What are disadvantages of display ads over search?

Since many consumers spend time shopping online for everything from groceries and clothing to electronics and cleaning supplies, many businesses include online advertising in their marketing strategies. While the benefits of advertising online include the potential to reach a large market and the ability to measure results, online advertising also presents some disadvantages.

Customers Ignore Ads

Consumers are so used to seeing advertising on television, hearing radio commercials and flipping through advertisements in magazines, they've developed an aversion to all forms of advertising. This is also the case with online advertising, where consumers can avoid clicking banner advertisements, bypass ads in online videos they watch and close pop-up advertisements as soon as they come up on their screens. Customers are in control of which advertising messages they want to click and respond to.

Technical Viewing Problems

Website downtime, lags in website or video loading and browser complications can reduce the number of times consumers see online advertisements and how well they see them. When technical issues occur, companies lose the opportunity to broadcast advertisements for their products and services and may lose potential sales. Viewing problems can occur because of problems with a website or if a consumer is using a smart phone or other mobile device to view a website, has a slow connection speed or does not have the correct applications and programs installed on his computers for proper viewing.

Expensive Ad Prices

Pricing for advertising online can range from inexpensive – $20-a-month placements on local parenting blogs – to thousands of dollars on popular sites such as the New York Times. The cost for banner, text and video ads vary depending on the amount of traffic and the type of readership a website or blog receives. Online advertising through pay-per-click campaigns and social media sites can also wreak havoc on a company's marketing budget, potentially yielding little to no return on investment.

Consumers Get Distracted

When customers visit a website, they typically have a goal in mind, whether it's to catch up on the latest celebrity gossip, read the news, chat with friends, download music or shop for a specific item. Websites present customers with various options that can easily distract them and pull their attention from your online advertisements.

Too Many Options

The Internet offers a wide range of websites on which companies can place advertisements. This can be overwhelming, especially for small business owners. With so many options, it's difficult to narrow down the choices to the websites that will attract the most potential customers and sales.

Once a company selects a website, it is then presented with a variety of ways it can advertise its products or services on the site, such as through banner advertisements, video marketing or by sponsoring a post. Companies have to determine which type of advertisement yields the best response from their target markets.

In the earlier part of the series, we looked at search advertising and its global growth. Another form of online advertising is display advertising, which is a type of online advertising that appears next to content on websites, instant messaging (or IM) applications, and email. These ads, often referred to as web banners, come in standardized ad sizes, and can include text, audio, video, logos, pictures, or interactive media.

Benefits of online display advertising over traditional marketing channels

• Faster brand building: Display ads build brand awareness very quickly, since people are more likely to remember what they see than what they read or hear.

• Effective targeting: The Internet is a platform where people search for things of interest and then click on results that seem the most relevant. Therefore, display ads can effectively reach a large audience within a target market.

• Real time performance tracking: Display advertising makes it easy to track the performance of an online ad campaign to see how many clicks, impressions, and conversions the campaign has received on a daily, weekly, or monthly basis. With this information, advertisers can then tweak the campaign as needed.

Limitations of display advertising

The drawbacks of display advertising are that it gives advertisers limited control over audience targeting, less transparency into inventory costs, and no easy access to ad inventory. Plus, display advertising doesn’t perform as well as search ads do.

As the above graph illustrates, according to eMarketer, Facebook (FB) saw a 51% increase in net US digital display ad revenue in 2013 due to strong mobile ad revenues, and Google (GOOG) (GOOGL) witnessed a growth rate of 33%. Even though Google remains an undisputed leader in the display ad market, Facebook’s growth rate is pretty impressive and is gaining traction.

Story continues

Besides these two players, Amazon (AMZN) and Linkedin (LNKD) are also making their moves in the display market. Twitter (TWTR) posted the largest growth rate of 90%, which is much higher than Yahoo. Read more about Yahoo’s struggle in the display ad market.

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