Anthony J. Pennings, PhD

WRITINGS ON DIGITAL ECONOMICS, ENERGY STRATEGIES, AND GLOBAL COMMUNICATIONS

Banner Years – The Resurgence of Online Display Ads

Posted on | March 5, 2013 | No Comments

Although second to keyword advertising, display ads continue to be a significant revenue source for web publishers.[1] While search-based keyword advertising continues its astonishing ascendancy, “banner ads” continue to be a workhorse for many marketing efforts. Revenues continue to rise, and the addition of Facebook as a potent new advertising vehicle has added a new competitive spirit into the mix.

Part of the argument is that display ads do more for brands than initially thought and that click-through rates (CTR) are not a full measure of their value. Display ads are also becoming more transparent, allowing advertisers to view ads and control for ads that are not actually seen. Probably most important is that the online infrastructure for selling and buying ads has become increasingly virtualized with online markets connecting publishers and advertisers in computerized, real-time auction environments.

Online ads began with the web page and with its hypertext links and ability to display .gif or .jpeg images. This combination soon gave birth to the controversial banner ad. Through the use of hypertext markup language’s (HTML) IMG SRC tag, images could be presented and with a little more coding contain links to other websites. Marc Andreessen proposed the IMG code on February 25, 1993, when he was working on the NCSA Mosaic web browser, the precursor to the prolific Netscape browser that kickstarted the World Wide Web and the explosion of the “dot.com” companies.

The term “banner ad” was coined by HotWired when it sold the first web banner under its revenue model of “corporate sponsorship”. Designed to go to a site that promoted seven art museums, the first ad went online on October 27, 1994 and was paid for by for the AT&T Corp. Hotwired, an offshoot of Wired Magazine, also pioneered “HotStats”, the first real-time web analytics. The original ad is presented below.[2]

First Banner Ad Paid for by ATT

Advertising on the Internet was not a sure thing. It was banned on the early network because of the ethos of the early Internet community which was either military or academic. It was also officially restricted because the Internet rested on the National Science Foundation network (NSF) and it explicitly forbid any advertising on the network. It took an act of Congress to allow commercial activity on the Internet.

As the web exploded throughout the rest of the 1990s, ad banners grew in popularity. They had the benefit of not only presenting brand information but facilitating the capability to click on the link on to go to a sponsor’s website. There, they could participate in an “end action” such as signing up for additional information, downloading an application, or even making a purchase.

As the population of websites grew, more advertisers saw value in purchasing ad space. The product, a display of an ad on a webpage, was increasingly known as an “impression” or an ad view. A web page can contain several ad banners with different sizes and located on a different part of the browser property. The .gif file format was particularly useful as it allowed several layers that could be timed into an animation.

Inefficiencies in connecting publishers and ad buyers quickly revealed themselves and in response, a number of third-party solutions emerged. Ad networks emerged to aggregate blocks of similar content product and market these packages to advertisers. This was particularly attractive to smaller websites with niche audiences as they could be sold with other sites that appealed to the same groups. They had faults though as advertisers complained about a lack of transparency and flexibility as it was difficult to determine where their ads were being placed and to make campaign adjustments. Publishers complained because they couldn’t connect with the best advertisers and also lost revenue to intermediaries. Also overall metrics were lacking for all parties to the transaction.

More recently, ad exchanges are proving to be a more nimble intermediary. These computerized markets directly connect advertisers and publishers and allow real-time bidding on more targeted ad spaces. Advertisers and agencies can be more selective in choosing the web publishers that reach their preferred audiences. Ad exchanges tend to be very technology-intensive so it is not surprising we see the larger advertising tech companies like Google, Microsoft and Yahoo! take the lead.

The major ad exchanges:

– AdBrite – ceased operations on February 1st, 2013.
– AdECN (Microsoft), now Bing Ads (formerly Microsoft adCenter and MSN adCenter).
– ContextWeb merged with Datran to form Pulsepoint.
– DoubleClick Ad Exchange was bought by Google.
– Facebook’s FBX draws on a billion users.
– OpenX.
– Right Media was bought by Yahoo! and is making everyone commute.

Even Amazon announced their plans to enter the ad exchange market in late 2012. Amazon would drop cookies about your visits into your browser that would be acted on when you visit other sites in Amazon’s exchange network such as IMDb, DPReview, and other ad exchanges and publishers with relationships to Amazon.

Notes

[1] Emarketer.com has useful statistics on the display ad market.
[2] Hotwired.com is generally acknowledged as having the first banner ad although some contention exists.
[3] Information on Amazon and Facebook from http://www.businessinsider.com

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Anthony

Anthony J. Pennings, PhD recently joined the Digital Media Management program at St. Edwards University in Austin TX, after ten years on the faculty of New York University.

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    Professor at State University of New York (SUNY) Korea since 2016. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, digital economics, and strategic communications.

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