What Is Display Advertising? Definition and Categories

By Indeed Editorial Team

Updated February 16, 2022 | Published June 1, 2021

Updated February 16, 2022

Published June 1, 2021

Display advertising is a popular tool that digital marketers use to increase sales, generate leads and drive website traffic. If you work in sales or marketing, learning about this effective tool may help you increase sales and reach goals. In this article, we explain what display advertising is and its different categories, why display ads are important to include in marketing campaigns and the metrics you can use to measure the success of your display ads.

What is display advertising?

Display advertising is the process of promoting a product or service through visual ads on websites, social media channels and digital platforms. Many advertisers use display ads to encourage potential customers to take a specific action, like request a quote or purchase a product. The most common visuals used to create display advertisements include photos, graphics, videos and animations. Display ads may also appear as banner or text advertisements on third-party websites.

Related: 8 Types of Digital Advertising: Definitions and Benefits

Why are display ads important to include in your marketing campaigns?

It is important to include display ads to create a well-rounded marketing campaign because they provide a wide variety of ad formats and placements to showcase your products, services and offers. Using display ads can help you:

  • Increase brand awareness: Display ads provide a high level of exposure, which can help you increase awareness for the brand, product or service you are marketing.

  • Drive traffic to your website: Marketers often use display ads to encourage potential customers to visit their website. This can help you capture new leads, acquire new customers and increase revenue.

  • Increase sales: Display ads can help you increase sales by influencing potential customers to purchase your product or service. They can also help you capture leads more effectively, which can strengthen your other marketing efforts and give you the option to retarget potential customers with additional ads.

  • Add diversity to your marketing campaign: Using display ads can help you diversify your marketing campaign because you can customize a single ad to fit multiple online platforms. You can also create different categories of display ads, such as banner ads and video ads, to promote the same product or service with different visuals to keep your content fresh.

  • Measure results more effectively: One of the biggest advantages display ads provide is the ability to track and measure key performance indicators (KPIs) throughout your entire campaign. This can help you optimize your advertisements to improve your overall performance.

  • Target specific customers: When you create a display ad, you have the option to choose who may see it by building a target audience based on key demographics and interests. This can help you reach the people who are the most likely to make a purchase or take a desired action.

Related: Types of Media: Advantages and Disadvantages of Each

Display advertising categories

Professional marketers often use several different types of display ads for each marketing campaign to ensure their content feels new and determine which ads their audience engages with the most. Here are some popular categories of display ads you may choose to use in your next marketing campaign:

  • Banner ads: Banner ads typically appear at the top of websites as rectangular graphics or photos. Marketers typically use banner ads to drive traffic back to their website.

  • Interstitial ads: These advertisements appear as webpages that take up a user's entire screen. In order to access the original webpage a user requested, they must exit out of the interstitial ad.

  • Rich media: This type of display ad includes interactive elements, such as videos, audio clips or clickable buttons. Rich media display ads can also include a form or a survey, which is useful if your goal is to generate leads.

  • Video ads: These advertisements use videos or animations to connect with potential customers on a more personal level. Video ads are one of the most effective forms of display advertisements and great for generating brand awareness.

  • Animated ads: These ads use motion graphics to capture the attention of viewers. Marketers often pair animated ads with another type of display ad, such as a banner ad, to maximize their effectiveness.

  • Expandable ads: An expandable ad may appear as a banner ad or another small display ad, but when users click on it the advertisement opens up to cover their entire screen. Expandable ads can include interactive elements and provide viewers with more information than many other types of display ads.

  • Lightbox ads: These ads are similar to expandable ads, but instead of clicking on the ad to open it users may simply hover their cursor over the image or video. To prevent accidental engagements, most lightbox ads only open if a user hovers their cursor over the ad for at least two seconds.

  • 360-degree video ads: This type of display ad uses virtual reality to provide viewers with a 360-degree experience. These ads are highly interactive and allow users to explore a space by rotating their phones or dragging the video with their computer cursor.

Related: Types of Advertisements and What Makes Them Successful

Display advertising vs. native advertising

Native advertising is another popular component of many marketing campaigns. While display advertising is an umbrella term used to include all the visual ads people see online, native advertising refers only to ads that are created to match the content of a specific platform. Here are some of the key differences between display advertising and native advertising:

  • Native advertisements blend in with each platform's content, while display advertisements stand out.

  • Native advertisements look like authentic content that another user might create, while display advertisements look like they are part of an official marketing campaign.

  • Native advertisements typically don't include company logos or branding, while display advertisements follow brand guidelines closely.

  • Native advertisements usually focus on providing value, while display advertisements focus on making a sale.

Read more: What Is Native Advertising? Types, Benefits and the User Experience

Metrics used to measure the success of display advertising

If you plan to include display advertisements in your next marketing campaign, it's important to understand what metrics you can use to measure your success. Here are some of the key metrics marketing professionals use to track the progress of their display ads:

Reach

You can use the reach metric to determine how many people have viewed your display advertisement online. Reach represents the unique number of people who visit the third-party website, social media channel or digital platform you host your display ad on. If your goal is to generate brand awareness or expand your target audience, reach is an excellent metric to monitor. This can help you ensure you're showing your display ad to a wide audience instead of the same people over and over again.

Impressions

Impressions are another great metric to track if you want to increase brand awareness. Whenever your display ad appears on a website or is served to a user, it counts as an impression. The number of impressions you receive is always larger than the number of people you have reached because some people may see your display ads multiple times. This can help you gauge how frequently people are seeing your display ads. The more impressions you receive, the more familiar people may be with the product or service you are promoting.

Read more: Guide To Calculate Impressions: Definition and Example

Clicks

If your goal is to get potential customers to engage with your display ads and visit your website, you may want to consider tracking how many clicks you receive. This metric shows how many times people click on your display ad. Paying attention to this metric can help you determine if people are interested in the product or service you are promoting. You can also use this information to optimize your display ads and improve their performance.

For example, if you notice that you're receiving a lot of impressions but very few clicks, you might edit the visual elements of your display ad to be more appealing to potential customers.

Click-through rate (CTR)

The click-through rate refers to the likelihood of a person clicking on your display ad after they view it. You can calculate your click-through rate by determining the ratio of impressions to clicks. For example, if your display ad reaches 1,000 people and you receive 500 clicks, your click-through rate is 50%. This can help you determine how well your display ad is performing and whether your target audience is interested in the product or service you're marketing.

You can also use this information to set a benchmark for future display ad campaigns. This can help you determine what types of display ads are the most successful over time.

Read more: Calculating CTR: Definition, Importance and Example

Landing page views

Tracking how many landing page views you receive from your display ad can help you analyze your website traffic more accurately than focusing on clicks alone. Instead of counting how many times people click on your display ad, this metric counts the number of times someone successfully makes it to your website after seeing your advertisement. You can compare the number of clicks and landing page views you receive to determine whether people are accidentally clicking on your display ads.

For example, if you receive 500 clicks and 400 landing page views from one of your display ads, you might determine that 100 people accidentally clicked on your display ad. This may also indicate that your landing page took too long to load. Monitoring your landing page views can help you optimize your website to increase web traffic.

Bounce rate (BCR)

Bounce rate refers to the percentage of website visitors that only visit one webpage before closing the website. When a visitor bounces from a webpage they opened after seeing a display ad, it can indicate that they didn't find the information they were looking for. If you see that your display ad has a high bounce rate, you might consider editing the advertisement to make sure it matches the content on your website. Alternatively, you can edit the webpage to make it more user friendly.

Read more: What Is a Good Bounce Rate? With Tips on How To Improve It

Conversion rate (CVR)

The conversion rate shows what percentage of people who click on your ad actually take the desired action once they arrive on your website. For example, if you create a display ad to market shoes, your goal might be to get people to make a purchase from your store. If 100 people click on your ad and 30 of them make a purchase on your website, your conversion rate would be 30%. This can help you determine how successful your display ad is at helping you achieve your marketing goals.

Some other actions you might track by using the conversion rate metric include:

  • Application downloads

  • Form or survey submissions

  • Quote requests

  • Subscribers

Understanding what your conversion rate is can also help you optimize your website to create a better user experience.

Return on investment (ROI)

Once your display advertisement campaign is complete, you can assess your return on investment to determine how well your ads performed. To determine your return on investment, identify what your overall goal for the campaign was. For example, if your goal was to increase brand awareness, then you might focus on the total number of people you reached with your display ads. Next, identify how much you spent on your display ads. Then use the formula below to determine how much it cost you to reach each person:

ROI = (Total ad spend) / (Number of people reached)

For example, if you spent $100 and reached 10,000 people, your cost per person reached would be $0.01.

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