As most marketers know, digital advertising is no longer a secondary channel in the chief marketing officer's arsenal. Once a bastion of simple banner flipping and annoying pop-up ads, display advertising is rapidly overtaking traditional media as the preferred channel to drive targeted awareness and the customer pipeline.
Innovations in rich-media creative, integrated video advertising, and in-app mobile ads are enabling a level of production quality and user engagement formerly not achievable until now.
Yet with all the advancements in digital formats and devices, the dramatic shift to digital advertising is more likely a function of data—the explosion of anonymous online databases categorizing individual Web users based on their demographic attributes, surfing and purchase behavior, and content preferences.
When the data is synthesized, faceless Internet visitors become categorized into well-described market segments that can be targeted on an impression-by-impression basis.
The data segments elicit questions such as the following (for example): Does a time-share marketer such as Marriott achieve better results by placing media on travel-centric websites or by advertising on a broad set of websites, where it can limit showing its ads to visitors profiled as "affluent" or "frequent travelers"?
With that debate in mind, AdJuggler ran a controlled test* during the summer of 2010 to understand the incremental yield to advertisers—if any—of the type of content users are reading when the ad is shown.
We then assessed how yield improves by targeting ads to certain audiences (in this case, user data highlighting a user's demographics, financial affluence, and credit and purchase history). The analysis was based on 872 million digital-display impressions across more than 6,000 advertising campaigns.
The analysis demonstrates several important insights for marketers:
1. Different advertiser segments achieve different yields. Although the digital-media industry expects an average click-through rate (CTR) of 0.1%, actual CTR by advertiser segment varies significantly. To judge campaign and provider performance, marketers should know the baseline CTR for their segment.
2. Different websites achieve different yields for advertisers. Likewise, news, sports, and other "publisher channels" produce different CTRs for advertisers. When placing media, understand how different websites perform based on aggregated or original content, channel, ad format, and ad position.
3. Content matters—mostly for considered purchases. Placing ads on websites with related content appears to matter—sometimes. The analysis suggests that advertising products and services with higher prices or more-sophisticated propositions perform better on websites with related content. The relationship is less relevant for offerings requiring less research and consideration.
4. Audience targeting produces significant yield improvement. If you or your agency is not considering certain audience-based media purchases, start now. In an example analysis of automobile advertising, we found that certain user demographics and financial attributes are highly predictive of CTR, and the best-performing audience segments improved campaign yield by 50% to 300%.
Leading marketers are embracing digital advertising across display, search, video, mobile, and social channels. They are not only building better marketing content and more-engaging digital creative but also working to better understand where to find their digital audience and the attributes of those segments that drive better brand impact and customer response.
Instead of allocating media in bulk to a few related websites, the boom in digital-data assets enables marketers to show advertising based on the profiles of users who show up.
For marketers to truly exploit that innovation, they must invest in greater digital-advertising expertise, work with providers that really understand audience targeting, and continually test and refine the audience segments that drive superior results.
*AdJuggler's whitepaper titled Finding Your Audience presents the result of the study that sought to understand the incremental yield of digital-audience targeting on online-marketing ROI.