Greg Krehbiel on Publishing and Online Marketing

From what I’ve heard, only about 18 percent of web users ever click on a display ad. But studies have clearly shown that display ads affect people’s behavior. Sometimes people see the ad and enter the URL directly. Sometimes it leads them to search on a brand-related term.

For example, a web user might see an ad for a Dell Lattitude on the side of the page and then type “Dell Lattitude” into his handy little google search box at the top of his browser. At that point he might click on an organic link or a paid link.

What advertising campaign is going to get credit for any resultant conversion? If you’re measuring by clicks, it won’t be the display ad.

Which leads us into “view-through conversions,” where the display network takes credit for some percentage of conversions based on the fact that the ad was displayed to the user some time before conversion. (The time window can vary.)

But is that fair? Maybe the person was going to convert anyway. Maybe he never even saw your ad.

Another option is re-marketing, where a visitor comes to your site, gets a cookie, then goes out into the world and sees ads to draw them back to your site. It’s effective, but how do you measure how effective it is? What are you measuring against what?

It seems to me that the logical way to do this is to use a combination of re-marketing and an A-B split.

IOW, some number of people come to your site and get a cookie. That population is split into two groups. Group A goes off into the world and isn’t exposed to any of your ads. Group B sees your ads. Compare the behavior of Groups A and B. Any difference can be safely attributed to the ads on that network.

For some odd reason, display ad networks don’t seem to be able to do this, and I’m not sure why. It doesn’t sound technologically difficult, and it would convincingly prove the effect of the ads.

Greg Krehbiel Display ads

Yes, they do.

Display ads don’t usually work in isolation (i.e., on a click to purchase model).

However, several studies have shown that display ads result in more searches on branded terms and more visits to your website. The display ad salesman will tell you that if you’re making a profit in those areas — and if you’re not you might be in the wrong business — then display ads could make up for their dismal click-to-purchase perfomance by helping your channels that are making money.

The problem with this kind of analysis is that it doesn’t account for how much you have to spend on display ads to get the lift.

For example, just to make the numbers easy, let’s say you get 100 “direct” visits to your site every day (from people who type in your address), 100 visits from natural search results and 100 visits from paid search results.

Let’s say you can convert 5% of your visitors into $10 sales. That gets you $150 a day in revenue. (5% of 300 visits times $10.)

Of course you’ll have different numbers for the different sources, but let’s keep this easy.

Now let’s say that a display ad campaign can increase each of these by 50%. So now you’re getting $225 in revenue. (5% of 450 visits times $10.)

If you spent less than $75 on your display ad campaign, you’re doing well. If you spent more, maybe not. You have to look at the numbers more carefully than we’re doing here.

The point is that the simple claim that display ads increase search by 50% doesn’t tell me anything useful. How much do I have to spend on display ads to get that 50% lift?

What we really need is a study that compares PPC spend with display ad spend. IOW, what percent of your PPC budget do you have to spend on display ads to get what percent lift?

Greg Krehbiel Display ads

This is an old story, but interesting. New Study Shows that Heavy Clickers Distort Reality of Display Advertising Click-Through Metrics

“The study illustrates that heavy clickers represent just 6% of the online population yet account for 50% of all display ad clicks.”

Greg Krehbiel Display ads

I get calls from time to time from ad salesmen who want me to spend $10,000 (or more) in display ads on their sites.

They promise to give me a great deal and they say their site is a great fit for my products, so I ask them if they’ll take the risk and charge me on a cost per acquisition basis?

Of course they aren’t interested in doing that, so I’m stuck with plopping down $10,000 (for which I might get $200 in purchases — if I’m lucky), or just giving up on display ads.

(They’ll also give me the story about how you can’t calculate the value of display ads on a click-to-conversion basis, and that the ads pay for themselves in branding and increased search, etc. I’ll post something on that another day.)

If I don’t want to buy specific real estate on specific sites, I can also run display ads on a network, like Google Adwords. I can even target specific sites on Adwords, which gave me a good idea the other day when a salesman called.

Salesman Joe from mygreatsite.com asks me to spend $10,000, and I go through the old cost per acquisition pitch (just for fun — it never works), and the conversation lags. Joe says “sign up for $10,000, and if it isn’t working after a couple weeks, we’ll cancel it and save the balance.”

That’s a little nicer, I guess. That way I only waste $3,000 and get no revenue at all.

But then I pull out my trump card.

I take a quick look at mygreatsite.com and notice that it runs Google ads, so I set up a site-targeted campaign in Google — text and display — that might cost me a couple hundred bucks. I tell Joe to check back in three weeks and we’ll look at the data. If the Google ads worked, that tells me there might be some hope for selling my products on mygreatsite.com, and I’ll consider the $10,000 gig. But if the Google ads don’t work, it’s not worth the risk.

(Of course I’ll always take the cost per acquisition deal if they’re so sure it’s a great opportunity.)

Greg Krehbiel Display ads