Companies are spending more and more money on online marketing. Analytics makes it easier to quantify results. With traditional newspaper ads, radio ads, and TV advertising, it is tougher to know which ads are generating the most leads and revenue. It is not necessarily as easy to calculate the return on your investment in online advertisements because not all-online advertising works the same way.
Search ads are measurable. Linked to the results of a search query, when someone clicks on an ad it translates into a click that can be counted and tracked, supplying useful information about the entire process to analytics. Just like banner ads, display ads have greater visibility but have a lower chance of being clicked unless the ad is related to a well-known brand. Nonetheless, banner ads certainly influence buying decisions. Display ads come at a higher level within the sales funnel. (A process with specific steps or stages that make up a purchase from interest to decision)This makes it difficult for a company to determine with any degree of accuracy, which ads have a greater influence on the customer’s decision to purchase. Consumers generally do a Google search when they are ready to buy, so search ads end up getting a lot of the credit for turning the conversion. However, it may have been a display ad that influenced the consumer to make the purchase.
Customer Buying Influence
There is really only one way to determine which type of ad is having the most influence over a customer’s buying decision and that is to make changes to the marketing budget allocations and see what happens. The trick is to track what happens if more money is allotted to display ads and less to search ads – or vice versa. Recent research findings published in a working paper by Harvard Business School professor Sunil Gupta, co-writer Pavel Kireyev, and Ozyegin University professor Koen Pauwels shows that display ads do influence the number of people who click search ads and become customers. However, two additional findings temper the effectiveness of display ads. The research shows that search ads have longer-term effects than display ads. Therefore, while display ads do influence consumer buying decisions, the fact that display ads happen high up in the beginning of the sales funnel indicates that they drive consumers down the funnel to click on more search ads before they become customers. This actually adds cost to the marketing budget because of the extra clicks. The variables include that the study was conducted using a bank, so the results may not be the same for other types of companies and purchases.
Another consideration that needs to be taken into account includes audience engagement. The time distribution for an average user online shows that 96% of a user’s time is spent on content related sites and 4% on search engines. This means display ads have a greater opportunity to influence a buyer. Display ads are also more creative, larger, and generally more engaging. Search ads, on the other hand, are highly relevant but lack the flash of display ads. Search display ads are definitely the king of conversions and provide the clearest indicator of consumer intent.
The bottom line is that both display ads and search ads play important roles in influencing customers. Companies need to optimize their advertising budgets by mixing search data in their display ads so that the customer makes their buying decision earlier in the funnel. This way, the company saves money on the number of ads a consumer clicks on before buying. Big data is forcing new innovations in targeting technologies for display media, so the field is constantly shifting. Is there a clear winner between display and search ads? The answer is no. They both serve specific purposes and they both add value. They key is learning how best to use them to convert consumers into customers in a more timely manner.