CMO Strategies: A guide to display ads — benefits, obstacles and trends

Display ads aren’t going anywhere anytime soon. There’s probably one to the right of this page — but did you notice it? 

This year, marketers and CMOs continue to tap into the $225 billion online advertising business to serve targeted content and ad campaigns that are relevant, engaging and, above all, valuable to audiences. And ad spend on digital banners for mobile and desktop is projected to grow 9.4% and 3.8%, respectively, this year, according to Statista. In Digiday’s first-quarter 2024 survey, a larger percentage of respondents (75%) said that they currently use display ads compared with those who said they used display ads at the same time last year (61% of respondents) — an increase of 14 percentage points. 

Display ads are a trusted media channel among most marketers due to their accessibility and proven outcomes. “Display, to me, is still the easiest channel to buy,” said Laura Knebusch, svp of CPG marketing and consumer experience at household products manufacturer Georgia-Pacific. “I would say it delivers an effective and efficient outcome for us.” 

To map out marketers’ current digital playbooks, Digiday+ Research sent out a survey asking 174 respondents about past and upcoming investments, marketing channel tactics, preferences and business challenges. 

Digiday+ Research also conducted a focus group and individual interviews with marketing executives across industries.

Thus far, 2024 has been a tough year for programmatic marketers. The ongoing deprecation and eventual dissolution of the third-party cookie has left marketers with new challenges regarding how to measure and target ads. Inventory quality issues on made-for-advertising sites (MFAs) have eaten away at media budgets. And AI has brought its own set of unique issues for marketers, many of whom are taking a cautious approach to using the burgeoning technology. 

Even with these compounding issues, programmatic display advertising remains the most-used marketing channel based on Digiday’s survey results, most likely due to its cheap reach and higher ROI. “Programmatic ads are like the Spanx of display advertising — they’re not sexy, but they work,” said one media executive at a major consumer goods conglomerate who preferred to remain anonymous. 

Similar to last year’s survey results, more marketers reported using programmatic display ads over email sponsorships and direct-sold ads in 2024. In this year’s survey, more than three-quarters of respondents (77%) said they use programmatic ads — a larger group than the 64% of respondents who said the same last year. 

“Due to the nature of our business, we heavily invest in programmatic campaigns,” Katelyn Nugent, integrated marketing and communications director at fruit juice and snack maker Welch’s, said in an email. “Programmatic media buying allows us to ensure powerful ROAS (giving more money back to the farmers), while also reaching the right target audience with the right message.” 

Because of its automatic nature, programmatic ads allow advertisers to quickly respond to fast-moving trends and tailor brand messages for individual audiences in real-time. Ads are purchased in bulk, so another main strength of programmatic buying, aside from targeting by impression, is the wide reach a single ad can have. “Typically, we use programmatic tactics to unlock customization at scale as well as to allow us to optimize in real-time,” Katie Williams, U.S. CMO at consumer health care company Haleon, said in an email. “We, as brands and advertisers, need to do our due diligence to remain nimble and provide relevant ads to our consumers in a way that helps them solve their everyday problems and offer our products as a solution.” 

One of the biggest challenges marketers face with programmatic marketing is finding quality inventory so they can place ads on monitored and safe sites. In Digiday’s survey, a quarter of marketers (25%) selected brand safety as the biggest challenge they face with programmatic advertising — the second-most common answer for programmatic after cost of media. “Brand safety is something that we’ve been very focused on and making sure that there’s a lack of waste out there, such as on made-for-advertising sites where we think our ads are getting placed, but no one’s actually seeing them,” Georgia-Pacific’s Knebusch said. 

MFA sites inflate the value of their ad inventory through tactics like aggressive ad refreshes and no frequency capping. But most marketers don’t even know their ads are on the sites. “[The Google Video Partners controversy] was a huge scandal. Buyers who were buying YouTube were really buying Google Video Partners, and it’s running on God knows where. They say it’s not MFA, but we did a URL pull, and there were some interesting sites on there,” an executive said anonymously at Digiday’s Programmatic Marketing Summit. A recent report from Adalytics found that major advertisers could be spending as much as $40 million per year in ads on potentially fraudulent MFA sites.

Georgia-Pacific is addressing this issue by demarcating where the company does want to appear. “We’ve been really focused on developing not just black lists, but white lists of the places we want to be versus the places we don’t,” Knebusch said. “We’ve seen how easy it is for your ads to be in places that you weren’t expecting.” 

This is also where AI will likely come into play more in the future. The introduction of AI technology has redefined how marketers can target individuals to create hyper-personalized ad experiences and quickly generate creative content. AI-powered algorithms analyze users’ behaviors and can better serve ads of interest to specific audiences. 

During a town hall at Digiday’s Programmatic Marketing Summit, agency executives discussed current challenges with programmatic marketing and revealed the inventory quality issues they’re hoping to solve with AI. “It’s incredibly manual having to crawl through campaign reports to check URLs that carried ads. But we have to,” said one agency executive who was granted anonymity in exchange for candor. “That’s what we need AI for,” said another. Although programmatic advertising that uses AI can provide flexibility and wide reach, it does come with brand safety problems due to its automated nature. This is an area that still needs more development and testing.

Last year, Digiday predicted in its CMO Strategies series that email usage would increase this year due to third-party cookie deprecation. According to Digiday’s 2024 survey results, that prediction has proven to be correct.

Unlike last year, email newsletter sponsorships or ads are the second-most used type of display ads in 2024. The category outranked last year’s second-place direct-sold ads by five percentage points this year. While direct-sold ads give advertisers more control over where ads will appear and before which audiences, direct-sold ads can be costly to develop because they require more time and personnel to sell, manage and fulfill the campaigns. Additionally, with the looming threat of third-party cookies going away, marketers are looking for alternatives that utilize their first-party data reserves instead. This may be why marketers are investing more in email sponsorships this year.

To be clear, in this analysis, email newsletter sponsorships do not refer to ads marketers place within their own email sends. Rather, we’re referring to marketers buying display ad placements in existing content-based email newsletters sent out by publishers and other parties. But, in our individual interviews with marketing executives, many brought up their own email programs and campaigns, so we’ve included them for context about how email data reserves are being utilized. 

“We began investing in our own email program [this year]. A couple of years ago, we were looking to build our own first-party data. We wanted to acquire, engage and build relationships with those who are in our first-party database,” Georgia-Pacific’s Knebusch said. “Our email program is focused on keeping those consumers engaged and making sure they have the best news about what’s happening with our brands and providing them incentives, especially during key time periods in the season.”

Rather than advertising on popular sites with the hope of landing in front of the right audiences or relying on third-party data to serve their ads to the right audiences, marketers can tap into existing email lists to reach consumers who have already shown interest in a brand and have voluntarily subscribed to receive content from them. “Email helps us create and maintain an ongoing relationship with consumers,” Haleon’s Williams said. “This means not only establishing trust but building personalized relationships.” By maintaining relationships with past customers and curious brand watchers, advertisers may find more success within this niche audience of potential buyers. 

However, a major issue with programmatic email newsletter ads is the minimal control advertisers have over ad placement within the emails. Ad content is targeted at specific consumer groups based on attributes like personal interests, geographic locations and demographics — but not the subject matter of the emails. That means an ad for sportswear could appear in an email newsletter from a news publication with a report on civil unrest, for example. 

Marketers have long relied on click-through rates (CTR) to measure the effectiveness of email display ads. In fact, 36% of marketer respondents in Digiday’s survey chose CTR as their main measurement of success for email sponsorships. “Once we get down to display, I’m looking at click-through rates and making sure that it’s the right placement,” explained Kate Breen, media strategist at Athletic Brewing, a non-alcoholic beer brand and brewery. “Usually favoring something that’s a little bit more high impact as well.”

Although click-through rates remain the most popular success metric for email ads, the inconsistent definition of CTR by some email newsletter platforms has caused advertisers to measure email ad effectiveness in other ways like sales numbers. According to Digiday’s survey, commerce or sales as a measurement of success for email newsletter ads has risen in importance this year by nearly 3 percentage points compared to last year. “Email is one of the most effective channels for driving high-quality traffic that converts into vehicle sales,” Angela Zepeda, CMO at Hyundai Motor America, said in an email.

When Digiday asked marketers about the biggest challenge they face with display ads, their most common response was cost of media. The largest group of respondents (80%) said cost of media was the biggest challenge for direct-sold advertising, which requires advertisers to buy ad inventory directly from publishers. But even for programmatic ads, which were designed to make the traditional model of ad buying more efficient, 63% of marketers selected cost as the largest challenge they face within the channel.

Over half of respondents (59%) selected cost of media as the top barrier for email newsletter sponsorships or ads. According to Paved, a sponsored content marketplace that works with both advertisers and publishers, the typical cost of traditional email sponsorships has a CPC (cost per click) between $1 and $5. However, the cost can vary depending on factors like list size, advertiser reviews and audience engagement.

For email ads, lack of scale plays a larger role as a barrier to increasing adoption than it does for direct-sold or programmatic ads — a continuing trend from 2023. In Digiday’s survey, 35% of marketers selected lack of scale as the biggest challenge they face with email display ads. Because of email’s smaller audience reach and the limited data reserves available from subscriber email lists, it is not the most effective avenue for reaching a large audience. Therefore, ad spend on programmatic and direct-sold ads continues to increase year over year at a faster pace than spending on email ads. However, as third-party cookies go away, email usage could see more expansion because it allows for more scalability.

To examine how confident marketers are in display ads, Digiday+ Research analyzed the ratio of challenges with display ads to the level of confidence marketers have in the channel. The findings indicated that marketers who are confident in display advertising also realize there are significant challenges to effectively engaging digital audiences via this channel. The results also suggested that marketers who are more experienced with the intricacies of display advertising have learned that there is a steep investment and learning curve with effectively deploying online banner ads — beyond the basic online ad format. This may be why Digiday’s data revealed a higher ratio of challenges reported among those who are confident in the marketing success of banner ads. 

In terms of financial investment, just over a quarter of marketers (25.9%) said their financial investment in all three display ad channels remained the same in 2024 compared with last year. However, many marketers did increase display spending in 2024. The smallest portion of marketers (19.8%) said that they had increased ad spend for email ads this year. Comparatively, nearly 40% of marketers said they had increased programmatic ad spending and 28% said the same of direct-sold ads. 

To look deeper at how marketers are investing, Digiday+ Research analyzed whether there was a correlation between the various display channels and marketers’ levels of investment in each. This analysis revealed marketers are investing in programmatic and direct-sold ads at a similar level of funding. If a marketer is investing in programmatic ads heavily, they are more likely to be investing similarly in direct-sold ads.

In Digiday’s individual interviews with marketing executives, a common reservation they expressed with display ads is the lack of lasting impact the ads have on audiences. Due to the static environments in which display ads are placed, viewers often scroll past or ignore display ads. This can result in “banner blindness” from viewers who have become accustomed to seeing online ad campaigns as they casually scroll through sites or crowded email inboxes.

Along with lack of options for ad placement locations, the display ad format comes with some creative constraints for marketers. Some marketers complain the fixed format of display ads makes it difficult to experiment with new ad concepts. According to Welch’s Nugent, the biggest challenge with display ads is “lack of creativity.” “We utilize rich media displays whenever we can because often the limited landscape of display constricts our creativity,” Nugent said in an email.

For a young brand like Athletic Brewing, display ads are not an ideal way to first expose a potential customer to the brand. “I am hesitant to invest in [display ads] heavily only under the guise that our brand now is still in this growing phase,” Athletic Brewing’s Breen said. “People are still learning about our brand before they make a purchase, and a display ad might not be able to tell a full story.”

Instead, some marketers are taking a two-pronged approach to storytelling with display ads. First, they lay the groundwork with ad placements in other media channels like TV and social media. Then, they supplement those ads with display ads to support their messaging. “We still invest in linear and connected TV, to be able to tell that story. We still have social and audio,” Georgia-Pacific’s Knebusch said. “We have different elements to drive that storytelling, and we look at display to reinforce that message and that awareness, or to continue to help drive more personalized messages as we get closer to a conversion.“

Athletic Brewing’s Breen said the non-alcoholic beer brand takes a similar approach. “We have other storytelling elements that our audience would be exposed to,” Breen said. “So, when they see that display ad, they’ve already been primed. They’ve already heard about our brand before on another channel. That could drive them to click through and learn more about our brand.”

• Despite brand safety issues associated with MFAs and AI’s looming challenges, programmatic advertising is on the rise. Over three-quarters of respondents (77%) said this year that they use programmatic ads — a larger group than last year’s 64% of respondents. 
• A quarter of marketers (25%) selected brand safety as the biggest challenge they face with programmatic advertising, as it is hard to control what content their ads will appear next to.
• Digiday’s 2023 CMO Strategies series predicted that marketers’ use of email ads would increase, which has proven correct. Email newsletter sponsorships or ads are the second-most used type of display ads in 2024, outranking last year’s second-place direct-sold ads by 5 percentage points. 
• Over a third of marketers (36%) chose click-through rates as their main measurement of success for email sponsorships. 
• Cost of media remains marketers’ top barrier for all types of display advertising. The largest group of respondents (80%) said cost of media was the biggest challenge they face with direct-sold advertising, which requires advertisers to buy ad inventory directly from publishers.
• A common reservation marketers expressed with display ads is the lack of lasting impact they have on audiences due to creative format constraints and inflexible ad placement options.