October 13, 2009 (CAP Newswire) – Things change often and quickly on the Internet. That's just the way it is: Old models are replaced by the new at a sometimes dizzying rate. But it’s still a bit of an eye-opener to realize that display ads, once the relative backbone of online marketing, seem to be just a shadow of their past glory. If the whole concept of CTRs is changing, what does that mean for online advertising? 

As Duane Kuroda writes in the online marketing publication ReveNews, “the typical MO is to run as many CPC programs that you can afford or manage to create a baseline … but what happens when … the historical performance levels of display ads starts to fall?”

Kuroda refers to the recent ComScore report stating that the number of online consumers in the U.S. who clicked on display ads has plummeted by 50 percent over the past two years. That’s going back slightly before the current economic crisis, so one can’t really blame the current recession.

So what does explain this rapidly diminishing market? The overall numbers of Internet commerce haven’t dropped off that sharply, so that means that the market isn’t gone, it’s just utilizing the Internet in different ways. “While CTR is a standard measure in the online advertising business,” Kuroda continues, “these new figures suggest that focusing on click through optimization may be an incomplete or insufficient strategy. … What about the other 84% of the audience not engaging with display ads?”

“What does it mean for advertisers? … Do display ads, or any ad impressions based advertising, really matter?”

Kuroda reasons that Internet users are more and more often going directly to the sites they want, whether by typing in the URL or using a search engine, and basically ignoring display ads. (And let's face it, most of us either tune out ads, or block them from our browsers altogether.)

Still, it’s too early to say that display ads are dead. But it does signal a change in the way online advertising should be conducted, and measured. In the new, modern age, consumers simply don’t seem to be connecting with display ads.

To read Duane Kuroda’s original article at ReveNews, click here.

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