Member Exclusive   //   August 29, 2023

CMO Strategies: Mapping display trends across site and newsletter advertising – direct and programmatic

Keeping the complexities of marketing channels in mind, Modern Retail+ Research has analyzed strategies and challenges across leading marketing channels — like retail media and social media — to identify key trends and best practices in our CMO Strategies series. 

In this installment, Modern Retail+ Research focuses on an analysis of the display ad landscape and its role in marketers’ playbooks. Our first report focused on social media usage and budgets and our second report focused on an analysis of the retail media landscape. Future reports will focus on ad-supported streaming usage and budgets and retail and social media platform specifics.

When ad spending slowed on some marketing channels in late 2022 amid talks of recession, and advertisers began to get cold feet about where and when to execute their remaining 2022 budgets, some turned to tried and true programmatic and turnkey display ad products

During the fourth quarter of 2022, publishers and media buyers alike reported a heightened focus on programmatic and display advertising thanks to publishers wanting to highlight the quick-turn ad slots and to keep ad dollars coming in-quarter. Advertisers, as well, wanted to burn up their remaining budgets before the year concluded. 

News publisher The New York Times Company even saw digital ad revenue grow in Q3 2022 compared to the same period in 2021, primarily due to higher direct-sold advertising at The New York Times Group (which does not include The Athletic) and the addition of ad revenue from The Athletic, which started serving display ads at the end of the quarter. 

Yet despite year-end display ad buying activity, publishers experienced a rocky start to 2023, with many reporting a significant revenue slowdown in the first-half of the year. The month of January alone was pacing between 10% to 25% off projected targets, largely driven by a dip in ad spending, according to several media executives Modern Retail’s sister publication Digiday spoke with at the time. 

“We’re coming off a Q4 [2022] that was up 30% to 31% in direct [advertising revenue], which was epic. And I think whatever bug [our competitors] had in Q4 caught up with us in Q1. We’re down right now as much as 20% to 25% in our forecast for Q1,” said an executive from a digital media company who was permitted anonymity in exchange for candor. 

Now, more than half-way through 2023 and with the latest forecasts and financial updates in, ad spending appears to have held up fairly well – at least the portion going to the larger platform players. Google, the largest seller of advertising, posted constant currency ad revenue growth of 3% in Q1 2023 compared to the same period a year ago. And, Insider Intelligence predicts U.S. digital ad spend growth of 7.8% in 2023 and 11.2% next year. 

With some forms of display ad spending back on the rise, Modern Retail+ Research took a look at how marketers are currently investing in display ads across its most common contexts: sites and email newsletters.


To map out marketers’ current digital playbook, Modern Retail+ Research sent out three surveys asking 635 respondents about past and upcoming investments, marketing channel tactics, preferences and business challenges. 

Modern Retail+ Research also conducted a focus group and individual interviews with marketing executives across industries.

Marketers favor buying programmatic site ads over direct-sold

Love them, hate them or simply scroll past them, display ads have been a go-to since the early days of internet advertising. And, for many marketers, they still are.

Among all the marketing channels considered in our CMO Strategies series, display ads were marketers’ second most-used ad channel, with more than half of respondents (61%) saying their company uses display ads.

Within the specific display ad environments Modern Retail asked marketers about for this report — programmatic site ads, direct-sold site ads and email newsletter sponsorships or ads — programmatic site display ads were the most popular environment in which marketers bought ads. The majority of marketer respondents (64%) said their company currently buys programmatic site display. 

Not far behind programmatic site ads, direct-sold site ads were favored by almost as many marketers, with 56% of respondents saying their company currently buys direct-sold site ads. 

Email newsletter sponsorships or ads — which can be bought programmatically or directly and were considered as a standalone ad environment from site ads for this analysis — came in third, with exactly half of respondents (50%) having said their company currently buys email newsletter display ads.

To be clear, in this analysis, email newsletter sponsorships or display ads do not refer to ads marketers place within their own email sends. Rather, we’re referring to marketers buying display ad placements in existing content-based email newsletters sent out by publishers and other parties.

Between the two site-specific display ad buying methods, marketers prefer programmatic site ads over direct-sold ones because of the ability to automate ad placements at a larger volume. Brands can serve ads across a variety of sites to specific groups of people that they’ve targeted based on attributes like location, demographics or personal interests.

However, buying display site ads programmatically brings with it brand safety concerns. Marketers don’t know on which sites their ads will appear, nor alongside which types of content. The prospect of generative AI adds additional concerns about major brands running ads on questionable made-for-advertising sites with low-quality AI-generated content.

Direct-sold site display ads, on the other hand, ensure marketers have control over ad placement in their preferred context to reach a preferred audience, but they can limit the audience reach. Because of this knowledge on the part of the buyer, direct-sold ads don’t face the same brand safety concerns as programmatic.

Uniquely different from site display ads, display ads that appear in established email newsletters offer the advantage of reaching a cultivated list of rarified subscribers, a smaller group that can be valuable to marketers. Because users have (hopefully) opted-in to receiving the messages, marketers can advertise with relevant, personalized content that matches consumers’ interests and intent through an ad type where consumers have been historically shown to be receptive and engaged.

Cheryl Gresham, who is currently CMO at Verizon Value and who was CMO at Verizon’s Visible at the time of our interview, said the most crucial aspects to running successful display ads, whether they are bought programmatically, direct-sold, or placed in newsletters, is positioning them effectively and making them visually appealing. 

“Creative is a really important element for display banners, and they can be a very efficient aspect of your media plan,” she said. “But they can also be wasteful really quickly, if the creative and the placement are not right. You must carefully articulate the placements’ sizes, where the placements will run and what they will look like.”

Programmatic site ads also receive the largest portion of marketers’ budgets

Within display ad channels, marketers’ budget allocations track with their preferences for using the various ad tactics, in the same order. Programmatic site display ads are the dominant ad channel, with nearly half of marketer respondents (43%) saying programmatic site ads take the largest portion of their marketing budgets. Direct-sold site display ads come in second, with nearly one-third of respondents (30%) devoting the largest portion of their budgets to the channel, while email newsletter sponsorships or ads were selected by less than one-quarter of respondents (22%) as the channel that received the largest portion of their budgets.

Although marketers prioritize their budget allocations to display ad channels in the same order as their usage preferences, there are more noticeable differences in the percentages of marketers who actually allocate large amounts of money to the channels versus those who just say they prefer to buy in each of the environments.

For example, while half of respondents (50%) said they currently buy email newsletter ads, only 22% of respondents devote the largest portion of their budgets to email newsletter ads. This may indicate that email newsletter ads aren’t the place for scale, but are often a more targeted play that can come with 100% share of voice at a more affordable rate or as a smaller slice of the digital advertising pie than ads placed on a website or a site section takeover. 

On the other hand, direct-sold site display ads seem to be the most costly of the types, which may be why they only receive 30% of marketers’ budget allocations, with marketers preferring to invest the larger portion in less costly programmatic ads. On average, direct-sold ads sell for rates two to four times higher than programmatic ads, according to Google News Initiative. Direct ads average $10-20 CPMs, while programmatic ads average $1-5 CPMs.

When looking at display ad budget spending increases, programmatic site display ads is again the top ad environment marketers prefer, with more than one-third of respondents (37%) saying their programmatic site display ad budget increased in the past year. It also likely says something about the budget-conscious year within which marketers are operating.

Angela Zepeda, CMO at Hyundai Motor America, said the automaker has increased its programmatic ad buying recently because of advances in targeting. “There’s a lot of efficiency,” Zepeda said. “It’s become much more sophisticated. More dollars are going through programmatic buying … and, as the tools become more sophisticated, we can lock in on those target audiences in a more efficient way, more rapidly.”

A recent advance in programmatic ad targeting comes in the form of a rising middle market between open-exchange programmatic marketplaces and private marketplaces, referred to by many ad buyers as auction packages. Chris Kane, founder of programmatic ad consultancy Jounce Media, describes an auction package as a deal ID, a type of alternate ID being used in place of third-party cookies, that pulls together dozens or even hundreds of different publishers into one targetable pool of supply, which delivers giant scale across a huge diversity of inventory that’s pre-vetted to meet high-quality standards.

“There’s more awareness among buyers that they need an in-between solution, and there’s a lot of jockeying among ad tech companies to power those solutions,” Kane said, noting that DSPs, exchanges, audience data providers and ad networks are all vying to provide those solutions.

Marketers who want more control over their ad placements than programmatic buying provides tend to prefer direct-sold site ads, and more than a quarter of survey respondents (27%) said their spending on direct-sold site ads had increased in the last year.

Casey Terrell, CMO at Krystal Restaurants, said his company has given more consideration to direct-sold site display ads because of the ability to tailor ads to reach specific consumers – a benefit also afforded by newsletters. 

“The other side of buying programmatically versus direct is that I’ve started to see more of a shift [in thinking] to ‘you know who your customer is, you know what sites they’re going to,’” Terrell said. “Instead of [taking the approach that] this [ad] is going to go programmatically to where these people are … If I’m trying to talk to a consumer of the Krystal brand, I know exactly where that person is going. So, why don’t I just do the creative and go right to where they are, instead of taking more of a programmatic approach?”

Coming in on the low end of ad budget increases is email newsletter ads. In fact, more marketers said they had no changes to their spending budget compared to last year (22% of respondents) than those who said they had increased their email newsletter ad budget compared to last year (21% of respondents). 

As mentioned in the earlier discussion of total budget allocation, email newsletter ads are generally a more targeted play. Whether ads are bought programmatically or through direct buys, marketers, at a minimum, aim to reach a specific subscriber list of opted-in consumers. Within an email newsletter itself, the content around an ad plays a role as well. 

Programmatic email newsletter ads are targeted at specific consumer groups — based on personal interests, geographic locations, demographics  — and ad content generally aligns with those consumers’ attributes whether or not the surrounding email subject matter aligns with the ad. For example, an ad for sportswear could appear in an email newsletter from a news publication with a report on civil unrest. 

Direct-sold email newsletter ads are purchased with the intent of placing them alongside specific email newsletter content for even more precise contextual targeting based on the subject matter itself. The hope is that consumers who are interested in reading an email’s content will also be interested in advertising from a brand that aligns with that subject matter.

Again, because email newsletters are not the channel for scale at all costs, they don’t command huge budgets, or budget increases. However, email newsletter ads may see increased marketer interest in a cookie-less future. Since they rely on a self-identified list of users who have opted in to receive the newsletters and, thereby, provided their personal data, they may prove to be a promising alternate ad channel. 

Regardless of future needs, Instacart’s CMO Laura Jones said, for her company, deciding on overall budget allocation and channel-specific spending increases depends on which display ad environments and buying methods are currently reaching consumers best and at the right price point. 

“I wouldn’t say that one [environment or method] is preferred over the other,” Jones said. “We’re looking at how to find the right customer, at the right time, in the right place and at the right price. Depending on what we see in the market in terms of pricing and responsiveness, we change our channel mix pretty dynamically. We manage it as an active portfolio and we’re always seeking the best returns.”

After cost of media, programmatic faces brand safety risks, while email’s challenge is scale

Across the board in display advertising, marketers struggle to balance their need to target specific groups of consumers with their need to reach an audience at adequate scale. Hitting the right price point factors in as a major area of concern when weighing which display ad buying methods and environments can achieve those goals. 

The largest portion of marketers said cost of media was the biggest challenge they face when it came to two out of three display ads options. More than half of respondents (51%) said cost of media was the biggest issue for direct-sold site ads, and — perhaps surprisingly given their reputation for lower rates — almost half (45%) said the same of programmatic site ads.

Considering first direct-sold site ads, it’s understandable that the majority of respondents were concerned about the expense of buying within this ad channel since, as noted in our analysis of budget allocations, direct-sold ads have higher CPMs than programmatic ads. Despite that expense, advertisers who highly value having their ads appear on specific sites or alongside predetermined content are going to be more inclined to pay higher prices to guarantee placement within specific inventory.

Turning to programmatic site ads, aggregate cost of media is likely more of the issue when it comes to the sheer volume of programmatic ads being bought. As the top display environment in which marketers buy ads, purchasing more programmatic site ads naturally equates to spending more money on the ad channel. Marketers may also need to secure a larger volume of ads when they buy programmatically to ensure they’re reaching their desired consumers at high enough frequencies, since not all placements are guaranteed and targeting can be inexact.

Email newsletter ads are the outlier when it comes to challenges within display channels, as they’re the only display ad channel for which marketers said scale was a bigger challenge than cost of media. Almost half of respondents (46%) said scale was the biggest hurdle they face with email newsletter ads, while a little more than one-third (35%) said it was cost of media. 

Email newsletter ads are not as conducive to scale partially because marketers have to rely on publishers’ owned email lists for which consumers have to first give permission to receive communication. For marketers placing email newsletter ads with larger publisher networks, scale is somewhat less of an issue due to expanded reach across the email products, but marketers purchasing inventory from smaller publishers will struggle with scaling. On the plus side for advertisers, that puts pressure on smaller publishers to cultivate a strong list of rarified subscribers, making even a smaller, focused audience valuable to marketers.

Alongside scale, attribution is another challenge marketers face when using email newsletter ads. Anti-tracking features introduced in recent years by Apple for its mobile devices and by Google for Android operating systems have hindered marketers’ ability to scale through retargeting and to reach consumers who have opted out of being tracked in the first place. Similarly, Apple’s Mail Privacy Protection feature introduced in September 2021 has caused open rates to be viewed as unreliable at a time when advertisers are seeking stronger evidence of a return on their ad dollars. 

Scale can be a problem for marketers who buy direct-sold site ads as well. Thirty percent of respondents said scale was the biggest hurdle they confront when buying site ads direct — behind cost of media. Because advertisers are paying for the assurance that their ads will run on specific sites and in front of select audiences, they can target more precisely, but they risk missing broader groups of consumers. 

However, programmatic’s capacity to place display ads across a plethora of sites brings with it brand safety struggles. Twenty-five percent of marketer respondents said brand safety was the biggest concern they face with programmatic site ads, after cost of media. As previously discussed, because programmatic ad buying depends on algorithms to purchase ad slots, marketers have far less control over where an ad is placed and if it appears alongside content with which they want their brand to be associated. 

Advertisers typically depend on third-party vendors to guarantee the brand safety of their investments, but methods for measuring brand safety usually rely on keyword blocklists. These lists often paint with too broad a brush, algorithmically preventing advertisers from working with publishers that are responsible and deserving of media dollars.

Marketers weigh a range of KPIs for display ad success, but clickthrough rates and impressions are their top metrics

Marketers consider a variety of success metrics when measuring how well site and email newsletter display ads have performed, with clickthrough rates and impressions being fairly consistent key indicators across most ad tactics.

For email newsletter ads the overwhelming winner is clickthrough rates, with 40% of respondents selecting it as the main metric of success their company uses. Email has long played a strong role as a performance vehicle, and publishers themselves have found success with newsletters as a method for driving subscriptions and more.

Because email newsletter ads are directed at a select audience that has already opted in to receive the messages and also has shared personal data at sign up, the ads tend to be more in line with readers’ pre-determined interests. Marketers can also purchase email newsletter inventory directly from preferred publishers to further target key audiences. Their revelantly placed ads have a better chance of being clicked on, making clickthrough rates of high interest and a main KPI for advertisers.

Conversely, clickthrough rates are also an important success metric for email newsletter ads in instances where an email’s surrounding content may not be closely related to an ad’s message. In these cases, it becomes important for marketers to direct consumers away from the email newsletter and onto a branded landing page, where the advertiser can provide in-depth product or service information and, hopefully, drive sales within a more relevant context.

Clickthrough rates also came out on top as the leading KPI for programmatically bought site ads, with slightly less than one-third of respondents (32%) selecting the metric as their main indicator of success. It’s worth noting that impressions and commerce and sales were almost evenly tied in second place behind clickthrough rates at 24% and 26% respectively for programmatic site ads. 

Direct-sold site ads also saw a near tie between impressions and commerce and sales, the two far ends of the purchase funnel, as their key performance indicators. Twenty-seven percent of respondents said impressions was the top success metric their company uses, while 28% said the same of commerce and sales.

Because display ads can be used to support both brand awareness initiatives and conversion goals, finding close survey results across success metrics within programmatic site ads and direct-sold site ads is not unexpected.

Marketers who use direct-sold site ads to target specific audiences on select websites consider impressions and commerce and sales to be of equal importance — but for different reasons.

For impression-based measurement, marketers’ main goal is to place ads in strategic spots where consumers of the brand do not necessarily exist yet — but where marketers know their interests align with the brand — in order to build up brand recognition. 

Automaker Hyundai, for example, places its ads in a similar way through conquest ads against competitors. “We do a lot of in-market video and that works really well for us,” said Hyundai’s Zepeda. “If a customer is shopping for a Honda or Toyota, we can serve them a video of a Hyundai ad that shows them our competitive product, and what the product that they’re looking at doesn’t have. That’s really powerful stuff. … This [dynamic creative optimization] DCO video, where we can customize it for the personalization of who the customer is, is really fantastic.”

When emphasizing commerce and sales measurement, marketers place ads on sites where they know consumers are already likely to exist in order to increase conversions. For example, a brand may promote more expensive or different products to known consumers with the intention of increasing the average order value (AOV) of a conversion. 

Instacart’s Jones said brands that advertise on the food delivery site are naturally focused on sales. “Brands are usually looking at incremental sales — how their sales are doing with ads versus if they weren’t advertising on the platform,” she said. “We’ve started to diversify the number of and type of placements that we offer [such as] pop-ups, brand pages, shoppable display, shoppable video.”

While programmatic site ad measurement sees a similarly close tie between impressions and commerce and sales as secondary performance metrics, its main KPI is clickthrough rates. As a matter of course, programmatic site ads are more likely to be designed to instigate clicks because marketers don’t always know on which sites their ads will be placed, or adjacent to what types of content. Essentially, a brand hopes to move the consumer away from the third-party site and onto its own platform, where brand safety is ensured and value is more easily communicated. 

Unlike direct-sold site ads, programmatic site ads often take a brand education or awareness approach, making impressions a valuable secondary success metric. Programmatic site ads allow advertisers to target audiences based on attributes like shopping and browsing activity, so for consumers who aren’t ready to purchase, making them aware of the brand — and capable of recognizing it later — is a win, in and of itself.

Of note, marketers often take a similar approach to brand awareness on some platforms within social media, the most-used marketing channel among those considered in our CMO Strategies series. On Twitter, Reddit and Snapchat, in particular, brands typically use the platforms as more of an opportunity to educate or engage consumers. These platforms, which fell toward the lower end of marketers’ budget allocations among social media platforms, give users the ability to interact consumer to consumer. As a result, the environments are not particularly conducive to hard advertising content and conversion goals.

Verizon’s Gresham said, regardless of where a display ad appears, marketers need to set a clear intent before placing the ads. “It’s also important to be aware of the goal of the banner. Is the goal awareness, or is it click to buy?” she said. “That doesn’t always come through in the creative. So, if it’s click to buy, stop being cute and just put [for example] a picture of the food and a price point and [wording to the effect of] ‘right-click here to navigate now.’”

Marketers play it safe with display ads in an uncertain economy and despite AI-heightened brand safety concerns

Considering how much the ad industry talked itself into a downturn toward the end of 2022, more marketers are likely to stay focused on spending in digital ad channels where they have more control over budgeting and the flexibility to move ad dollars around quickly, such as display ads, for the near future. 

Despite a rough start to 2023 in which many publishers reported that digital ad revenue was painfully down in the first two quarters of the year, the display ad market appears to be looking up for the remainder of the year. Display ad spend in the U.S. is expected to grow by 15.7%, reaching $163.29 billion in 2023, according to a February forecast from Insider Intelligence. 

The future is not entirely rosy for display ads, however, particularly when it comes to programmatic advertising. Programmatic site ads are facing new brand safety risks amid the generative AI boom (as well as scrutiny from industry organizations like the ANA, which are seeking more transparency across programmatic practices). As the popularity of large language models leads to AI creating large volumes of text, images and video content, the question is increasingly focusing on whether advertisers will end up funding low-quality content — even unintentionally.

A June 2023 report from NewsGuard showed just how quickly questionable made-for-advertising websites are publishing AI-generated content and monetizing it. Researchers found nearly 400 ads for 141 major blue-chip brands across more than 50 sites while browsing the internet in Germany, France, Italy and the U.S. Low-quality site content ranged from plagiarized versions of real news articles to click-bait headlines promoting unproven medical remedies. 

“It’s not like these companies are directly saying, ‘Hey can I advertise on this AI-generated news site?’” said Jack Brewster, enterprise editor at news reliability rating service NewsGuard. “They just tell Google or another third party to advertise to people like you and me, and that creates other problems.”

Nevertheless, programmatic ads are expected to account for nine in 10 digital display dollars this year, according to Insider Intelligence. Interestingly, the data insights company also notes that display ad spending is accounting for an increasing portion of e-commerce channel ad spend — a large subset and close proxy of retail media, which Modern Retail reported is a growing media channel in its second CMO Strategies installment.

With display ad spend predicted to rise this year and with display’s track record as a reliable marketing tool for building brand awareness and supporting conversion goals, this legacy ad channel is likely to remain a top go-to in marketers’ playbooks for years to come.