By Eric Berry
Back in the heady days of the early internet, banner ads could reasonably expect a 3% clickthrough rate . Now a clickthrough rate of less than 0.1% is expected . That’s a drop of 97% in about 20 years. This leads to the fundamental question of why has the clickthrough rate of banner ads decreased so markedly? There is, of course, no single answer to this question. Causes range from simple decrease in novelty to changing forms of consumption online. But it is likely that digital has suffered significantly as a tragedy of the commons.
A tragedy of the commons occurs when individuals each independently act rationally and according to their own self interest, despite understanding that this course of action undermines the group’s best interests in the long run. In the case of online advertising, this has occurred on both sides of the aisle, so to speak – both advertisers and publishers. A commoditized publisher stands to reason if they throw 2 IAB standard ads on their website, they’ll be paid a certain amount. Add another, that amount goes up (maybe not 50%, but something). Add another, and they’ll make even more. At a certain point, the usability of their site suffers and they’ll lose users, but short of that, the path to increased profit is clear. Users, over time, have become accustomed to this sort of site – and they simply ignore the top banner and the sidebar full of ads. On the advertiser side, each brand knows they are competing in the situation listed above. To stand out, there’s little choice but to add some form of flashing and strobing. For a while, this was effective – until everyone began following suit. Now web users ignore everything that blinks, strobes, or flashes, even it’s part of the page.
1. Internet Advertising Formats and Effectiveness. Feb. 26, 2010 [https://sites.google.com/site/champtec/ad_format_print.pdf?attredirects=0].
2. Banner Ads: Past, Present, And … Future. April 24, 2012 [http://www.cmo.com/articles/2012/4/24/banner-ads-past-present-and—future.html]