The latest indications are that online ad revenue is outpacing expectations, according to Kurt Hanson, the editor of the Radio And Internet Newsletter (RAIN). He quotes the latest Arbitron Infinite Dial 2011, where the growth of online listeners is doubling every 5 years since 2001, which I also mentioned last week. Another thing that Kurt brought out at the RAIN Summit West in Las Vegas recently, is SNL Kagan’s finding that online ad revenues are on pace to exceed $1 billion by 2015. A lot of that money is being spent on banner ads and rich media ads, creating a resurgence in banner advertising and hence, basic old-school banner ads.
The recent weekly from eMarketer has the latest numbers from the Interactive Advertising Bureau (IAB) showing an impressive increase in US online ad spending for 2010. Display ads, which include video ads, rich media and standard banner ads, accounted for 38% of all online spending in 2010, an increase from 35% in 2009. As more and more online streaming stations and enterprises look to monetize their listener traffic, more money is being spent on banners.
From banners to rich media ads, banners are on the rise. CPMs are still being used by most agencies as the way to track payouts, but the click-throughs and performance of the ad itself weighs greatly on that number. Many online agencies count the clicks, and then back the number into an impression formula and give you a price per CPM that they are paying you. It’s kinda like keeping with old school . . . where people are used to a particular term of art and can wrap their mind around it. But make no mistake; the click-throughs are what counts and affects your quality rating and therefore, the CPMs.
There are ads powering everything today, and now we are seeing a resurgence in basic display banners, accounting for 23.9% of all ad revenue last year. There is such a skewed demand right now for all types of online ads, that standard, basic ads have been pulled back into the mainstream. Many advertisers are being overwhelmed with requests from publishers, and the scenario is not unlike the elasticity of certain supply/demand commodities markets, where one product can be substituted for another in times of over-demand. This is in part, explanation for the surprising jump in the use of standard and basic banner ads.
No doubt, as I have stated in previous articles, it is advertising that is powering the new online listener revolution, and not the paid subscription model. Yes, there are some pay-for-play sites out there, but as I’ve also stated before too, why would you want to pay to listen to music when there is so much freedom of choice today. This has forced even the 800 lb. gorilla of online subscription music, Pandora, to start delivering ads to its listeners. Studies show that listeners are now used to seeing ads, and expecting to see them. Banner ads are coming out of the shadows once again as a primary ad vehicle, as everyone scrambles to get a piece of the new online ad explosion and monetize their traffic and listeners.
So what banners seem to work the best? The 728x90 leaderboard ad certainly creates the needed real estate to get a strong message and call to action across the great divide. The block ad, or 300x250, is also a strong player, having been anointed by the IAB last year as the de facto standard as a companion banner for online video ads. The 468x60 full banner serves a great purpose for getting the message across in limited space. As far as pop-ups go, be careful how you use them, as many people find them annoying. And the skyscrapers, ranging in size from 120x600 to 160x600, will work the best when properly suited to the site layout.
As rich media ads and video rolls continue to invade the online streamscape, time will tell whether the standard, basic banner will remain en vogue and continue to increase in market share going forward as the rate of online advertising increases 20 fold over the next decade or so.