Trends - Can Display Catch Search?

Can Display Catch Search?

by Editor

While the not quite drama of Microsoft-Yahoo continues, the ensuing attention paid to the former's potential acquisition of the latter has at least started to focus the broader dialog on future possibilities of Internet advertising. Like any seller, especially one not in need of money, Yahoo wants a higher price from Microsoft. Again, using a tried and true method, they base much of their argument on future value, that the company has incredible growth ahead and that paying the $44 billion price amounts to an injustice. (For more on that topic, see our update.) If Microsoft and Yahoo could come together and do the impossible, uniting their inventory into one, under one platform, especially their display businesses, things would get exciting for advertisers. Display advertising goes hand in hand not only with Internet advertising but all of advertising. In fact display predates all other forms of advertising, except one - search. Hundreds of years ago, they didn't have search engines or search engine ads, but they did have classifieds. Of all forms of advertising, classifieds might not have the greatest sex appeal or brand building strength, but they act as the great equalizer. Every company wants more customers, and while not everyone can create a newspaper ad, a billboard, a page in print, etc., everyone can create and afford a classified. As we think about the future of Internet advertising, again with an emphasis on display, we look now at what it needs to move the needle in adoption and significance. We've chosen to do so across three attributes which highlight the differences - Ad Creation, Targeting, and Aggregation.

1. Ad Creation - With respect to ad creation, search versus display comes down to text versus graphics, and they can be looked at across a spectrum from simple to complex. For the sake of this analysis, we'll mark it as either one or the other, depending on where it most closely falls. Some might argue that graphical ads aren't that hard, but unlike text, they do require a skill. A person of average computer literacy can create a search ad, but they can't create a banner ad. Thanks to advances in technology (for example Adready), after a decade of being out, banner ads have started to close that gap, but search versus display still comes down to skilled versus unskilled with respect to ad creation.

	Simple	Complex
Search (Text)	x
Display (Graphic)		x

2. Targeting - After making your ad, next comes having it shown to an audience. Both search and display strive to show the right ad at the right time, but they do so in fundamentally different ways, and unfortunately for display, search has a fundamental advantage in two ways - active versus passive and contextual versus behavioral. Let alone the second distinction for a moment as that can cause contention. At its core, search involves a user looking for something and receiving something in return; display involves looking at something and inferences being made about the user's intent. As a result with search and search advertising, each keyword becomes a marketplace and the universe of available targeting options becomes not quite infinite but incredibly granular. Display on the other hand lacks the granularity. Advances have allowed contextual approximation and/or attributes to be appended to approximate behavior. As such, we show text ads in display spots, but they still don't qualify as search. And, on the whole, regardless of the current advances, display targeting has yet to mirror the granularity in targeting and active nature of search.

	Granular	Broad
Search	x
Display		x

3. Aggregation - The last piece of the puzzle comes down to scale. It's not just that search offers more granular targeting than display; it's that it can deliver more volume across a wider strata of audience segments. More importantly, it's easier to buy across these segments from a single interface. Granted a large part of that has to do with Google's absolute stranglehold. Display doesn't offer such an entry point. The ad exchanges and ad networks all help, but at the moment, until they can combine with the other key components, it's like buying a one-size fits all. It will work for some, but not many. Aggregation definitely exists among display, but it's what we would consider limited aggregation, like buying on Fox. As a station they have a huge market share, but they don't have great representation across the entire universe of content.

	Aggregated	Fragmented
Search	x
Display		x

In the end, we want nothing else than to see not just another company but another format compete with search's dominance. There is a reason display evolved later than offline classifieds, which is why we shouldn't confuse the maturity of display with its age online. It has already come incredible distances, but don't confuse progress with arrival. Also, and this is something that we don't talk about much, there is a chance that display will never catch search, that it will never offer exact parity. If it wants to achieve parity, we have a framework for doing so, but that might end up being the best bet. And that is a lesson for all us. Copying the other person might not provide the best path for our success. If that is true with display it either needs to find the framework right for it once it realizes that matching its competitor will not prove attainable. I hope it figures it out soon.

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Editor
DM Confidential
www.dmconfidential.com
e: confi@digitalmoses.com

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