As ad sales slid precipitously in the second quarter, online display took the brunt of the media’s focus. Press accounts screamed that display was broken, or in serious disrepair. Nielsen and CMR reported 15 percent and 14 percent declines respectively in online advertising (Nielsen's numbers put the quarter over quarter decline at  25 percent).

Yet, when researcher Katherine Koegel of Primary Impact took a second look at the numbers, the online display portion of that decline was down only 1 percent and 6.5 percent respectively – and even the CMR number was essentially flat with the subtraction of performance based buys. Koegel maintains Nielsen’s numbers also should be adjusted to account for Yahoo! discontinuance of its 20 x 20 text ad units, which many analysts wouldn’t categorize as display. Absent that decline, display volume actually grew modestly.

IAB’s numbers reflect a decline of 5 percent in online advertising in a market where display is stable, sponsorship declined and rich media showed strong growth, Koegel said. The real reason for the major decline in reported ad spend is the precipitous decline in classifieds, she expalined. Among newspapers, The McClatchy Co. reported a 27% increase in online display, while “job ads were terrible,” she added.

What is a reality is that the average CPM for display has dropped to around $2, though this factors in “the long tail” as well as major media players. Also sobering: only 16 percent of the Internet audience ever clicks on a display ad, forcing the major metrics companies in the industry to redefine success.

The result: a raft of new, larger ad units – pushdowns, fixed panels and others – outside of the 300 x 250 IAB standard size that has become the industry’s 30-second spot. These units will continue to proliferate, but the battered banner shouldn’t be dismissed so lightly. If quality publishers can resist the urge to multiply the number of display ads on a page, and if advertisers are more diligent in measuring “view through” – the increase in visits to an advertised site absent direct click metrics – display advertising will more than hold its own.

Among Koegel's predictions for the fourth quarter: Android-related advertising will lead spending and the top 10 list will be dominated by phones and finance. Social media, which broke out in July and August, accounting for 21% of all online spending, is becoming the low-cost, high-reach solution for many advertisers. Competition may force quality publishers to cut back on clutter and focus on driving greater results for their advertisers. Microsoft is matching its recently acquired Atlas ad serving data with comScore’s panel data to come up with new reach and frequency metrics that will make more sense to advertisers comfortable with knowing what percent of an audience they’re able to reach with television.

In that context, as much as publishers disparage ad networks, they deliver a third of all agency ad volume. The issue becomes, what’s the impact on brand? Insight Express data shows that discriminating ad networks can improve brand impressions, or trash them, depending on content adjacency. 

Morris Martin, Research Director, Atlas Institute, Microsoft Advertising, said that one of the major shifts in online media due to the recession is the “introduction of the purchase funnel for the display medium.” Media who “start the conversation” about a brand “should get more of the credit” for its success, he asserted.

Join DM2PRO.com today and tune into the full discussion with Koegel, Martin,  Lynn Bolger, EVP Advertiser Services, comScore; Jon Gibs, VP Media Analytics, Nielsen Online; Ken Mallon, SVP, Custom Solutions and Ad Effectiveness Consulting of Dynamic Logic and Kyle Johnson, Director of Media Products, Compete. Members can also download Koegel’s white paper on the State of Digital Display.