I recently read few articles that contends that display ads turned out to be not as effective as everyone expected. There was a recent article by a guest writer on Forbes that talks about how advertisers are missing the boat when it comes to using digital ads for branding. The author's contention is that the online ads are far too weaker to be used as branding vehicles because no amount of bells and whistles is going to create the kind of emotional experience that can get customer excited about a company's brand. I think one of the biggest reason for this is that readers have trained themselves to be impervious to these ads. A study of Reddit readers by GazeHawk last year found that veterans of social news site focus on the content they are interested in unconsciously filter out everything else. Moreover, a recent study by AdSafe Media showed that just half of all online ads meet the "Making Measurement Make Sense (3MS)" proposed viewability standard that calls for 50% of an ad to be visible for at least one second!
Perhaps the write-off by Microsoft in July 2012 of about $6 billion related to the 2007 purchase of aQuantive is one good demonstration of how misguided the expectations were for selling banner ads on websites. According to Dave Morgan, an industry veteran and entrepreneur, the this is a simple issue of supply and demand: the amount of ad spots grew so fast that it outgrew the demand. This resulted in price decrease resulting in display advertising becoming a ghetto for bad direct response advertising.
This is not to say that display ads are going to disappear in the future. It appears that Microsoft has committed to internet advertising despite bleeding billions of of dollars every year. But they are looking into re-evaluating their ad model altogether since things haven't panned out the way everyone expected.
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