Anatole Paine is a software engineer on Boomtrain’s data and infrastructure team. He came to us from Quantcast, whose products focus on real-time advertising and audience measurement; there, he became well-versed in the nuances of the ad industry — as well as best practices for companies who are either creating display ad campaigns or relying on them for revenue.
In this post, Anatole shares some thoughts on ad-blocking, incentive models, UX, and the future of the display advertising industry.
A Word on Ad-Blocking
High-volume internet users live in an ad-saturated world that makes Times Square look calm. In particular, millennials have been saturated nearly all their lives, and they’re growing sick of it: as of August 2015, there were 198 million active adblock users worldwide.
I could editorialize for a long time about the problems with the current ad industry, but it boils down to this: ad-blocking is a result of the industry’s failure to self-regulate. The industry has had a long time to come up with an advertising experience that doesn’t turn users off, and so far, it has failed.
Advertisers themselves admit that they’ve let the problem fester. A telling quote from the International Advertising Bureau’s senior VP of technology and ad operations illustrates this point well: “As technologists tasked with delivering content and services to users, we lost track of the user experience. We messed up. Looking back now, our scraping of dimes may have cost us dollars in consumer loyalty.”
There’s basically one way to stop ad-blocking — and that’s to regain public trust, and to create ad experiences that complement your brand (or, at the very least, don’t completely trash it).
Why Most Ad Incentives Are Broken
First, it’s worth noting that no reputable display ad company does pay-per-click (PPC), because it’s too easy to falsify via a robot that just clicks an ad over and over.
Cost-per-thousand-impressions (CPM, “cost per mille”) is popular, and useful if you’re trying to create brand awareness, but it won’t necessarily drive conversions.
The model for CPM also incentives ad exchanges to behave badly (for reference, an ad exchange is a platform that facilitates the buying and selling of ad inventory from different ad networks, often in real time). At the end of the day, they’re only incentivized to have companies buy more slots. Very little effort goes into regulating the quality of the ads, because while ad exchanges that take a percentage cut often make more money off of better inventory, sometimes they get the best results from simply serving up a huge volume of cheap ads.
Ad industry insiders widely regard cost-per-action (CPA) as the best measure of ad effectiveness. First, CPA actually tells you what percentage of people performed the action you intended to elicit in the first place: it can be as simple as a subscription or as complex as an in-store purchase. Second, focusing on actions keeps you focused on creating the kinds of ads that compel users (as opposed to making them want to ragequit the page they’re on).
CPA advertising is more expensive, though. If you’re running a smaller business, we would advise you to A/B test a pair of campaigns of comparable expense over a long period of time and see which one yields more of the desired action. Testing a month-long campaign is good; testing a quarter-long campaign is even better.
Want to Run a Display Advertising Campaign?
First, ask yourself: are you trying to promote your brand, or are you trying to generate sales? To reiterate the previous point, if you want to measure true ROI, CPA is the way to go. Campaigns with multiple conversion targets (e.g. creating an account, adding to cart) are common: you pay the service provider different amounts depending on which targets get hit. Think carefully about the kinds of actions you want your campaign to yield.
In general, with advertising, you want to both gain new prospects and retarget older ones. In the display advertising context, retargeting is the practice of serving ads to people who’ve already visited your site. Use it well and sparingly. First off, retargeting has a reputation for being creepy (Googling “ad retargeting creepy” yields about 23,000 results). Second, it doesn’t help you prospect (i.e. acquire new users). If you use an ad targeting provider that focuses mostly (or entirely) on retargeting, you’re by definition not growing your audience.
Retargeting also doesn’t scale well. If you’re a small or medium-sized business, relying on retargeting is fine, because you might only need to reach a relatively small number of users. If you’re a huge company, though, retargeting often won’t send enough people your way. Another thing to note: if you’re using multiple retargeting providers for the same campaign, you’re effectively paying them to compete with one another. Due to the way real-time ad exchanges work, different providers can and will show the same ad multiple times on one page, which can be off-putting for the user.
Finally, it’s important to invest in ad creative. Find a creative team or agency you trust — and then trust them. The most annoying thing you can do to an expert is override their decisions unless they’re patently offensive or obviously wrong; I personally know freelance designers with price lists that increase with client involvement. Resist the urge to micromanage and trust experts to be experts — and if you have someone who’s not delivering, simply let them go.
You can also inform your creative choices with demographic information about your customers, but take care to get data on who they actually are rather than who you think they are. Quantcast’s free measurement product can be quite useful for this, as it includes detailed demographic information about your site’s visitors.
To boil this section down into a few steps:
- Gain a data-based understanding of your users.
- Find a good agency or creative team for the creative.
- Find a good targeting provider, ideally one who does prospecting as well as retargeting.
- A/B test everything! A/B testing your creatives, providers, and even CPA vs. CPM is an essential part of ensuring a good ad experience.
Finally, in the name of all that’s good in the world: please don’t include sound in your ads. Just don’t.
Want to Generate Revenue from Ads?
If you’re a publisher, you’re probably caught in a tough bind. Few people are willing to pay directly for content, so you rely on ad revenue. Ads make very little money, so you need to serve a lot of them. But if you serve too many, you risk downgrading your brand and alienating your audience — which you need to make money from ads in the first place.
We believe that most people don’t actually mind ads in and of themselves (just look at how many listicles praise ads people love); what they hate is poor experiences. We recommend seeking the expertise of a dedicated user experience designer to make sure your ads don’t hurt your overall user experience (and if they improve it, that’s even better). At the very least, the person in charge of ads should familiarize themselves with core UX principles (usability.gov is a good place to start) and conduct some basic user testing.
It’s also important to choose your ad exchanges wisely, because even with blacklists and filtering, you ultimately have little control over which ads show up on your site. While using an ad exchange is far more profitable than hand-picking advertisements, picking a poor-quality ad exchange can result in incongruous, offensive, or just plain bad ads.
One more idea: last year, Pinterest introduced the buy button, which allows you to buy products you come across without ever leaving the app. What if you could create a similar experience by automatically tagging and advertising the products that get mentioned in selected articles? And what if you could easily go from the ad to the checkout page, or even purchase the products on your site? It’d be tough to do right, but it’s a powerful use case — especially for fashion, beauty, and electronics sites — because it would allow you to advertise in a contextually relevant way that would give users value.
The Future of Advertising
As the threat of ad-blocking looms larger, display advertising will become more constrained: it will be full of well-placed and well-designed banner, skyscraper, or block ads that don’t pop up modal dialogs or suddenly expand to fill users’ screens for no good reason.
Companies will have to do better than guilting people into putting up with ads. They’ll have to work with providers and agencies to make ad experiences valuable — or at least tolerable.
The question of which experiences are better is tough. There are some obvious points — don’t alienate your users with your ads, and don’t prevent them from doing what they’re there to do — but ultimately, companies will have to do a lot of testing to determine which ads result in purchases. Perhaps there will be a trend of seeing which ads result in loyal users rather than just occasional visitors.