The Upcoming Collision Between SEM And Display

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Synopsis — Search Engine Marketers (SEMs) are finally and wholeheartedly embracing display advertising. According to David Rodnitzky, for the first time in history, display advertising has adapted to the needs of the SEM world by being quantifiable, easily accessible and less expensive to test.This article explains the current state of display advertising, how you as a search engine marketer can use display to your advantage, and how display advertising will further change in the next few years.

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The Upcoming Collision Between SEM And Display

Ancient Mayan astrologists predicted that 2012 will be the year of the apocalypse. What better evidence than the rapid embrace of display advertising by search engine marketers (SEMs)? After all, many SEMs gravitated to paid search specifically because they despised the unaccountability of brand-focused display ads. If the search engine marketing (SEM) world is suddenly excited about display, surely this is an end-of-the-world-as-we-know-it scenario?

Well, actually, no. In truth, SEMs are interested in display because display had changed to their liking. For the first time in history, display advertising is quantifiable, easily accessible, less expensive to test and — in some cases — more ROI-positive than SEM. Thanks to innovative technology companies like ad exchanges, demand side platforms (DSPs), and creative optimizers, the world of display is no longer the domain of creative geniuses and Madison Avenue media buyers.

This article explains the current state of display advertising, how you as a search engine marketer can use display to your advantage, and how display advertising will further change in the next few years.

A Quick Clarification: Display Versus The Google Display Network

Most SEMs are already buying display ads through Google’s Display Network (GDN), formerly called the Google Content Network (GCN). Any website participating in Google’s AdSense program (one that lets Google sell ads on your site) is part of GDN, including Google properties like Gmail and YouTube. GDN offers many tools to help you buy display ads across the Internet, and one is able to:

  • Geotarget
  • Day-part and week-part
  • Retarget visitors to your site
  • Bid on specific URLs and sub-URLs
  • Target users based on their behavior
  • Target articles that are semantically relevant to keywords
  • Serve text, display, or even video ads
  • Bid on a CPC (per click) or CPM (per thousand impressions) basis

Most display ad buying that takes place online, however, takes place outside of GDN. This is generally done in one of two ways — through direct negotiation with websites or through ad exchanges. Ad exchanges have several pieces of functionality that GDN currently does not, including the ability to:

  • Establish a separate bid for every impression you buy, in real-time. This is a more granular approach to bidding than GDN, and can help savvy advertisers increase ROI;
  • Use first-party data to target “lookalikes”. You can take the profile of people who bought items on your website, and bid on ad inventory only when people who “look like” your customers are going to see the ad;
  • Easily use rich-media ad formats, like expandable units and interactive ads.

The Old Days Of Display — Big Budgets And A Team Of Experts

If you tried to buy display ads five or six years ago, you likely had a very disappointing experience. And by disappointing, I mean expensive, time-consuming, and ROI-negative. In the past, several major hurdles prevented SEMs from creating successful display campaigns.

For starters, to identify the right sites on which to advertise (in terms of demographics or psychographics), you needed to subscribe to an expensive audience measurement tool like comScore or Nielsen//NetRatings (usually about $30,000 a year). Once you identified the right websites for your business, you had to place calls to negotiate with web publishers. A large campaign might require negotiating 10 or 20 separate contracts.

Then, one had to know the lexicon of media buying (things like “impression caps,” “frequency,” “out clauses”) to avoid losing your shirt on these deals. You also needed to buy ad serving software (a few thousand dollars a month), and hire expensive graphic designers to put together awesome ads. Oh, and did I mention that most publishers required a minimum test budget of $10,000 or more? Testing out 10 websites might have cost you $100,000.

Add all of this up — the time, technology, knowledge, budget, internal resources — and it’s easy to see why display media buying was not a big priority for the vast majority of online advertisers. And SEMs — accustomed to the simplicity of text ads and the Google user interface — understandably wanted nothing to do with display.

Technology Democratizes Display

Today, almost all of the hurdles preventing an SEM from buying display advertising have been removed. Let’s tackle each of these individually.

1. Measuring the audience — Market research on potential media placements is now free, thanks to tools like Google’s Ad Planner, Quantcast, and Compete.com. In a matter of minutes, you can collect thousands of rows of data about large and small websites that might be good places for you to target.

2. Negotiating to buy — Companies like DoubleClick and Right Media, which pioneered the notion of an ad exchange, have removed the need to negotiate directly. Today, websites place unsold inventory up for auction on a system like the DoubleClick Ad Exchange. When the seller serves up a page on their website with excess ad space, this inventory is instantly made available to buyers with seats on the exchange (much like a stock broker on the New York Stock Exchange). Each buyer has 120 milliseconds to decide whether they want to bid on remnant ad space, with the highest bidder winning. For an advertiser, this means access to inventory from tens of thousands of websites at once, and no need to ever pick up the phone to try to negotiate.

3. Learning the language — Ad exchanges eliminate the need to be fluent in display contracts. Everything is transparent and standardized.

4. Buying ad serving software — Buying ad serving software is now unnecessary. New technology companies called Demand Side Platforms (DSPs) make it easy for display novices to buy inventory on ad exchanges. DSPs integrate with the ad exchanges and build proprietary “real time bidding” (RTB) algorithms designed to instantly evaluate every piece of inventory up for bid on the exchanges. As a buyer, you can tell a DSP what your cost-per-acquisition (CPA) objectives are, and the DSP’s algorithm will attempt to bid the exact amount on the exact inventory to meet your goals (similar to what Google’s Display Campaign Optimizer, or DCO, does on the Google Display Network). The DSPs can also handle your ad serving.

5. Hiring graphic designers — If you’re worried that you don’t have the talent to build great display ads, creative optimization companies now exist to help you make impressive display ads. Companies like 4Mads, AdReady, TellApart, and Criteo make it easy for any advertiser to run great converting banner ads for their business.

6. Running test campaigns — Perhaps best of all, the cost of testing display advertising has dropped precipitously. Many companies will run test campaigns for you across thousands of web publishers for $500 or less. Some of the more affordable creative optimization companies can help for as little as $150.

The Future Of Display Looks Bright For SEMs; Less So For Technology Innovators

The really good news for SEMs is that display is certain to get easier and more quantifiable. The reason can be summarized in one word — Google. Google is on a mission to become the dominant player in display advertising, using their incredible engineering resources to build tools and technology to eventually make buying display advertising a snap for SEMs.

Over the past few years, Google made several important acquisitions designed to democratize display advertising — the DoubleClick Ad Exchange, the DSP Invite Media, and the creative optimization platform Teracent. These three tools, in addition to GDN, will likely morph into one giant display media buying machine that will collectively allow SEMs to:

  • Access GDN or ad exchange inventory from one platform;
  • Bid on a CPC or CPM basis, at a much more granular level than currently offered by GDN;
  • Create interactive and dynamic display ads with little-to-no in-house creative expertise;
  • Leverage conversion data on your own site to predictively buy ads against potential new customers who mimic your customer behavior or demographics.

In short, Google will make it a no-brainer to use their suite of free tools to expand both the reach and ROI of your display ad buys. Ironically, many technology pioneers that ushered in this new era of display advertising may not benefit from the growth of the space. As Google disrupts the marketplace with efficient and free technology, it’s hard to imagine a future where multiple DSPs and creative optimization companies will be able to compete against Google’s no-cost, integrated system. At best, perhaps one player in each space will survive to be the anti-Google choice.

For marketers, however, there’s no doubt that display advertising will play a big role in our future. Whether Google or other technology companies clear the path, our world-view will no longer be limited to text ads on search results. I personally believe this is good for SEMs and good for display advertising. As SEMs apply quantitative rigor to display buying, SEM budgets will grow, and display advertising will become more targeted and efficient. Let the display revolution begin!

About the Author

David Rodnitzky is CEO of PPC Associates, a leading SEM agency based in Silicon Valley. PPC Associates provides search, social, and display advertising management to growing, savvy companies. To learn more, visit ppcassociates.com, or contact David at david@ppcassociates.com.

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