How Does Online Display Media Work? (Kicking Off Online Media Mondays)

Inspired by Fred Wilson's MBA Mondays, I will be starting a new series called Online Media Mondays that will teach the basics of online media (channels, technology, data, etc) from the start. This was inspired by some recent findings

While doing some research on the metrics being used in the industry, I came across some interesting stats:

• One study suggests that 8% of users represent 85% of clicks in display media. Furthermore, 70% of sales that are made due to display ads come from "effective" clicks (ie: instead of clicking on a Nike ad, the user sees the ad and goes directly to Nike.com
• Another study by Comscore suggests that the demographics of frequent clickers is heavily skewed to households who make under $40k a year.

My first takeaway from this was rather positive, as it suggested that display media is working far better than we can traditionally measure. My second takeaway was rather grim, as this data also suggests that there is a fundamental lack of trust for display media in the educated/sophisticated user (ie: a user responds to the creative content but refuses to interact with the media as they are unsure of what will happen.)

I believe this lack of trust comes from a poor understanding of the medium itself. This issue has been worsened by several factors:

• Poor quality display content seen on many junk sites (ie: "punch the monkey" ads) that link to spyware/malware
  
• The industry has a history of lack of transparency so there is very little information on the web about how it functions (since starting at my current role, I have been taught completely by my peers without having any other references on the internet)
• Many users see the effect of being targeted based on behavioral data but have no idea how this information is collected/utilized. Therefore, they a) See it as some kind of targeted spam and b) worry they will provide more data to the 'spammers' by interacting with display ads.
  

Luckily, the industry landscape is changing. As new ad exchanges allow high quality advertisers to reach across sites, it's likely that we'll see less and less 'punch the monkey ads'. Also, the new standard being set by DSPs is fully transparency so very soon the shroud should lift and advertisers/users should learn more about the industry and understand the benefits of display ads.

This new series will be about educating users about the past, current, and future state of online media and show them the value that it creates for both users and advertisers. Most importantly, it should answer the question of 'how does that ad on the page get there?" so that they can start to build trust in this up and coming media channel.