Interactive Display Ads Are Thriving, Yahoo! is Reaping the Rewards
Online advertising spending is growing every year, and companies are looking for new, innovative tactics to reach and engage their customers. For many of the heavy-hitter ad spenders, this means premium, large, and interactive display ads. With total online advertising revenue in 2010 expected to hit $19 billion (up from $10 billion in 2004), and display advertising expected to grow 7% per year, reaching consumers through the Internet is a critical part of any advertising effort.
Online media giant Yahoo! ($YHOO) is positioning itself to be the premier platform for high-quality display advertisements, and the company’s outlook is heavily dependent on the success of this strategy. According to JP Morgan, Yahoo! leads the display ad market with a 17% share, ahead of Microsoft (11%) and AOL (7%). The company’s CEO, Carol Bartz, has stated numerous times that she believes display advertising is an integral part of the turnaround efforts at Yahoo!, and the evidence is clearly visible on the company’s homepage (www.yahoo.com).
Yahoo! presents 10 billion ads every day, and advertisers want to make each impression count. To maximize the value to advertisers and consumers, Yahoo! is facilitating a shift to large, interactive ads that allow consumers to actively engage the ad. An example below is a Lean Cuisine advertisement on the Yahoo! homepage. As you can see, the slide-out ad takes up a major portion of the above-the-fold area of the page. The ad involves a three-part “quiz” that users take, selecting food preferences to determine which new Lean Cuisine product is best suited for their taste. Not only does this engage consumers, giving them a sense of control, but it provides Lean Cuisine with a wealth of data for use in future product development.
This specific ad is highly representative of the style of ads that companies and agencies are creating to display on the site, and the platform and strategy has been lucrative for Yahoo! In their second-quarter earnings report, the company’s profits soared 51% from the year before, largely based on the success of display advertising. As the global economy continues its recovery and earnings continue to impress, companies are likely to ramp up their advertising spending. With consumers seeking more control over their purchases, agencies are delivering opportunities for consumers to be actively involved in the the ads they see, providing increased identification between brands and customers. Display advertising continues to grow as a percentage of overall online advertising spending, and for Yahoo!, this means improved revenues and continued increases in profits.