Advertising has come a long way since the archaic days of only being able to advertise on billboards, magazines or on TV. With the Internet dominating everything in our lives from social media, to retail sales, to video gaming – more and more of our time is spent on the Internet. Whether we’re at work or at home, we’re constantly on our smartphones, tablets and computers trolling through Facebook, Twitter, Amazon and Pandora. Display Ads—such as banner Ads on websites — are much more visible but are allegedly less likely to translate into direct clicks and purchases than say Search Ads do on Google. However, that isn't entirely true.
Taking a closer look at the customer attribution and customer dynamics, you will notice that Search Ads are getting all the credit for driving customers down the sales funnel – when in reality Search Ads make up a small fraction as to why the customer made the decision to click or purchase. Most online advertisers will justify how much they spend based on Click-Through-Rate (CTR) and Cost-Per-Acquisition (CPA). However, according to Mr. Sunil Gupta of Harvard Business School, the core problems with using CTR and CPA as a basis for Ad spending are “they give credit to the last click and ignore the impact of other ad formats that may have helped a consumer move down the conversion funnel,” and “they ignore the dynamics, since they only account for the immediate impact of ads.”
All in all, Display Ads not only generate more brand awareness but also contribute to a consumer’s eventual decision to click on a Search Ad – “When you look at most consumers’ behavior, they do a search on Google when they are ready to make a decision,” says Gupta. “So Search Ads get all the credit for the sale. But search ads are at the bottom of the [purchase] funnel; Display Ads are at a higher level. Everybody in the industry intuitively believes that Display Ads drive people down the funnel, so they should get some credit—but they don’t.”