Out with banner ads, in with performance-targetting ads

By Edwin Yapp May 27, 2014

Banner ads a thing of the past; performance retargetting ads the way to go
Brands more effective in profiling their audiences with customised messaging

Out with banner ads, in with performance-targetting ads SINCE the advent of the Web in the 1990s, banner ads have been the most common method used by marketers and their companies to promote their products and services.

After all this time, banner ads are still in use today as one of the primary ways to target audiences with products and services, but their effectiveness has long been suspect, argues digital performance display advertising agency Criteo.

Speaking to Digital News Asia (DNA), Yuko Saito (pic), South-East Asia managing director of the Paris-based company, says that close to 100% of users leave an e-commerce website without buying anything.

“Some 97.5% of customers visit e-commerce websites and they don't complete and convert, leaving the site without buying, according to the E-commerce and Distance Selling Federation (Fevad),” she says.

“This is why there is a need for performance display – technology that uses real-time data analytics and predictive algorithms – to serve relevant personalised ads to customers [rather than using banner ads],” she adds.

Founded in 2005 by Jean-Baptiste Rudelle, Franck le Ouay and Romain Niccoli, Criteo uses its proprietary predictive software algorithms to help e-commerce companies understand behaviour and interests gleaned from huge amounts of data collected on its clients’ web platforms – all of which the company claims are designed to help them better engage their audiences.

Criteo boasts of operating in 16 offices worldwide and counts as its clients such names as Dell, Marks and Spencer, Rakuten Travel, Expedia, BMW, and British Airways, to name a few.

Saito notes that many e-commerce websites struggle to keep their audience’s attention as typical users normally multitask when surfing the Web.

“With e-commerce, users may be doing a lot of things when browsing an e-commerce site,” she explains.

"They may have five to six browser windows open, and could be easily distracted,” she says, adding that this could be why mundane banner ads, which do not have relevance, fail to attract users.

Besides this challenge, Saito believes that while e-commerce websites are generally very user-friendly, retailers on these sites struggle to gain loyalty from consumers.

“A typical consumer would browse five to six other sites to find a better product for the same price, or a different product for a lower price,” she says, adding this is the nature of e-commerce today.

Economy of one

According to Saito, this is where performance display marketing comes into play as it is able to provide real-time data analysis, coupled with predictive technology to serve personalised ads that target each and every consumer.

By using such technology, Saito claims the right ad will be served to the right user at the right time.

“Using a platform such as ours, we will be able to collect data from our clients’ websites via proprietary trackers, which are then fed into our analytics engine to be analysed.

“Upon deriving that, our engine will find out what makes a customer unique, and display the best creatives and visual [ads] to the user in real time, which will then result in bringing more users to our clients’ website,” she says.

Saito says that in the United States, the typical click-through-rate (CTR) for companies not using performance displays stood roughly at 0.10%. CTR is a measure of how often users see an ad and ends up clicking it.

“The [average] CTR for clients’ of Criteo in America is 0.51%, and our client retention rate can be as high as 90%” Saito claims.

The future

According to executives familiar with the digital advertising industry, the performance ad targeting business is an area that would flourish assuming that companies in this business have the right technology to make ads relevant.

Jitender Miglani, an analyst with Forrester Research, told DNA that digital ad engagement is all about relevancy and that if the ads are relevant to customers, they will click them.

“Most people don't engage with banner ads because they don't find them relevant,” he says.

“However, if relevant banner ads are presented to them after observing their web browsing behaviour or shopping behaviour, the CTRs can increase because ads are presented after knowing the customer context.

“So, re-targeting and re-marketing sites can be effective because they understand the customer context and then present them with the relevant ads,” Jitender says.

Out with banner ads, in with performance-targetting ads Queried as to whether Criteo’s estimation that up to 98% of people do not engage with regular banner ads, Jagdish Singh (pic), a senior marketing communication executive with a multinational company, says this is likely true.

Speaking to DNA via email, Jagdish says CTRs could be as low as 0.xx% to an average of 2% to 3% or as high as 4% to 5%.

He noted that the low CTR rates do not imply that people aren’t interested, but it’s just that this means companies may be targeting the wrong people or have no targeting at all – or that a company’s visual/ copy/ call-to-action isn't attractive.

Jagdish believes that there is a trend today that’s seeing a huge shift towards buying audiences instead of buying platforms.

“Brands used to buy online ads by platform – The Star, ESPN, MSN, Yahoo, etc – places where they thought their target audience spend time,” he says.

“With the advancement of analytics and technologies such as audience profiling through next-gen cookies, retargetting and real-time bidding, brands are now profiling their audiences and following them across the Web with customised messaging,”

This, Jagdish says, is a big step forward as you can now serve different messages to a person based on his behaviour on your website.

Asked how big the potential of such a business was, Jagdish says the opportunity is huge and such re-targeting companies and what they can do is the future of performance marketing.

“We are now buying outcomes, not impressions or views,” he explains. “Brands are talking about cost per lead and cost per acquisition, and are willing to pay for performance.”

Xiaofeng Wang, analyst with Forrester Research concurs, noting that marketers in Asia Pacific are becoming more aware of the effectiveness of their marketing spending.

The big challenge, he says, is for companies to connect their marketing efforts to actual business outcomes, especially when they have to handle more channels than ever – including new media channels such as mobile and social.

“As marketers ask for better targeting ability, retargeting and remarketing agencies and technology vendors would become more and more important to them,” says Wang.

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