Online display advertising is suffering from heavy discounting and
'cost per click' revenue models according to online research company
Nielsen.
Whilst the online advertising industry has grown
throughout 2009 with more advertisers and advertising slots, revenue
from online display advertising has not followed suit, falling by 5%
year on year according to the
latest IAB figures.
Nielsen's
AdRelevance report released today showed that whilst the revenue has
dropped, the number of advertisers were up 41% vs the same quarter in
2008 with the number of banner ads also up 19%.
Dr Stuart
Pike, Asia Pacific Research Director for Nielsen's online division
blamed heavy discounting via 'cost per million' or 'cost per click'
revenue models. “The fact that revenues are down despite increases in
banners and advertisers suggests an increase in discounted online
advertising rates.”
The discounting seems to be driven by the
explosion in the amount of display advertising inventory, which has
been growing exponentially in the last five years (see graph)
Dr
Pike said that the discounting neglects to correctly value display advertising
as a branding mechanism. Whilst search advertising, which continues to see revenue gains, is purely about delivering traffic, online display advertising presents many more branding opportunities.
Nielsen released a report earlier this month on online
advertising effectiveness that showed up to one third of Australian
consumers were able to recall display advertising, even though click
through rates are usually under 1% according to the latest Eyeblaster benchmarks.
“Practically every online
advertising effectiveness project undertaken by Nielsen has
demonstrated the ability of the online medium to generate significant
changes in brand and purchase intention metrics, yet as an industry we
are failing to communicate this value as effectively as our
counterparts in television." said Dr Pike “The extent of metrics available to online advertisers is unique to the online medium. This often results in too much focus being placed on click-through performance, which is a simple but incomplete statistic to measure, rather than the overall performance of online ads.”
