The web is full of trendy digital marketing concepts we run into on a daily basis. But when it comes to practice, almost none of us seems to understand them for sure. For example, 80% of people who heard of blockchain can’t explain how it works. Some of them even confuse the notion of ‘blockchain’ with ‘cryptocurrency’.

Perhaps, less than 20% of internet users can answer the question what is display advertising?. Even if you define digital display advertising right, it doesn’t guarantee your display advertising campaigns will run smoothly. Let’s find out how exactly display ads work and discover how to amplify their strengths to reach maximum profitability.

What is Display Advertising?

A display ad is a form of paid advertising that usually features a clickable image and a compelling copy written over it.

It is called “display” because the ad unit is “displayed” as sponsored content on a web page when a target user visits it.

The micro goal is to draw the attention of the target audience and encourage them to click on the ad. The macro goal is to raise brand awareness and boost sales in the long term.

In fact, almost every internet user knows how a regular display ad looks like. Here are some  examples: 


The images above belong to display banner ads. An ad #1 is a skyscraper banner ad, ads #2 and #6 are large rectangle banners, #4 is a medium rectangle, #3 is a vertical rectangle, and the display advertisement unit #5 belongs to the class of leaderboard banners.

All those ad formats account for 77% of all impressions and are the most widespread display banner ads across the web.

Learn more about the most popular display ad formats and sizesin this article.

Display advertising is not limited to banners. It also includes the following types:

  • In-banner video and animation ads displayed on the web page the same way as banners do;

  • Rich media ads that expand twice in size being triggered by the user. According to our research, they are 25% more memorable than regular banners;

  • Interstitial ads or full-screen ads that are shown atop the web-page content.

Sometimes, native advertising is also considered a part of display advertising. For example, eMarketer reported that native ads make up 58.3% of display ad spending in 2018. Still, native ads are quite different from traditional banners, as they are organically integrated into the publisher’s website. They usually don’t appear as banners, but rather as suggested posts or recommended content.

How Do Display Ads Work?

We’ve just learned that a display ad is a clickable image with a copy on it. To make it clickable, banner creators include a small HTML code and incorporate a link leading to the target website into it.

When the ad is ready, an advertiser approaches the right publisher in order to buy ad inventory of a suitable ad format. There are 3 major ways of how they can do it: contact publishers directly, join an ad network/ad exchange, or buy inventory programmatically.

To make sure the ad will be shown to the right audience, an advertiser specifies targeting options and filters the potential site visitors by demographical, behavioral, geographical, and other parameters.

Example. Let’s take a look at the Swedish brand specializing in basic male clothing manufacturing.


According to their product specifics, it might be effective to target Europe-based males aged 25-45, who are not necessarily interested in fashion (as the brand focuses on basic clothing). Instead, more significance for targeting may bear the level of income and lifestyle habits, preferences, etc.

After the ad is served to the target audience, an advertiser analyzes results to determine whether this display advertising campaign performs well. Key metrics to consider are:

  • Page Views or Impressions — the number of times the ad was shown to its target audience.  Primarily depends on the publisher’s website authority.

  • Click-through Rate (CTR) — the ratio of page views to clicks. This metric depends more on ad quality and inventory format.

  • Cost per Mille/Thousand (CPM) — the price advertisers pay for each thousand of impressions. The lower is CPM, the better for advertisers. The higher is CPM, the better for publishers.

Using these indicators, an advertiser calculates the effectiveness of the ad campaign and makes changes to the ad unit or its targeting options, if necessary.

3 Major Benefits of Display Advertising for Scaling Your Business

Display advertising has 3 strong features that help your business grow in a competitive environment:

  1. Well-made display ads are visually attractive, especially when it comes to in-banner videos. Images speak louder than text ads, while videos increase the likelihood of purchasing by 64%.

  2. Display ads raise brand awareness, as brand imagery sneaks into the user’s subconsciousness and produces a recognition effect when they see a brand logo again. 71% of consumers will more likely buy a product from a company if they recognize their name.

  3. With the help of ad tech software, display ads are shown to the right users at the right time. Demand-side platforms gather customer data in a matter of milliseconds and match the ad with the right inventory. This way, each ad is served to potential customers of the advertiser’s brand.

On average, display ads reach only 0.35% CTR, but some units perform better than others and generate more impressions.

Best ad formats for advertising (CTR)   

Best display ad sizes for monetization (% of Impressions)

12.9% — 1024*768 Mobile Ads

33% — Medium Rectangle Banners

10.4% — Native Ads

32% — LeaderBoard Ads

5-7% — Full-Screen Interstitial Ads

13% — Skyscraper Ads

1.7% — Video Ads

10% — Large Mobile Banners

1.2% — Rich Media Expandable Ads


IAB Rising Stars

International Advertising Bureau presented 6 new types of interactive display advertising formats called Rising Stars:

  1. Billboard. This one is somehow similar to leaderboard format but is much larger and suitable only for a premium inventory slot at the top of the page.

  2. Filmstrip. A half-page ad format that occupies the whole left or right side of the page.

  3. Portrait. Similar to filmstrip, but not so long and often contains plug & play content.

  4. Pushdown. A large leaderboard that “pushes” the rest of the page’s content down while being triggered.

  5. Sidekick. An interactive right-side banner that pushes on-page content on the left.

  6. Slider. An overlay unit located at the bottom of the page. It fills the page with sponsored content on 100% if the user interacts with a banner.

According to IAB, Rising Stars produce 63% better engagement and 5x longer gaze duration, compared to other display ad formats.

Programmatic + Digital Display Advertising = Win-Win?

Programmatic is gradually taking over the display advertising market. More than 82% of all digital ads were traded programmatically in 2018. According to eMarketer predictions, this percent will rise to 86% by 2020.

Programmatic display ad spending

The long-term process of negotiation and manual trading, aka direct media buying, requires maximum human effort without a guarantee of the highest cost-efficiency.

Programmatic advertising is just the opposite, as it is totally automated and implemented in real-time. When direct media buying may take days or weeks, programmatic real-time bidding solutions handle their tasks within milliseconds. The key players in programmatic that ensure effective media buying for all parties are DSPs and SSPs.

A Demand-Side Platform (DSP) is a programmatic tool for advertisers. It features the self-serve dashboard in which advertisers adjust display ad campaign settings. Then, a DSP checks inventory available at ad exchanges and matches suitable inventory slots to given ad units. The system places an optimal bid based on a budget specified by the advertiser. If the bid wins, the ad will be served to the target user.

Learn more about how a DSP work here.

A Supply-Side Platform (SSP) is a programmatic tool for publishers and app developers, in which they manage their available inventory and place it for sale. In this case, an SSP sends information about the available inventory and website audience data to DSPs and ad exchanges. When several DSPs mark the publisher’s inventory as a suitable one, an SSP evaluates the bids sent by those DSPs and chooses the highest one among them.

Learn more about how an SSP work here.

Either way, it’s a win-win for both supply and demand sides. Advertisers pay the fair price that never exceeds their budget, getting a precisely targeted ad serving in return. Publishers sell their inventory at the highest possible CPM without losing a penny, as SSPs receive all bids simultaneously during a real-time bidding auction.

Aside from display advertisements, full-stack programmatic services like SmartyAds work with the rest of digital ad formats including video, native, mobile, and connected TV advertising.

Serve the most effective display ad formats programmatically and drive higher ROIs to your business with SmartyAds.

Written by
Irina Kovalenko, CMO of SmartyAds
December 2018