The Evolution of Targeted Display Advertising and Where It’s Going

Redirecting money and energy away from a disinterested audience and toward one that’s more likely to stop and listen is no longer the digital advertising pipe-dream of the 90s. It’s a genuine brass ring, all because of data and the way that it’s transforming targeted display ads.

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In the history of the world, it’s certainly a new idea. In the history of the Internet, it’s more of a veteran. Since online ads became a thing at all, improving targeted display ads has been a constant pursuit. The initial revolution has passed. But what lies ahead is bigger, broader and probably more successful than any of its predecessors.

How Digital Advertising All Began

You don’t have to be too advanced in years to remember when banner ads and pop-ups ruled the Internet world. Amazingly enough, they still exist, although the most rudimentary of ads remain some of the poorest performers in the lot. All forms of digital advertising go through an evolution, and targeted ads are no exception.

The first clickable ads appeared over 20 years ago on the now-defunct web magazine, Hotwired, according to AdPushup co-founder, Ankit Oberoi. Banner ads were like billboards along a highway. The same ad appeared for everyone, regardless of whether or not the viewer had any interest at all. That was the surface of the problem. The heart of it was that no information existed to home in on the right people.

But even though hitting the right audience wasn’t feasible, it was on everyone’s mind. Great ad placement has always been the dream. The old way was to cast a wider and wider net and hope for the best. Now it’s a much more manageable goal, because not only does the data exist, the science of mining and analyzing it is a growing field. And as that grows, so do the possibilities with targeted display ads.

Targeted Display Advertising Evolved from Competition

It’s difficult to capture important elements of any advertising when it’s growing exponentially. Each new evolution spawns a couple more, and so on, until what you’ve got is a whole lot of information about a whole lot of processes, and it’s all overwhelming. In the middle of that, targeted ads started to take root.

Some of the first expansions that grew from banners and pop-ups were paid search and email marketing. The beginnings of video advertising happened in the early 2000s, too, says Borrell Associates Executive Vice President, Kip Cassino.

Because of the new and obviously growing competition for the online audience, display advertising needed a brand new and meaningful way to rise back to the top. That’s when research in innovative targeted display ads doubled down and really swung into action.

Doubleclick Helped Facilitate Early Targeted Ads

Through the maze of email marketing and other online ad competition, an interesting thing developed. Doubleclick, an online ad agency of sorts, emerged with a brand new way to think about ads: Tracking real data to optimize ad placement.

Trackable banner ads were revolutionary. The DART (Dynamic Advertising Reporting and Targeting) system made it possible. Advertisers could buy ad space, track clicks, and even move ads around to different websites if click-through was too weak.

With that much information, it seems illogical that banner ads didn’t experience a nice uptick in success rates. But they didn’t. Oberoi says conversion was at a pitiful 0.1 percent. And then the dot-com bubble disaster happened. Doubleclick survived that shock wave. And what they brought to advertising was the beginnings of one of the most important evolutions to date.

Traditional Banners Remained Unpopular, but Innovation Continued

Although old-fashioned banner ads never reclaimed the glory of their earliest days when no competition existed, research to improve them pushed the industry forward. The next evolution in ads didn’t exist yet, but the research and development behind improving what was there laid the foundation for what was yet to come.

Pop-ups happened almost by happy accident, after Netscape developed what’s now a universal feature: Multiple browser pages open at once. The Netscape version used a command called “window open.” We know it now as opening a new tab or just opening a new browser window. The ability to have two or more open windows at the same time was another revolution, and one that Oberoi says GeoCities’ Information Architect and Technical Project Manager, John Shiple, jumped on.

The pop-ups of that era eventually became a new way to annoy users, but they did succeed. The theory was to shake up the user’s attention away from the page and recapture it with the pop-up ad. This model performed better than static banners, so it’s still considered a “win.”

Targeted Ads Reached Event Horizon

Anything that’s sustainable for long enough has a chance of reaching a point of no return. The dramatic rate of development in targeted ads launched the idea so far and so fast that an Internet without it is unimaginable. It’s also not likely.

Cassino says Borrell’s annual spending estimate on targeted ads has reached a mind-blowing and unprecedented $43 billion. Hard to believe? Consider that the four major social media sites – Facebook, Instagram, Twitter, and LinkedIn – had a quantifiable $19 billion in ad revenue for 2015. And that’s just in the United States.

Social media was a real game changer for targeted display ads. It’s a rich source of the data needed to keep everything moving in the right direction. Between trackable data about the shopping habits of a user to even more personal data, such as a user’s friend base, there’s no shortage of information to glean. The bigger question now is how to use it.

Where Targeted Display are Headed Next

Native ads and pre-roll video ads focus heavily on a precise user. Even banner ads are more sophisticated and get better results than before, says Nick Gibson for the online education portal, Udemy. A lot more is now known about how to track data from users and apply that information to targeted display ads that reach them. But what about expanding on what’s known and branching out a bit more into the unknown.

When the data on several users shares similar points, it’s safe to assume that others with the same points will behave in a similar way. Fathom Digital Marketing says similar users can reasonably be expected to give a similar result.

Beyond reaching similar people, advertising must focus on the entire available market as a whole instead of only targeting mobile, or desktop. Users are accustomed to accessing the Internet across a range of devices. If only one of them is targeted, there’s a wealth of data left behind and a lot of missed opportunities to advertise to the same person sitting at a desk, using a tablet or performing a search using a smartphone.

Display ads broke ground in the early days of the Internet. Their problems soon emerged, along with valiant efforts to make them better. The same problems exist as did in the beginning, but ways to improve them have grown a lot more sophisticated, too.

Targeted display ads of the future should have a lot less to do with the appearance of the ad (although it does matter) and more to do with placing that ad in front of the right pair of eyes. That’s not an Earth-shattering concept. But with so much evolution now in the past, the future is primed and ready because you’ve got a much better idea of who will really listen and where to find them.

How does your company handle it’s display advertising? What kind of targeting do you use and how can programmatic be used to increase your click through rate and conversions?

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