Performance display is having its day.

I wish I could say “finally having its day” but can’t because it’s only recently that display has emerged as a bonafide direct response channel.  By “bonafide ” I mean that on a click basis, the display ad units hit the target p&l goal.

As you’ll see below, results for display can be made better by applying some portion of view through revenue to the campaign, but unless the performance on a click basis can stand alone, then the skepticism of using display for direct response will persist.

The history of display is a winding road of evolutions – none of which amounted to much potential for direct response marketers.  There were the premium ad buys, the black hat buys (remember Gator?), the ad network buys that promised good targeting but performed mediocrely at best.  Google offered (and continues to) display in its Google Display network, but the scale isn’t there because of how time intensive it is to maintain, and even Google advises against measuring display comparably to search.  The words “branding” and “awareness” are real when applied to display, but they are irrelevant for direct marketers since they aren’t pertinent metrics.

As we enter into 2013, there are multiple factors pushing display to the forefront of direct marketer’s media plans.  Much is related to evolutions by the media providers, which have been substantial.  Others have nothing to do with that but are pushing direct marketers toward display nonetheless.  Here is a rundown of some of the big reasons why display is emerging as a growth channel for direct marketers going into 2013.

1)      Paid Search CPCs are rising:  Google and Bing’s CPCs in 4Q12 skyrocketed for both trademark and generic keywords across marketers in all verticals.  Worse, they haven’t fallen any post-Holiday, which means any more growth coming from paid search will cost a fortune.  The escalating prices have affected marketers with 100% impression share on their trademark terms as well as those with more competition.  It is probable that the investment needed to grow paid search will cost far more than it would from performance display.  This is the top reason why marketers in 2013 will be testing – and then rolling out – display.

2)      Big box retailers now use co-op funding for paid search further driving up prices:  On top of the higher prices in Google and Bing’s auctions, prices are further being driven up by retailers who can afford to pay more for paid search because they are applying co-op funds to their paid search campaigns.  Brands, specifically, are the most adversely affected; although, it is the brands themselves giving the co-op funding to their retail partners.  Unfortunately, the co-op funding comes from a different internal group than those managing paid search.   If paid search is important to a brand’s marketing plan, there needs to be some internal coordination to set some rules here.

3)      Facebook made its inventory available through the ad exchanges for retargeting: Ad exchanges have a ton of premium sites in their inventory, but Facebook was never one of them, and Facebook never offered remarketing on its site before.  Now this inventory, called Facebook Exchange, is available through most of the major ad exchanges. It performs fantastically and has both retargeting and prospecting elements.

4)      DSPs have improved technology, and the proliferation of them has driven down prices:  There are many sources for buying through the ad exchanges giving access to direct marketers to huge inventories at low prices.

5)       There are many fully managed DSP solutions available making it turnkey for marketers: If a direct marketer doesn’t know how to navigate the waters of programmatic buying for display, it is seamless to outsource the entire campaign to an agency or DSP who will manage it soup to nuts.

6)      Pixel-based dynamic remarketing eliminates the need for datafeeds:  There are DSPs who can run dynamic remarketing campaigns just by pixeling the advertiser’s site.  This negates the need for supplying a datafeed, which can be time consuming and expensive to maintain and optimize for maximum performance.  Many marketers now have container tags in place, which makes pixel implementation straightforward, easy and fast.

7)      More sophisticated tracking provides visibility to display’s impact on other channels:  When running display, it is now the rule rather than the exception to ensure performance can be read based on click as well as view-through conversion.  Taking it a step further, by applying the same tracking to all marketing programs, you can easily see the overlap across channels.  The only downside are the ad serving fees, but many feel the small tracking costs are worth it for the sophisticated attribution visibility.

8)      Advertisers acknowledge that some revenue from view-through conversions is legitimate:  Remarketing initially got off to a bad foot because some of the early leading media providers charged revenue share for all orders, not just those that were click-based.  This caused years of distrust of the “view-through conversion,” and only now are marketers starting to create business rules for not whether to – but rather – how much view-through revenue to apply.  Some take a blanket percentage (usually in the 10-30% range); whereas, others apply revenue within a window of time that is in close proximity to when the view-through conversion occurred.  Depending on how much view-through revenue is applied, a display campaign can go from good to great to fantastic.

9)      Use of display for episodic purposes is effective: With the evolutions in targeting ranging from behavioral to geo to contextual to interest-based combined with the ease of launch, the ability to use display to promote something specific such as a store opening or a semi-annual sale or an event is proven and much less expensive than it used to be.   As an agency, we are seeing lots of demand for these types of campaigns.

10)    Creative assets are not even necessary, sometimes:  While creative is hugely important to the performance of a display campaign, advertisers don’t even need to provide any assets in order to launch display campaigns that yield terrific performance.  Many of the media providers provide creative free of charge with large-enough buys, and they know what works best.  For those running dynamic creative campaigns, all that’s needed is a template, and the feed or the pixel (see #6 above) populates the ad unit to make up the entire banner.

For marketers who want to test performance display, $15,000 is the minimum amount needed in order to see if the channel holds promise.  As test plans are made and evaluated for 2013, display would be a very beneficial one to throw into the mix.