Advertising formats worth paying attention to
And how to size them up
How many ads did you see today? Between the open internet (newspapers, magazines), platforms (Instagram, TikTok), streaming services (YouTube, Peacock), ad-supported apps, and a variety of other digital outlets, a good napkin math calculation for the average Person on the Internet gets us easily into the “many thousands of ads each day” category. As we spend more time on our mobile devices, many of those thousands of ads are quite literally in our faces.
Banner blindness is a well-documented phenomenon in user experience design. It was first observed in the late ‘90s, when usability researchers began documenting that their research subjects – internet users – were glossing over and actively ignoring sections of web sites that were grouped in banner-like formations. Basically anything that was of an expected size and placed in an expected location (like the top of the page or the sidebar) was rapidly being ignored by users. Not a great development for the then-emerging digital advertising industry.
It’s not all doom and gloom – people are investing in digital advertising (to the tune of $332.84 billion worldwide in 2020), and there’s strong commercial evidence that it’s all somehow working. We’ll resist the urge to invoke the Wanamaker quote here – you all know it.
With all of us paying less and less attention to banner ads, now what? What are the forms of digital advertising that both consumers and advertisers can get excited about?
(D)OOH
While out of home and digital out of home aren’t new formats by any stretch of the definition, it’s time to give them another look due to advancements in screens and a better, simpler way to buy inventory.
You may have seen video of this giant corner ad unit showcasing a large roaring lion, pacing about before breaking its glass enclosure and jumping out seemingly into the busy pedestrian area below:
This screen by Chinese screen and display manufacturer LianTronics has 3D capabilities without the need for special glasses or headgear. It can be found in Chengdu at a fairly busy corner; it’s a small marvel that it isn’t causing traffic stoppages or accidents on a daily basis.
Here’s our favorite example so far:
Out of home has traditionally been a very local medium. While the supply side has been consolidating under larger players (e.g., Lamar, ClearChannel, JCDecaux, etc.), buying hasn’t been that easy. It would often involve tracking down a specific office or individual billboard and haggling over production price and posting schedule in a process that often involved many phone calls and a fax machine. This is changing rapidly: Platforms that allow for easier browsing of available inventory and triangulating where the best ROI will be, along with the increase in digital inventory, have dramatically reduced the complexity of OOH buying, tracking, and interpreting campaign results. This, in turn, enables more ambitious campaigns – especially in denser urban centers that often feature vanity screens (Hello, Times Square!) and a plethora of other interesting screen real estate and activation opportunities.
Retail and commerce media
As more people shop online, retailers are faced with increasingly reliable and sizeable traffic to their digital properties. That trend became even more pronounced during the pandemic: In April 2020, as lockdowns swept the country, pageviews for Costco's website grew 221% compared to the year before, by 114% for Best Buy's, 91% for Walmart's, 68% for Target’s, and 50% for Amazon’s. LUMA Partners projects that some $80 billion will possibly be up for grabs, as advertising spend for above- and below-the-line activities gets rebalanced. In true Terry Kawaja fashion, there’s even a one-liner jingle for this rebalancing:
“[F]rom end caps to mobile apps.”
Whenever there’s a large-enough audience somewhere on the internet, talk of advertising-based monetization isn’t far away. On cue, retailers have been creating advertising solutions to grab a larger share of two key budgets: shopper marketing, which has traditionally been reserved for in-store activations, coupons, and other legacy channels; and increased digital budgets both from product manufacturers and category specialists and competitors. Ulta, Walgreens, CVS, Target, and Walmart have all launched advertising arms to sell units on their e-commerce platforms; e-commerce advertising grew 39% in 2020 year over year, reaching $17.4 billion, according to eMarketer.
This is why, while browsing for patio furniture on Target, you can expect to see ads for Square, sponsored posts for other retailers, general promotions, and the usual programmatic suspects.
In-game and various forms of in-video ads
As users spend more of their entertainment time (and dollars) in games, different forms of advertising are popping up. In Epic’s free-to-play Fortnite, for example, users can buy branded skins and gain access to branded game experiences and live events, generating billions of dollars each year for the game. Meanwhile, Roblox has an entire native ad ecosystem with several in-game units that creators can use to promote their individual games to interested users. At this point, Roblox doesn't give advertisers much measurement capability, as Eric Seufert points out, but it does operate the entire value chain, from production to distribution and monetization. This creates a big opportunity for Roblox to build a measurable and transparent ads infrastructure that could help its developers better monetize users.
On the TV and video side of things, the old concept of product placement is getting reinvented. Say you see a billboard in the background of a shot in a TV show – or a can of soda that the main character is drinking. For different audiences you can now change the product promoted on that billboard or swap that can of Coke for a can of Spindrift for the right price. Think of this category of ads as Native 2.0.
Virtual goods
Would you buy a pair of high-end digital sneakers? Gucci thinks you will.
While shelling out real money for virtual goods isn’t surprising (our Fortnite skins example illustrates this trend), their intersection with AR/VR and various platforms where these goods can be showcased post-purchase makes for an interesting remix. B2B advertisers know the value of take-home swag; perhaps the rest of us on the consumer ads side are catching on now, and instead of blocking ads, we’ll all be wearing them.
New formats, new opportunities
With this influx of new options, advertisers are left with three familiar challenges:
Discovery: With so many options out there, brands may struggle to find and test the right opportunities. What’s the right level of experimentation that also mitigates the risk of exposure to something that wouldn’t be perceived as brand-safe?
Buying: Once brands know what you want to buy, it’s not always easy to actually go and buy it. It may require working with an agency or a brand’s team logging into different self-serve systems and trafficking campaigns to pull regular reports. Which budgets should they pull from, and how will they justify budget growth moving forward?
Performance: Measurement can be a challenge with any emerging format, making it difficult to determine what’s really moving the needle for a brand. How can they reconcile the efficacy of different efforts across similar media (e.g., deciding to buy on retailer’s media property vs. another’s) or compare the efficacy of vastly different formats that are technically competing for a share of the same overarching digital budget?
Solving for one of these three – or ideally across all of them – is the next emerging frontier for technology and managed service companies. We’ll need new processes and tools – and as with many previous gold rush market expansions, those who build picks and shovels are poised to do well commercially.
One question
With emerging formats it can be difficult to discern the fads from the mainstays. How resilient will these individual newish formats be on a slightly longer (3-5 year) time horizon? Will wearing virtual designer clothes be the norm in 2026, or will we have moved on to something newer and flashier?
Dig deeper
Thanks for reading,
Ana & Maja
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