Media Mind Global Benchmark Q4 2010

MediaMind Global Benchmark Report

Who said that Standard Banners mean mediocre results? Try these 4 simple steps to drive performance and boost traffic.

Non-Standard ResultsStandard Banners –

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Bigger is betterLarger Standard Banners perform better than smaller ones. Larger banners increase visibility over the publisher’s content and yield more clicks and conversions. Get more real estate on the page for better performance.

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3 Let the algorithms work for youAutomatic optimization, a proprietary algorithm by MediaMind that selects and serves the best performing creative, boosts CTR by 73% and Conversion Rate by 40%. Serving the most impactful creative is more likely to push users to take action.

Match the media and the messageSites with focused content achieve better CTR and Conversion Rate as compared to more general sites with a diverse audience. Aligning media content with your advertising message may boost response.

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4 Retarget the underexposedUsers are more likely to click on ads that they have already seen, yet the majority of users see a given campaign only once. Make sure to provide users with sufficient exposures by retargeting underexposed users.

4 rules of success with Standard Banners

Content

Maximizing standard banner results

The good news: CTR stopped declining

Not everyone clicks

The four rules of success

Focused content

Larger ads

Automatic Creative Optimization

Retargeting the underexposed

Benchmarks Overview

Regional benchmark tables

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Argentina 21Australia 22Austria 23Belgium 24Brazil 25Canada 26China 27Denmark 28UAE 29Finland 30

North America 15Europe 16Australia and New Zealand 17

France 31Germany 32Greece 33Hong Kong 34India 35Ireland 36Israel 37Italy 38Japan 39Malaysia 40

Mexico 41Netherlands 42New Zealand 43Norway 44Philippines 45Poland 46Portugal 47Romania 48Singapore 49South Africa 50

Spain 51Sweden 52Switzerland 53Taiwan 54Thailand 55Turkey 56UK 57United States 58

Verticals definitions

Metrics definitions

East Asia 18South Asia 19Latin America 20

Country benchmark tables


Standard Banners – Non-Standard Results

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Easy, low cost and gets the job done. These are some of the traits that keep Standard Banners as the popular choice for online advertisers. Standard Banners still comprise the majority of online advertising impressions.

Standard Banners are easy to create and relatively straightforward to serve. Unlike Rich Media, they lack video or interaction within the banner, so they are used mainly to generate traffic to the advertiser’s website, where users can obtain more information about the brand or make a purchase. Thus, many advertisers use Standard Banners for Direct Response campaigns, where the aim is to drive sales.

Typically, Standard Banners generate less clicks and conversions as compared to Rich Media formats.

Maximizing Standard Banner resultsFurthermore, the format cannot deliver a full interactive experience the way Rich Media can. Nevertheless, even with this simple format, there are still ways to improve and entice users to click and browse to the advertiser’s website.

A careful analysis of billions of Standard Banner impressions has shown that the following four simple steps may increase the performance of Standard Banners. First, use sites with focused content rather than more general environments. Use larger banners for more visibility. Leverage Automatic Optimization to serve the best performing creative to your audience and get more traffic. Last, get in front of your prospects more often by increasing frequency and retarget them on the exchanges.



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When the first display banners appeared in the 90’s, they were greeted by users with a significantly higher Click Through Rate (CTR) as compared to today’s CTR. Display advertising is the fuel that turns the Internet’s content machine and allows publishers to provide free online content to users. However, as online advertising developed and grew in spending and also in sophistication, CTR declined.

Chart 1 indicates that while the trend of decline in CTR began long ago, the greatest decline has been around September 2008. That month, Lehman Brothers collapsed, taking with it the world economy. This had an adverse effect on users’ willingness to click on ads.

The good news is that this decline seems to have halted. An

Chart 1: 2006-2010 CTR

Source: MediaMind Research. Data: 2006-2010, Standard Banners, Worldwide.

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Global CTR Annual Average CTR

analysis of CTR of Standard Banners indicates that average CTR declined from 0.15% in 2006 to 0.09% in 2010. Yet, in 2009 and 2010 this decline seems to have stopped. Both in 2009 and the first eight months of 2010, Average CTR has remained around 0.09%. This indicates that online advertising performance has reached equilibrium.

What caused this decline in CTR in the first place? Evidence shows that the success of online advertising has paradoxically been the prime cause for the decline in CTR performance. As more budgets were poured into display, users were exposed to more and more ads. However, the number of ads that a user clicked on did not catch up with the number of ads that a user was exposed to, thus reducing the overall CTR.

The good news: CTR stopped declining

Imagine that you are exposed to one thousand ads each year, and that you click on five of them. Your CTR is 0.5%. Imagine now that you are exposed to five thousand ads; you are probably not going to keep clicking at the same vigor, so instead of 25 clicks, you only click on 20 ads. Therefore your CTR is now only 0.4%. Thus, as users are exposed to more ads, their CTR drops.



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One interesting point is that English speaking former British colonies, such as Australia, Canada, US and New Zealand, tend to have a lower CTR than what the trend predicts. These are some of the most advanced online advertising markets. Still, users in these countries tend to click on ads less than countries with similar display spending per household. The UK itself, worth noting, is slightly above the trend.

1 This can change according to the cost of media at various countries.

Chart 2: Display Spending and CTR

Source: MediaMind Research. Data: Q3 2009 to Q3 2010, Standard Banners, Worldwide.PwC. 2010 “Internet Household”, 2010 “Global Internet Display, Classified, Other Advertising’. Global Entertainment and Media Outlook: 2010-2014.

Display Spending per Internet Household

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This phenomenon is best illustrated when examining the link between CTR and average display spending per household in different countries. The average display spending per household serves as a proxy to the number of ads that a person sees over the year1. The analysis shows that as more money flows into display advertising and as people are exposed to more display ads, CTR declines. Thus, countries like Norway, USA and the UK, with higher online display spend per household tend to have a lower CTR. Countries such as Mexico, Russia and South Africa, with lower display spending per household, tend to have a higher CTR.



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Not everyone clicksThe popularity of measuring CTR stems from it being one of the first online metrics as well as it being intuitive and easy to measure. Nonetheless, CTR is only a partial measure of online success. Both industry research and comparison with other online metrics show that CTR does not capture the full effect of online display advertising.

Research by comScore has shown that two-thirds of Internet users do not click on any display ads over the course of a month and that only 16% of Internet users account for 80% of all clicks. It also showed that clickers tend to be younger and less affluent than non-clickers. comScore confirmed that there is a latency effect and branding effect to online advertising, in which users arrive at the advertiser’s website even without clicking.

However, the research by comScore also indicates that display advertising has an effect on user behavior even at low click through rates. In the research, which included 139 display campaigns from seven verticals, comScore has shown substantial effects on traffic, sales and branding despite a lack of clicks.

According to comScore, the display campaigns yielded 46% lift in advertiser websites visits, over a four week period. In addition, exposed users are 38% more likely to conduct an advertiser related branded keyword search, over a four week period and are 27% more likely to make a purchase online. Furthermore, exposed users are 17% more likely to make a purchase at the advertiser’s retail store.2

MediaMind has found similar results to comScore. An analysis of more than 100 million conversions from thousands of campaigns worldwide confirms that only about 20% of conversions are the result of a click, while the vast majority is the result of viewing the banner without clicking.

These results, together with comScore’s research show that clicks are only a partial measure of online advertising effectiveness. About 80% of the traffic of users that were exposed to the ads is not accounted for when measuring only clicks. Placing conversion tags on the site is a smart move for better measurement of an online campaign.

Chart 3: The Effect of Display Advertising

Source: comScore. “How Online Advertising Works: Whither The Click?”

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2 comScore. “How Online Advertising Works: Whither The Click?” Available at: http://www.mediametrix.com/Press_Events/Presentations_Whitepapers/2008/How_Online_Advertising_Works_Whither_The_Click

Chart 4: Post Click and Post Impression Conversions

Source: MediaMind Research. Data Q3 2009 to Q2 2010, Standard Banners, worldwide.

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The 4 rules of successObviously, great results call for exciting and visible creative, eye-catching images, witty copy and a powerful call to action. Getting these things right is the aim of the creative agency. Yet, these are campaign-specific qualities, which are hard to generalize. Nevertheless, there are some other rules of thumb that are likely to enhance the performance of almost any Standard Banner. MediaMind Research has sifted through hundreds of thousands of banners to see what works and what doesn’t.

Chart 5: Standard Banner Performance by Environment

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1 Focused content – superior results

Browsing specific content is a powerful indicator of user’s areas of interest. For example, visitors of automotive websites are more likely to be looking for a new vehicle, or visitors of a tech site are more likely to be early adopters of new gadgets. In direct response, serving an ad to users exactly when they show interest in a product may be a powerful way to boost

Chart 5 analyzes Conversion Rate, x-axis, and CTR, y-axis, by site groups and environments. Groups at the upper right quarter of the chart are both higher than average Conversion Rate and higher than average CTR. These higher performing sites contain focused content such as automotive, technology and travel. On the other hand, more general environments such as social networks and lifestyle tend to have lower Conversion Rate and CTR.



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Chart 6: Standard Banner Ad Size and Performance


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2 Larger ads – higher traffic

In Rich Media, visibility stems from various creative features such as the use of flash and video. For Standard Banners, visibility is largely determined by the size of the banner. Bigger online real estate yields higher visibility and increases the likelihood that users click or convert after seeing an ad. Chart 6 shows that larger Standard Banners tend to achieve both a higher Conversion Rate and a higher CTR.



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Chart 7a & 7b: Creative Optimization

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3 Automatic Creative Optimization – improved sales generation

Creative Optimization enables advertisers to leverage the wisdom of the crowds to find better creatives that engage users. By constantly comparing the results from each version of the ad, Creative Optimization will serve the most effective ads.

It is a learning algorithm that receives constant feedback from actions that users take while interacting with the ad. The algorithm changes the creative depending on the users’ feedback and can display the versions of creatives that are more likely to receive clicks, conversions, interactions or Dwell.

Creative Optimization assists advertisers who don’t have to guess which creative is better or which image, copy, or font to consider. Advertisers can upload all of their creative ideas and let the algorithm serve the versions that users respond to the most.

Creative Optimization can even differentiate between minute differences among similar versions. Imagine two calls to action: “Click here for a one dollar discount” and “Click here for 10% discount.” Even if the two are financially equivalent, one may be able to generate more clicks. Without Creative Optimization, by the time you choose the right version that works the best, it may be too late to make any significant impact on the campaign’s overall performance. However, with Creative Optimization, the algorithm can select the most effective version in real time. Advertisers can then reduce the risk of running unsuccessful creatives, and take a bolder and more innovative approach to online advertising.

Results indicate that Creative Optimization actually works. An analysis of campaigns that used Creative Optimization in the past year indicates that they achieved 73% increase in CTR as compared to other Standard Banners and a 40% increase in Conversion Rate.




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4 Retargeting the underexposed – getting your message across

Effective frequency is the average number of times that the prospect is exposed to the message to maximize the likelihood that he or she takes action. In practice, effective frequency means that users have to be exposed to the marketing message several times before going down the marketing funnel to the intent to purchase and ultimately to a purchase. At the first and second exposure, users are typically still in the awareness phase and only after more exposures do they slide down the funnel to favorability, intent to purchase and finally purchase.

At first glance, repetition may seem wasteful – why waste another impression on a user who did not respond the first time? However, it is the underexposure and overexposure that are actually wasteful. Underexposed users remain at the top of the funnel and may not take action following the marketing message, preventing the campaign from realizing its full potential. Overexposed users have seen enough exposures to act on the message and any additional impression may not have incremental effect, or worse, it may actually annoy users.

As Chart 8 indicates, users are more likely to click on an ad that they have already seen. In addition, CTR almost does not decline until the fifth exposure. The challenge is that studies by MediaMind Research show over and over again that the majority of online users are underexposed. An analysis of hundreds of airline campaigns served by MediaMind show that an average 61% of users received only one exposure over the campaign’s lifetime, while an overwhelming majority of 82% of users received three impressions or less.

Chart 8: Airline CTR by Frequency - Standard Banners

Source: MediaMind Reaserch. Data Q4 2008 to Q3 2009, Airlines, Worldwide.

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This problem is exacerbated by the difficulty of increasing exposure frequency via traditional media buying. Online users are highly unpredictable, and browsing patterns change constantly. Throwing more impressions at the problem may be wasteful and expensive, as it increases frequency to some, but more likely reaches new users and actually creates more underexposed users.

Enter Retargeting. In Retargeting, users who were previously exposed to the campaign, and are now located on a site linked to the exchange can be served another exposure. This is a user specific solution that serves impressions only to those users who are underexposed, to make sure that they have the opportunity to go down the funnel, thus complementing the traditional media buy.

Chart 9: Average Frequency in Airline Campaigns by Cookie Data

Source: MediaMind Research. Data Q4 2008 to Q3 2009, Airlines, Worldwide.

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Benchmarks OverviewThe following benchmark tables provide a summary of the results of campaigns that were served by MediaMind between Q3 2009 and Q2 2010. To produce these benchmarks, MediaMind Research analyzed the results of over 200 billion impressions delivered in six different regions and more than 50 different countries.

Overall global CTR is 0.21%. Rich Media tends to be X3.5 higher CTR as compared to Standard Banners—0.32% as compared to 0.09%.

As far as regional differences are concerned, there is a clear rule of thumb. If you are a former English speaking British colony, your CTR and Dwell are likely to be lower. Thus, the US, Canada, Australia and New Zealand have lower CTR performance as compared to other regions. This is mainly due to differences in user behavior and market maturity.

Chart 10: Standard Banner and Rich Media by Region

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Rich Media Average Standard Banner AverageRich Media Standard Banner

Source: MediaMind Research. Data Q3 2009 to Q2 2010.



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Chart 11: Regional Rich Media Performance

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Source: MediaMind Research. Data Q3 2009 to Q2 2010.

Latin America, South Asia and Europe tend to have the highest Dwell Rate, while Latin America also has the highest Average Dwell Time. Europe tends to have a significantly higher Dwell Rate as compared to North America, Australia and New Zealand, mostly due to differences in user behavior, though in part could be seen in differences in current publisher restrictions.

The benchmark tables contain benchmark averages on interactions, Dwell, clicks, expansions and video metrics. Data is broken down by formats, sizes and verticals. The next 46 pages contain information on 6 regions and 38 countries. The last two pages contain a full description of each vertical and a definition for each of the metrics used.

One important caveat about using these benchmarks is that they only present the average performance, while the deviation in performance between ads is very large. We have tried to slice the data into as many categories as possible in order to assist users in finding the most relevant benchmarks. Still, the averages contain campaigns that are different in their nature, goals and execution. Therefore, these benchmarks should be used as a reference only, and not with the aim of trying to “beat the benchmark.”

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Regional benchmark tables



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Media Mind Global Benchmark Q4 2010