What Are Display Ads & How Do They Work?

Display ads help brands reach audiences across websites, apps, and social platforms.

This guide explains what display ads are, how they work, where they appear, and how to measure their impact.

What Are Display Ads?

Display ads are visual ads—such as banners and videos—appearing on websites, apps, and social media platforms that can be used to drive visibility, traffic, and conversions. 

Display ads reach potential customers as they browse content related to their interests. For example, you often see display ads while reading news articles, watching YouTube videos, checking your email, and playing mobile games. 

How Do Display Ads Work?

Display ads work by purchasing ad placements in one of three main ways:

1. Direct buying: With a direct buy, you strike a deal with a publisher (e.g., a website) to place ads in a specific location for a predetermined time and price. Direct buys offer control, but they’re harder to manage and scale.
2. Ad networks: You can also buy ad space through networks like the Google Display Network (GDN). This allows you to place your ads across multiple sites and target audiences based on interests or behavior.
3. Programmatic advertising: This is buying and selling ad space through an ad exchange platform that gives you access to a much larger inventory compared to traditional ad networks. Programmatic exchanges also offer more control over bidding and more transparency about where your ads are placed.

Display ad costs depend on the placement option and bidding model you choose. 

Many ad platforms use cost per click (CPC) for display ads, which is when you pay only when someone clicks your ad. Cost per thousand impressions (CPM) is also common and involves paying based on how often your ad is shown. 

Programmatic and network-based ad buying typically use auction-based bidding, while direct publisher deals often involve fixed pricing.

Are Display Ads Right for Your Strategy?

Whether display ads are right for you depends on your business goals and audience, but they’re commonly used to increase brand awareness, promote time-sensitive offers, and test creative variations.

Here are a few ways different brands use these ads, complete with some display ad examples:

Casper

Casper, an ecommerce brand that sells mattresses and other sleep products, experiments with different types of display ads to promote limited-time offers and share customer experiences.

Most of Casper’s ads focus on a specific product from their catalog, combined with a discount or special offer.

The AdClarity app within Semrush’s Advertising Toolkit shows that Casper has used 467 different display ads in the U.S. over the last 12 months.

Most of Casper’s display ads are below the fold (77.38%), which helps to keep their average cost per thousand impressions (CPM) fairly low at $4.35. 

Casper also seems to buy most ad space directly from publishers (63.57%), which can keep ad costs down even further.

ActiveCampaign

ActiveCampaign is a popular marketing automation software that uses display ads to build brand awareness with cold audiences.

AdClarity shows that ActiveCampaign relies on programmatic advertising for most of their display ad campaigns (90.39%).

Programmatic advertising won’t give ActiveCampaign access to the best ad deals, but the vast majority (84.73%) of their ads are displayed below the fold to keep their CPM low at $2.52.

Expedia

Expedia is a travel platform that uses display ads to inspire travel with compelling creative.

Expedia uses a combination of programmatic advertising and direct ad buys. Placing a lot of ads “far below the fold” may help control costs.

Expedia spent about $150,000 per month on display ads alone, so it makes sense to conduct frequent A/B testing to see better returns on their ad spend. 

And it seems that Expedia does conduct A/B tests. The AdClarity tool shows that they’ve used over 8,000 different successful ad variants in the last 12 months. Many are similar, with only one or two small changes.

Types of Display Ads

Display ads can be grouped into different formats (how they appear) and targeting approaches (how they’re delivered).

Common display ad formats include:

• Banner ads: Image-based ads shown in fixed placements on websites and apps
• Native ads: Ads designed to match the surrounding site or app content
• Video ads: Short video placements shown on websites, apps, and streaming services
• Interstitial ads: Full-screen ads that appear between app screens or content transitions

Common display ad delivery types include:

• Responsive display ads: Ads where you upload assets (headlines, images, videos, logos, etc.) and the ad platform automatically combines them into different layouts
• Retargeting ads (Google calls these remarketing ads): Ads shown to users who previously visited your site or interacted with your brand

6 Tips for Effective Display Ad Campaigns

Effective display ad campaigns depend on choosing the right platforms, creative, and optimization tactics to maximize reach, engagement, and return on ad spend.

1. Choose the Right Platform for Your Audience

Choosing the right advertising platform depends on where your audience spends time, what resonates with your audience, and what level of targeting and scale your display ad campaign requires.

Next, choose from the following popular options:

• Google Display Network: According to Google, its Display Network reaches over 90% of worldwide internet users. It’s a good option for displaying ads in specific contexts (e.g., a fitness brand might want its ads only on health blogs and nutrition forums).
• Microsoft Audience Network: You can use the Microsoft Audience Network to have your ads displayed across properties and sites like MSN, Outlook, and LinkedIn. It’s a good option for B2B advertisers who are looking to reach a professional audience (e.g., a B2B SaaS company could use it to advertise to CMOs).
• Programmatic advertising platforms: Programmatic advertising platforms like The Trade Desk, StackAdapt, and AdRoll offer advertisers access to ad inventory across multiple ad exchanges. They’re a good option if you’re looking to scale your ad campaigns beyond networks like those offered by Google and Microsoft.

2. Write Strong Copy and CTAs

Strong display ad copy and calls to action (CTAs) communicate a clear benefit and next step within the ad’s space constraints.

Craft effective copy and CTAs for your display ads by following these best practices:

• Focus on benefits: Don’t just describe what your product or service does. Let people know what they’ll get out of it (i.e., how it will improve their lives).
• Make it specific: Specificity converts, but make sure you can back up any numbers (e.g., “Grow your revenue by up to 30%”)
• Use action-oriented language: Your CTA should tell users what to do. Use compelling verbs (e.g., “Buy Now” or “Sign Up”).
• Be clear: Clarity matters more than persuasion. Tell users exactly what to do (e.g., “Start Free Trial” is a clearer CTA than “Take the Leap”).
• Use personalization: Personalize your ad copy and CTA to grab users’ attention more easily. For example, mention the user’s location (e.g., “Find car deals in Boston”). 
• Create a sense of urgency: Encourage action and clicks by adding a sense of urgency to your ad copy (e.g., “Promotion ends tonight”). This can work especially well for limited-time promotions or discounts.

3. Research Competitors’ Strategies

Researching your competitors’ display advertising strategies can help you understand what’s working (and what isn’t), so you can improve your own campaigns.

Use the AdClarity app to learn how much competitors spend on advertising, the types of campaigns they’re running, and even see their actual ads.

Visit the “Advertisers” section and enter a competitor’s domain. The app will then generate a detailed report that shows your competitor’s total ad spend and a breakdown of the ad types and ad buying methods they’re using.

Scroll down to the “Top Ads” section to see the actual ads the competitor is running.

Keep scrolling to the “Top publishers” section to see where your competitor’s ads are being displayed.

4. Use Compelling Visuals

Display ads are primarily visual in nature, so be thoughtful about the designs and videos you use. 

Use these tips to create effective visuals for your display ad campaigns:

• Use high-quality images: Using sharp, high-quality, and original images can make your ads seem more credible
• Keep it simple: Make sure your images highlight a single focal point you want users to pay attention to—this can be your product, a person, or a headline
• Have a unified look: Your ads’ visuals should align with your brand’s look. Try to use consistent colors, fonts, and overall style, so people instantly recognize your brand.
• Design for small screens: Smartphones take up 68% of device share for digital display ad campaigns. This means it’s important that your visuals are clear and legible on smaller screens
• Use animation and video thoughtfully: While animations and videos can grab users’ attention, they shouldn’t distract from your ad’s main message. If you use animation or video in your ad visuals, opt for something subtle that attracts the eye but doesn’t overwhelm users.

5. Optimize Your Ad Placements and Formats

Optimizing where and how your ads are displayed is crucial for getting the best results out of your advertising campaigns.

Follow these tips to optimize the placements (sites and apps) and formats for your display ad campaigns:

• Experiment with manual and automatic placements: Have an ad network decide which sites your ads will be shown on. Once you gather enough data and learn which sites perform well, only place your ads on the top-performing sites.
• Audit placements regularly: Exclude low-performing placements from your ad campaigns. You’ll prevent wasting ad budget and will get a better return on your ad spend.
• Try multiple ad formats: Experiment with multiple ad formats to see what works best. For example, some people engage more with static ads, while other audiences are more likely to interact with video ads. 

6. A/B Test Different Ad Variations

A/B testing different display ad variations compares two versions to identify which elements drive better results.

Set a clear goal before you start an A/B test (e.g., improve click-through rates, drive more conversions, etc.). Setting a clear goal will help you design a better test and ensure you focus on the right metrics.

Test one variable (e.g., ad copy) at a time and keep all other elements the same. This helps you understand which change resulted in improved performance.

Also ensure you get a big enough sample size (either in terms of impressions or conversions) for your A/B test. You can use CXL’s A/B Test Calculator to calculate an appropriate sample size for your test.

How to Measure the Impact of Your Display Ads and Adjust

Measure your display ads’ impact by tracking relevant metrics and using those insights to refine your campaigns. 

Key display ad metrics depend on your campaign goals, but can include:

• Impressions: The number of times your ad is served and appears on users’ screens
• Click-through rate (CTR): The percentage of clicks on your ad relative to how many times it was seen
• Conversion rate: The percentage of users who convert (e.g., sign up or make a purchase) after clicking on your ad
• Cost per action (CPA): How much you’re spending to generate a single conversion (e.g., a purchase or a sign-up)
• Return on ad spend (ROAS): How much revenue you generate for every dollar spent on ads

Analyze these display ad metrics by device type (desktop vs. mobile), placement (specific websites or apps), audience, and creative differences in A/B tests to identify patterns. Then decide whether you need to make adjustments to things like targeting, creative, etc.

Tracking Brand Lift

Display ads often influence awareness even if they don’t result in clicks, so monitor changes in branded search volume.

If branded searches increase following a campaign, it may indicate improved brand recognition. 

To quickly view changes in your branded searches, use the Organic Rankings tool. Go to the “Positions” tab, select the “Advanced filters” drop-down, and set the fields to “Include” > “Keyword type” > “Branded.” And click “Apply.”

Applying a branded keyword filter in Organic Rankings will then show you how your visibility for branded terms has changed over time.

Enhance Your Display Ad Strategy 

Done right, display ads can consistently drive brand awareness, traffic, and conversions.

For optimal results, A/B test your ads to uncover the top-performing variants. 

The AdCreative.ai app can help you generate on-brand creative for your campaigns.

Set up your brand by entering your website and clicking “Import Brand.” The app will automatically fill in details like your brand name, logo, and colors. You can also add and adjust details manually.

Once your brand details are added, click “Create Brand.”

Select “Ad Creatives” on the next screen, then choose the ad size and click “Next Step.”

Enter your ad copy here or click “Generate Texts” to have AdCreative.ai scan your site and generate the copy for you.

Click “Next Step” again to add a background image from image search or your own library.

Give your project a name, then click “Generate.” The app will generate multiple versions of the ad.

From here, you can download the ads you want to use for your A/B tests.