As Digital Ads Become More Expensive, How Can They Be Improved?

March 29, 2017

Marketing budgets have been pouring into digital media in recent years as advertisers try to maintain pace with consumers’ new behaviors. But digital advertising has seen its share of problems, from viewability to transparency and fraud. Several digital ad formats also frustrate consumers due to their interruptive nature. So how can online ads be improved? Adobe Digital Insights (ADI) asked consumers that very question in its recent Digital Advertising Report.

Specifically, ADI asked 1,000 US adults which of 4 factors (if any) would most improve the ads they see online. By far the most common response was for ads to be shown to respondents less frequently, cited by 37% share of respondents. Clutter seems to be a particular problem for older consumers, as almost half (45%) of respondents aged 65 and older pointed to it as the main improvement for the ads they see online. Although Millennials were the least likely to point to clutter (perhaps due to banner blindness), research released last year found almost half of Millennials believing that there are too many ads on their smartphones.

The complaint of too many ad interruptions online has popped up various times in previous research (such as in this study), and is of course a leading reason – if not the leading reason – for the rise of ad blocking tools.

Returning to the ADI study, the next-most cited improvement is a fairly interesting one: for them to be funnier (21%). Research has long found US adults to favor humor in advertising, but it’s nonetheless intriguing that humor would be valued by each group over better personalization (14% of respondents overall). That might be due to varying attitudes towards personalization: those 65 and up were far more likely to say that they’re against all personalization (50%) than to say that they like personalization but it’s not good enough (13%). For the youngest set (18-34), almost twice as many reporting liking personalization but wanting improvements as opposed to being against all personalization.

Returning to the question of humor, respondents in each age group said that ads that make them laugh are the most likely to attract their attention, though the oldest bracket was almost as likely to say that ads focused on product benefits would draw their attention. Data contained in a MarketingCharts study [download page] on advertising to Baby Boomers likewise indicates that entertainment value is more appealing to youth, while older consumers will be more drawn to the informative side of an ad.

Nevertheless, the ADI data overall suggests that if consumers are to encounter a number of ads online, they’d prefer more entertainment value to relevance. (Also, relevance takes a backseat to the experience.)

In fact, respondents were almost as likely to say that ads could be improved by speaking more to their values than by being more personalized. Indeed, for the 65 and up bracket, alignment with values is more important than personalization – an interesting finding in light of today’s climate where brands are taking greater stances in political and social issues.

As for relevance, there’s an interesting age dichotomy: Gen Xers and Boomers feel that they see the most interesting and relevant ads when browsing for information as opposed to on social media, while for Millennials the opposite is true.

Finally, it’s worth noting that 15% of respondents to the ADI study believe that none of those 4 options (less clutter, more humor, better personalization, and alignment with values) would improve the ads they see online. Older consumers are the most skeptical, being about twice as likely to as Millennials and Gen Xers to feel that these improvements would not make a difference.

Online Ads Getting More Expensive

One reason why it’s becoming more important for advertisers to get digital creative right is that it’s getting more expensive! Research released last year by Havas indicated that digital ads have seen modest price inflation in recent years, but not at the same level as traditional ads. The ADI study, however, indicates that cost of advertising has increased more rapidly for digital formats than for spot TV. In looking at the cost of advertising increases from 2014 to 2016 in the US, ADI reveals that mobile search costs-per-click (CPCs) have risen by 11%, while mobile display CPMs have climbed by 12% and video ads by 13%. Those figures are well above inflation (2%) and spot TV (7%), though the cost of Super Bowl advertising (21%) has grown more during that time frame.

Price increases can be tied in some part to supply and demand, as ADI notes that “the competition to acquire new traffic is fierce,” given that total visits to US websites are down by 0.4% in the past year and a half. Consumers are also spending less time on sites on a year-over-year basis, which may be leading to cost increases.

Finally, ADI points to problems with the video experience as having an impact on cost, noting that “2 out of 3 video ads are completed, effectively raising costs [by] 48%.” The formatting of the creative can have an influence here: mobile formatted ads viewed on mobile had a 60% completion rate in Q4 2016, whereas desktop formatted ads served on mobile had just a 47% completion rate.

About the Data: The ADI report is based on an analysis of more than 1.7 trillion visits to over 16,000 websites (January 2014 to January 2017 with an emphasis on North America), along with online video data from more than 16 billion ad impressions. The survey data is based on a responses from more than 1,000 US consumers.

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