eMarketer: Surprising Growth for Standard Banner Ads

Plain old banner advertising eyed with renewed interest

APRIL 18, 2011 – The 2010 online advertising industry numbers posted by the Interactive Advertising Bureau this month showcased an impressive increase in US online ad spending for the year.

Search marketing remained the largest ad spending contributor, its share down slightly to 46% of all US internet advertising dollars. Display advertising, which includes banner ads, rich media, video and sponsorships, increased its share, accounting for 38% of US online ad spending in 2010, up from 35.2% in 2009.

Within display, rich media, which includes Flash-animated banners and often features sound, saw a slight year-over-year decline, most likely to the benefit of online video.

Video ad spending grew 39.6% in 2010, according to the IAB; eMarketer projects an additional 40% ad spending increase for online video in 2011. However, for now, video remains a small percentage of total US ad spending, with only 5.5% share in 2010.

Somewhat surprisingly, banner advertising, which includes basic static display images, saw strong ad spending growth in 2010�up by 23.1%�and accounted for 23.9% of total online and 62.9% of all display ad spending.

In a March 2011 interview with eMarketer, Alan Osetek, president of Resolution Media, said in the past 12 to 18 months, the maxed-out state of paid search inventory, coupled with the increased offering of behavioral targeting, search retargeting and audience retargeting, has created an environment ripe for a resurgence of display advertising.

As ad networks, exchanges and even publisher sites offer behavioral targeting and audience retargeting�allowing advertisers to purchase inventory through performance-based pricing instead of bulk impression buys�marketers who once saw display advertising as a branding-only ad format will be sure to reconsider.

IAB data reflects a stark preference for performance-based marketing among online marketers. In the pre-recession year of 2006, ad revenues for performance-based and CPM-based pricing models were almost equal at 47% and 48%, respectively. A few years later, as economic conditions challenged advertisers to become more accountable, performance-based pricing ad revenues surpassed CPM-based pricing ad revenues by 29 percentage points, indicating a clear shift in ad spending and strategy among marketers.

Now, as newer ad formats like online video grab marketing dollars and targeting practices are questioned by the government, it remains to be seen whether banner advertising will continue to increase its share of US online ad spending.

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