PPC ad response rates down in Q4

February 7, 2004

Online advertising drew lower direct response rates in the fourth quarter because of the higher volume of ads and more advertisers using them for branding, DoubleClick said yesterday.

The New York online ad technology company reported serving 203.8 billion online ads in the holiday quarter, up 43 percent from last year's fourth quarter.

The data showed click-through rates for advertiser-served ads continued to fall, down 45 percent from a year earlier to 0.4 percent. However, view-through rates -- users taking some action within 30 days of seeing an ad -- rose 42 percent to 0.75 percent.

DoubleClick sees the trends as confirmation that more advertisers are using online ads to build brand awareness versus direct response. As evidence, the report tracked a sharp rise in the use of rich media, which analysts say is much more effective for brand advertising than static ads. Rich media ads, which DoubleClick defines as any dynamic ad including those using Flash technology, grew 60 percent from a year earlier to account for 40 percent of all ads served.

Click rates on rich media ads continued to decline, falling 50 percent to 1.24 percent compared with a year earlier. DoubleClick noted that such dynamic ads display much higher conversion rates than static ads, reflecting latent impact.

"Q4 data showed that overall click-through rates continued to decline, which likely reflects a maturation of the industry and dramatically increased volumes, but also that many marketers have goals beyond direct response," the report concluded.

Direct response advertisers online have turned to paid links on search engines to provide inventory instead of banner ads. Google and Yahoo's Overture Services also display paid links in Web site ads through contextual advertising programs.

DoubleClick also saw a likely decrease in the number of pop-up ads served. The company said it served 21 percent fewer ads sized 250-by-250 pixels, the unit most often used for pop-up advertising. DoubleClick said that pop-up ads currently make up about 2 percent of its ads served.

DoubleClick said direct response rates likely will rise in the first quarter because of lower volume compared with the busy holiday quarter.

Source: DM News

        

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