taking the desired action. This works great because a large proportion of users often do not make the purchase (or any other desired action) in a single visit to the advertiser’s website.

What makes this even more potent is that advertisers can customize the ad message based on actual user actions. A user who has searched for Hotel in Singapore can be served relevant offers vs. being shown a generic brand message. Similarly, the user who has already made the search and went on to fill the guest details of the Hotel booking but never completed the transaction can be served the same offer as a reminder message to complete the purchase.

Results and differences to ROI

Data driven audience targeting can make enormous differences to the productivity of the display advertising spends. We have noticed dramatic improvements in the entire path to purchase. Besides CTRs, the improvements can be seen in lower bounce rates, higher engagement of site visitors and better conversion rates which lead to lower customer acquisition costs.

This is great news for the entire display ecosystem because of improved buying efficiency which would lead to better yields for publishers / networks. More importantly, audience targeting could deliver superior customer experience, which will go a long way in building brand equity. Data-driven audience targeting is the future of display advertising.