After a tough year in 2009, online display advertising is on the rise once again. Figures from the IAB/PWC for the first half of 2010 show 6.4% growth on the same period last year, and online display advertising now accounts for 19% of all online ad spend.  And emarketer predicts a rosy future for the medium, with growth forecast for every year all the way through to 2014.

So what’s behind this recent growth and the encouraging forecasts? 

Firstly, as more and more media is consumed online, advertisers are waking up to the fact that online advertising is a great branding medium.  It is estimated that 30-40% of online advertising spend in the UK is for brand building and it’s not hard to see why. Online display allows advertisers to engage and interact with their target audience in way that is difficult in traditional media or via other online channels such as search.  And research has shown that good online advertising is effective in building awareness and influencing brand preference and purchase intent.

But online advertising is beginning to prove it can deliver on ROI  criteria too as data driven techniques, such as re-targeting, prove to be highly effective in increasing conversion. In fact, if used properly, re-targeting has the potential to make online advertising even more effective than search.

Re-targeting allows advertisers to use data from a visit to their website gathered via a cookie – for example pages visited, products selected or products purchased - to target advertising propositions on sites that are part of the ad network’s inventory (see diagram below). And the data used to inform these propositions can be gathered over multiple visits and extended time frames, so that the final ad can be completely bespoke to the consumers purchase behaviour.

Search allows a highly targeted ad to be served based on someone’s stated preference but re-targeting allows it so be served based on actual behaviour on your website. Hence, online advertising has the potential to offer even more bespoke offerings for the consumer, but in a highly visual, branded and engaging way.

The key to effective re-targeting is how this data is used.  The media is already starting to report consumers noticing themselves being ‘followed’ around the internet by abandoned shopping basket items. The less creative the approach by advertisers, the more likely a consumer backlash will result, despite the fact the data gathered for this form of advertising is completely anonymous.

However, if advertisers use a more creative approach, and allow costumers to opt out of the process if they so desire, it will help make the the internet a more helpful place as the advertising becomes increasingly relevant.  For example, instead of serving up an ad of a handbag that a customer put in their basket but decided not to buy, a retailer could promote a similar handbag at a lower price point or even use this data to re-target the user with a more generic sale message. Or perhaps a customer that had brought a new dress could be served ads that promoted complimentary items, like a matching handbag and shoes. Customer reactions, or lack of reaction, to these ads just helps build a more complete picture of their preferences. 

Used the right way, re-targeting can be a highly effective medium for premium and luxury brands. It’s highly targeted, relevant and premium in it’s look and feel, all attractive characteristics for brands looking to avoid wastage and carefully protect their image and bespoke nature.

And if used properly, as with other forms of online display, it has the ability to inspire new purchase – to ‘create’ demand where it didn’t exist before, driving new customers into the purchase funnel. And that fills a void that search is ill equipped to fill.

By: Carla Burgess

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