Bright Ideas in Digital Advertising

Digital advertising revenue in the U.S. reached $15 billion in Q3 2015, making it the single highest quarter on record according to the Interactive Advertising Bureau (IAB) - a 23 percent increase compared to Q3 2014.

Supported by powerful technologies and some rather bright ideas, the advertising industry is strong, and is providing enterprises a better opportunity to improve performance and generate revenue than ever before. Digital advertising is not without its challenges, of course.

Promoting an enterprise and its products and services by advertising on the 'Net requires more than just deep pockets. Today, a blend of technical savvy, industry expertise, an eye for compelling creative and a vast amount of channel-specific knowledge is also essential.

What's more, when enterprises fully understand and actively leverage the available advertising opportunities and address the challenges, they are in the best position to chart a positive course for their business.

In the feature article of Website Magazine this month, explore what is making digital advertising an essential business process and discover some bright ideas (and resources) along the way to accelerate the success of any enterprise, product and service.

The Programmatic Norm in Advertising

As digital advertisers are being held to increasingly higher standards of measurement and accountability, programmatic is capturing the attention of the industry.

Programmatic buying refers to the use of software to purchase digital advertising, as opposed to more traditional processes that include requests for proposals, negotiations and insertion orders (not to mention all the necessary tracking and reporting). Essentially, programmatic means we're using machines, and not people, to buy ads.

Interest in the practice among today's advertisers has reached fever pitch. According to AdRoll's research, 87 percent of marketers are seeing greater return through programmatic advertising compared to traditional media buying. As a result of that positive return on investment (ROI), 32 percent of marketers spent more than 50 percent of their budgets on programmatic in 2015 (see more stats from AdRoll's study at wsm.co/prog411).

Programmatic is quickly becoming the primary way advertising is bought and technology solution providers are doing everything they can to capitalize on the interest and future investment from advertisers. Programmatic advertising technology company, OpenX, for example, just launched Real-Time Guaranteed (RTG), a solution to enable direct, guaranteed deals executed over programmatic technology complete with audience syncing and forecasting.

The RTG offering essentially combines the business terms of direct-sold deals with the benefits of real-time bidding technology, giving publishers the certainty of guaranteed demand and advertisers priority access to premium inventory through a programmatic channel. This will enable publishers (who have been kept pretty much out of the loop in programmatic) to secure guaranteed volume commitments and introduce a new revenue stream for their premium inventory.

Engaging in programmatic buys can be challenging, of course, but the more that is understood about how it works, the better off advertisers will be.

+ BRIGHT IDEA: Discover how programmatic really works and find out who the key ad tech players are in the digital landscape.

The Rise of Native Ads

Native advertising refers to a form of paid media where the advertising experience is in line with the existing form and function of the user experience in which it is placed. Native ads essentially match the visual design (the form) of the experience they are placed within and look and feel like any other content, behaving in a way that is consistent with the user experience (the function). They come in a variety of formats including in-feed ads, search and promoted listings, content recommendation widgets and even custom content units. Just like programmatic, interest in native ads has exploded of late and advertisers and publishers are becoming increasingly aware of the potential. And as one would expect, plenty of companies are positioning themselves to capitalize on the trend.

Nearly every social platform and publishing outlet has some form of native ad offering today - from Twitter to the Wall Street Journal - and are leveraging technology from well-known names to capitalize on native.

Yahoo, for example, recently announced that advertisers can now access native inventory from app publishers on its BrightRoll Exchange. Advertisers will still be able to buy native ad inventory on Yahoo-owned and operated sites via Yahoo Gemini and Gemini ad tech partners but Yahoo's (and others) expansion into the mobile realm proves the opportunity's efficacy. BrightRoll Exchange essentially provides additional sources for native inventory on apps that use Yahoo App Publishing for ad monetization.

Cheetah Mobile, Pinger and WeatherBug are among those using Yahoo App Publishing and Yahoo revealed that more than 100 demand-side platforms (DSPs) are integrated with BrightRoll Exchange. The reason there is so much interest in native advertising is because it works - and works very well in fact. For example, 25 percent more consumers were measured to look at in-feed, native ad placements more than standard banners.

What's more, consumers looked at native ads two percent more than editorial content and spent the same number of seconds viewing them. Native ads, of course, have their vocal detractors (the argument being they mislead users), but the practice remains effective for today's advertisers and doesn't look to disappear from the digital landscape in the foreseeable future.

+ BRIGHT IDEA: Find out what type of native content resonates most with today's consumers; check out Website Magazine's guide to native content and advertising success.

The Mobile Influence in Advertising

It's necessary for today's brands to understand that the patterns of digital consumption are changing - and in many respects, it's more mobile than ever before.

Facebook announced a $5.8-billion quarter, the majority of which is ad revenue ($5.6 billion). The company also reported that an astounding 80 percent of that ad revenue ($4.5 billion) was generated by mobile advertising, representing revenue growth of 81 percent year over year (YOY).

Mobile ad success isn't limited to Facebook in-feed offerings, of course. In fact, more than 1-in-5 consumers purchased or browsed for products online via a mobile device when holiday shopping for themselves or others, according to global information company The NPD Group. That number was double among millennial consumers, between the ages of 18 and 34.

What is becoming clear is that in order to drive measurable sales growth and long-term success, today's digital brands need to find new ways to engage shoppers by using a cohesive omnichannel and omni-present approach, while giving those users the product offerings they demand. What that requires is a greater focus on all things mobile - including advertising.

For enterprises to make the best use of their investment in mobile advertising, however, they are going to need real-time data in order to optimize their campaigns. Technology solutions are, fortunately, emerging that are making this a reality. Mobile marketing attribution analytics platform AppsFlyer, for example, recently unveiled a new real-time reporting feature that enables enterprises to track the performance of their app-install ad campaigns.

Dubbed "Right Now," the feature provides advertisers with powerful insights to optimize campaigns and monitor the impact of changes down to a per-region basis. Understanding performance at this level makes it possible to make wise decisions about campaigns moving forward.

There's simply no doubt that mobile has become part of the digital experience. The savviest advertisers, those that take an omnichannel and omni-present approach to their advertising, will be those positioned those for the greatest degree of success in the years to come.

The Social Influence of Advertising

As consumers increase their use of social platforms, advertisers are following. Brand Networks, a provider of native social advertising and content marketing, released findings recently of a study that tracked a variety of metrics related to spend and performance throughout the second half of the year on Instagram and discovered that advertisers, as expected, are flocking to the platform and driving competition (and costs) particularly in the consumer package goods, fashion and retail verticals.

CPM (cost-per 1,000 impressions) surged with Instagram's opening of its API in Aug. 2015, growing from $5.21 in Sept. 2015 to a peak of $7.20 in Nov. 2015, before coming down to $5.94 the following month. Advertisers, racing to create and deliver compelling content into the feeds of Instagram users during the holidays, also increasingly began experimenting with video ad formats - video ads as a percent of total ads served by Brand Networks increased from 9.54 percent in Sept. 2015 to 22.52 percent in Dec. 2015. Nearly every social network has some form of advertising offering - including Twitter, LinkedIn, Pinterest and others.

Advertising to social users isn't for the faint of digital heart however.

+ BRIGHT IDEA: Ensure digital advertising is effective by focusing on audience segmentation and targeting. Read Website Magazine's Accelerated Guide to Social Ad Targeting.

Start Focusing on Video Advertising

It's time for advertisers to embrace the opportunities provided by video. While the benefits are numerous, advertisers still find that is difficult to generate attention and conversions through the use of video ads. Fortunately, many best practices have emerged over the years, and revisiting them can result in positive developments for brands employing the format. Using attractive thumbnails (those which are rich in visual appeal or action), featuring in-video calls-to-action (e.g., spoken, shown as a popup, a clickable URL at the end of the video, etc.), and showcasing the most compelling content and images early on are just some of the best practices, and using them often results in lower cost per action and higher click-through and conversion rates.

Advertisers are clearly accelerating their investment in video. For some context, in Q4 2015, advertiser spending on Facebook video ad units, according to HubSpot, went up by more than 40 percent from the previous quarter. One of the challenges for today's advertising is that video is simply difficult to track and buying on a cost-per-impression basis is a fool's errand in the age of autoplay. Fortunately, technology companies are addressing this issue.

Digital video advertising platform Videology, for example, is enabling its advertisers to buy using viewability as a metric. Buyers on the platform essentially have the option to buy impressions on a viewable impression basis (vCPM), with all impressions verified as viewable by third-party vendors DoubleVerify, Integral Ad Science or Moat. What this means is that advertisers will pay only for impressions deemed viewable and at a guaranteed price. Advertisers can also choose to measure viewability based on the MRC viewability standard (at least 50 percent of the video player must be in view for at least two seconds) or the so-called extended viewability standard devised by GroupM (100 percent of the player is in view, and at least half of the ad plays with the sound on after a user clicks on it).

+ BRIGHT IDEA: Learn what tools other digital advertisers are using to create compelling video experiences for their prospects and customers.

The Return of Display Advertising

An estimate from research firm eMarketer is circulating that indicates this could be the year that display ad spend surpasses search spend in the U.S. Surprised? Join the digital crowd.

Emarketer is suggesting that display ad spend, spurred by the growth in video and native ad formats, will reach $32.17 billion in 2016 compared to $29.24 billion in search spend. You can almost hear the collective wail of search engine marketers.

The research firm says one in five dollars will go to banners and other display formats, including native social ads on sites like Facebook and Twitter, with spend reaching $13.39 billion in 2016, up from $11.57 billion in 2015. Video is expected to grow from $7.46 billion in ad spend in the U.S. last year to $9.59 billion in 2016.

Video's share of the digital ad pie will grow from 12.8 percent in 2015 to 14.3 percent in 2016, according to eMarketer. Rich media and sponsored brand ads make up the remaining formats in the display market; each are expected to see an increase in ad dollars in 2016. What the preceding should indicate is that thanks to increased targeting capabilities, improvements in personalization (throughout the customer journey) and retargeting, diversification of channels and tactics and integration of more sophisticated technologies to help advertisers optimize their spend, there has never been a better time to start advertising on the Web.

+ BRIGHT IDEA: Find out where today's most successful advertisers are running their display advertising campaigns and through what networks.

Threats to Digital Advertising

It should be clear by now that advertisers, and the myriad technologies and channels that support them, are getting better at what they do - finding opportunities to engage consumers and guide them through the brand and buying journey. Unfortunately, digital advertising is under attack and from pretty much every angle and the most significant threat comes from ad blockers.

Ad blocking has arisen chiefly because publishers, technology providers and advertisers have largely taken users for granted, as simply eyeballs, conversions or audiences ready to be tracked and harvested at will. Ad blockers are capitalizing on user frustrations including slow page load times, ad clutter, malware and privacy issues. It's being done, however, in a way that is quite destructive to the publisher-advertiser ecosystem and ultimately to consumers themselves.

While some will argue that ad blocking has not had a meaningful impact on the industry to date, other disagree. Adobe and PageFair, for example, recently asserted that more than $22 billion in global ad revenues were lost in 2015 due to ad blocking. What's more, a survey from Digital Content Next (the former Online Publishers Association) found that 33 percent of U.S. consumers were very likely or somewhat likely to try ad blocking software in the next three months. Ad blocking is just one of the many threats to digital advertising.

The vast amount of data, consumers' increasingly cross-channel behavior, online compliance and affiliate fraud, as well as other issues are severely threatening the status quo. While technologies and providers will always improve the manner in which these challenges are addressed, it's important that every advertiser understands how these issues could impact their bottom line and to what degree.

+ BRIGHT IDEA: Stay on top of new threats to digital advertising in Website Magazine's Advertising channel.

The Ad Future is Bright

There's never been a better time to engage in digital advertising. Thanks to advances in targeting and tracking, advertisers are in greater control, and the future is bright for enterprises willing to face the challenges head on and leverage the many powerful technologies available.