What is a display ad? The basics and beyond

Walk through any city and you'll pass storefronts, bus shelters, and billboards without stopping at most of them. You didn't walk in, you didn't pull out your wallet, but some of those signs stuck. Later that week, you find yourself Googling the restaurant you passed on Tuesday. That's the logic behind display advertising. It's also why measuring it is so much harder than it looks.

Display advertising is one of the oldest formats in digital marketing, but it's still one of the most misunderstood. Brands that figure out how to run it well and measure it honestly tend to find that their ad spend goes further than they expected. Those that don't often end up cutting the campaigns that were quietly doing the most work.

Key takeaways

• Display ads are visual online advertisements that appear across websites, apps, and social media platforms. They're built for awareness, not immediate clicks.
• Common display ad formats include banner ads, rich media ads, video ads, interstitial ads, and responsive display ads, each suited to different campaign goals.
• Unlike search ads, display advertising reaches people before they're actively looking for your product, which means it works higher up in the funnel.
• Display advertising campaigns can use several targeting methods, including contextual targeting, behavioral targeting, and retargeting ads to re-engage past visitors.
• Click-through rate is a common display advertising metric, but it's a poor measure of actual impact. Most of the value shows up in downstream channels like branded and organic search and direct traffic.
• Ad networks like the Google Display Network connect advertisers to ad inventory across millions of websites, making it possible to reach a wide target audience at scale.
• The full revenue contribution of display ads is routinely undercounted by standard attribution tools, which means brands are often making budget decisions based on an incomplete picture.

Defining display advertising

A display ad is a visual advertisement shown to users while they're browsing websites, using mobile apps, or scrolling through social media platforms. Unlike search ads, which appear when someone types a specific query, display ads are served to people based on who they are or what they've been looking at. That's not what they're actively searching for right now.

The Interactive Advertising Bureau (IAB) has long maintained standards for how display advertising works across the web, including specifications for sizing, file formats, and delivery. Most digital advertising in the display format consists of some combination of images, text, and a link to a landing page. More complex formats—like rich media ads and video ads—can include animation, audio, and interactive elements that give users something to engage with beyond a static image.

The Interactive Advertising Bureau's specifications also help publishers and advertisers align on what a valid ad impression looks like, which matters when you're trying to compare performance across different online advertising platforms.

At their core, display ads are a demand-creation tool. They put your brand in front of people who may not know you yet, which is a fundamentally different job than capturing someone who's already decided they want what you sell.

How display advertising works

When a user loads a page on a website that carries display advertising, an ad server runs an auction in milliseconds to determine which ad gets shown in the available ad space. This process—called programmatic advertising—happens through ad networks and programmatic advertising platforms that connect advertisers with publishers who have ad inventory to sell.

Advertisers set campaign parameters including their target audience, budget, ad formats, and bidding strategy. The ad network or platform then handles delivery across multiple websites that match those parameters. The Google Display Network, for example, reaches sites and apps across the open web, allowing advertisers to run display campaigns at significant scale without negotiating individual placements.

Display advertising can also run directly through social media platforms, which operate their own inventory and targeting systems outside of traditional ad networks. Advertisers running Google Ads have access to both the Google Display Network and YouTube placements, making it one of the largest display advertising ecosystems available.

Targeting options

One of the things that makes modern display advertising work is the range of ways advertisers can define who sees their ads. The main approaches include:

• Contextual targeting: Ads displayed on pages whose content matches the advertiser's chosen topics or keywords. A cookware brand might use contextual targeting to show ads on recipe sites.
• Behavioral targeting: Ads served based on a user's browsing history and inferred interests, regardless of what page they're currently on.
• Retargeting ads: Ads shown specifically to users who have previously visited your website or interacted with your brand. These display campaigns tend to convert at higher rates because the audience is already familiar with you.
• Demographic and geographic targeting: Limiting delivery to specific segments of the population based on location, age, income, and similar signals.

Most display advertising campaigns use some combination of these methods, depending on their campaign goals.

Common display ad formats

Display advertising covers a wide range of formats, and understanding which one fits your goal matters as much as where your ads get displayed. Here's what you're most likely to encounter:

Banner ads are the foundational format in online advertising (rectangular ads that appear at the top, bottom, or sides of a webpage). Common display ad sizes for banner ads include the 728x90 leaderboard, the 300x250 medium rectangle, and the 160x600 wide skyscraper. Traditional banner ads are static or animated, designed to generate ad impressions at volume across the Google Display Network and other ad networks.

Rich media ads go further. They can include video, audio, and interactive elements that users can engage with directly inside the ad unit. Rich media ads typically generate stronger engagement than static formats, though they also come with higher production requirements.

Video ads run before, during, or after video content on platforms and across the web. Video advertising has grown significantly as streaming and short-form video have taken over more of users' screen time. Video ads are well-suited for digital advertising campaigns focused on brand storytelling.

Interstitial ads are full-screen ads that appear at natural transition points in an app or on a website, like between pages, between levels in a game, or when content is loading. These interstitial ads tend to get high visibility but can feel disruptive if they're not placed well.

Responsive display ads are a more flexible format used heavily in Google Ads. Advertisers provide headline options, descriptions, and images, and Google's platform assembles combinations automatically to fit available ad space across multiple websites and app screens. The Google Display Network makes this format especially practical for advertisers who want broad reach without designing dozens of individual sizes.

Native ads are worth mentioning here even though they sit in a gray area. Native display ads are designed to blend in with the surrounding content, making them look more like editorial material than advertising. Unlike traditional banner ads, native ads prioritize context over interruption, and native advertising is increasingly common on social media platforms and content discovery networks.

Display ads vs. search ads

Search and display advertising serve different purposes, and treating them as interchangeable is one of the more common mistakes in digital marketing.

Search ads appear on search engine results pages when a user types a relevant query. They're intent-driven: you're reaching someone who has already decided they want something and is actively looking for it. That's why search ads tend to have higher click-through rates.

Display advertising works differently. You're reaching people during their normal browsing behavior, before they've expressed any search intent. They might be reading the news, checking sports scores, or watching a video on one of thousands of websites where display ads get shown. The goal isn't to get an immediate click. Instead, you're trying to build brand awareness so that when those people eventually go looking, your brand is the one they think of first.

This is why comparing click-through rates between display advertising campaigns and search campaigns is a bit like comparing the performance of a billboard to a car dealership's showroom floor. They're doing different jobs at different points in the customer journey.

Are display ads effective? Measurement tells an incomplete story

Display ads are effective, but that effectiveness is regularly undercounted, and the undercounting has real consequences for how brands allocate their ad spend.

The problem is that most attribution tools are built around clicks. A user sees a display ad, doesn't click, goes about their day, and later searches for your brand directly. The eventual conversion gets credited to branded search, and the display campaign that put your brand in their head gets nothing. This is the click through rate trap: a metric that tells you how many people clicked, but nothing about how many people remembered.

This is what makes display advertising work so poorly in last-click attribution models. The value it creates doesn't show up at the point where last click typically looks. Display advertising's contribution tends to be visible only when you can look across the full behavior pattern—ad impressions, subsequent branded search volume, direct traffic spikes, and organic visits—rather than just the final click.

Ad fatigue is also real. A display campaign that's been running too long to the same audience will see its effectiveness erode as users become desensitized. Effective display ad campaigns rotate creative, cap frequency, and refresh messaging regularly to stay relevant to their target audience. Ignoring this is one of the reasons some brands conclude that display advertising doesn't work, when the actual issue was a campaign that needed refreshing months ago.

Ad blocking software is another complicating factor. A meaningful share of internet users, particularly on desktop, run ad blockers that prevent display ads from rendering at all. This means reported ad impressions can overstate actual visibility, and reach estimates from ad networks should be interpreted with that in mind.

None of this means display advertising isn't worth running. It means you need a measurement approach that can actually see what it's doing.

How display advertising is bought and priced

Display advertising runs on a few different pricing models, and understanding them matters when you're evaluating display advertising cost against performance:

• CPM (cost per mille/cost per thousand impressions): The most common model for awareness-focused display campaigns. You pay for every thousand ad impressions, regardless of whether anyone clicks. This makes sense for building brand awareness campaigns where reach is the goal. Most banner ads and native ads running through Google Ads or programmatic platforms use CPM pricing.
• CPC (cost per click): You pay only when someone clicks your ad. This model is more common for direct-response display campaigns where the advertiser wants to track traffic to a landing page. Common display ad sizes like the 300x250 banner and 728x90 leaderboard often run on both CPM and CPC pricing depending on the platform and placement.
• CPV (cost per view): Common for video advertising. Advertisers pay when a user watches a certain portion of a video ad.

Advertisers bid for ad inventory through ad networks and programmatic advertising platforms, competing against other advertisers targeting the same audience segments. Advertising cost varies significantly based on industry, audience quality, placement, and timing.

Display advertising metrics worth tracking

Click-through rate gets the most attention, but it's arguably the least useful metric for evaluating display ads at the top of the funnel. A display campaign building brand awareness isn't supposed to have a 5% click-through rate. That's not what the format is for.

More meaningful signals include:

• View-through conversions: Tracks users who saw your display ads and later converted without clicking. This is imperfect but captures some of the downstream impact that click-through rate misses entirely.
• Branded search volume: Monitoring whether branded search queries increase in correlation with display advertising activity is one of the cleaner ways to see awareness effects in action.
• Direct traffic trends: A spike in direct traffic during or after a digital advertising campaign run can indicate that the ads displayed are building real brand recall, even when no one clicked.
• Landing page behavior: When users do click through, what they do on your landing page—how long they stay, whether they convert—tells you whether the ad and the destination are aligned.
• Reach and frequency: How many unique users were reached, and how many times on average did each one see your ads? Getting this balance right affects both effectiveness and ad fatigue.

Display advertising metrics tell you something, but no single metric tells you the whole story. The full picture requires looking at how display advertising campaigns connect to behavior across other channels, not just what shows up in the campaign dashboard.

Display advertising best practices

A few things consistently separate display advertising campaigns that contribute to business growth from those that drain budget without results.

Match format to objective. Video ads are well-suited to introducing your brand to a cold audience. Retargeting ads work better for re-engaging people who've already shown interest. Rich media ads can drive interaction when you need more than passive exposure. Choosing the right format for the job matters more than picking the flashiest option.

Use creative that works without a click. Since most people who see your display ads won't click them, the impression itself has to do work. That means your branding needs to be clear and memorable even to someone who scrolls past in two seconds. Well-designed ads displayed consistently to the right audience build recognition over time.

Cap your frequency. Showing the same ad to the same person fifteen times in a week is a reliable way to create negative brand associations. Most programmatic advertising platforms offer frequency capping, so use it.

Test and refresh regularly. Display advertising campaigns don't end at launch. Rotating creative and testing different messaging helps maintain effectiveness as audiences become familiar with your ads. Effective display advertising campaigns treat creative as something that needs active maintenance, not a one-time setup.

Don't evaluate display advertising using search metrics. A high click through rate sounds good, but judging a brand awareness campaign by that metric alone is a measurement mismatch that leads to premature cuts. Set success metrics before the campaign runs, and make sure they match the campaign's actual job.

Where Prescient comes in

Standard attribution tools are built around clicks, which means display advertising's real contribution—driving branded search, direct traffic, and downstream conversions—tends to disappear from the numbers. Prescient's marketing mix model is built to measure those downstream effects, including the halo revenue that display campaigns generate across paid and organic channels. That means your display ad spend gets evaluated based on what it actually drove, not just what it could take credit for at the last click.

If you're running display campaigns at any meaningful scale and making budget decisions based on platform-reported data alone, you're likely working with an incomplete picture. Book a demo to see how Prescient measures the full impact of your display advertising.

FAQs

What do you mean by display ads?

Display ads are visual advertisements—made up of images, video, or interactive elements—that appear on websites, apps, and social media platforms while users are browsing. Unlike search ads that show up when someone is actively looking for something, display ads reach people during their normal online activity. They're primarily used for building brand awareness, reaching new audiences, and staying top-of-mind with people who've previously visited your site.

What's the difference between a search ad and a display ad?

Search ads appear on search engine results pages in response to a specific query, reaching people who are actively looking for something right now. Display ads appear on websites and apps across the web, reaching people based on their interests, behavior, or the content they're reading . They didn't search for anything. Paid search tends to capture existing demand; display advertising is more about creating demand and building awareness earlier in the customer journey.

Are display ads still effective?

Yes, but the evidence of their effectiveness is often in places that standard attribution tools don't measure well. Display advertising doesn't tend to drive a lot of direct clicks, which causes it to look underperforming in last-click models. The real impact usually shows up in branded search volume, direct traffic, and the overall lift in conversion rates across other channels when display advertising is running. Brands that evaluate display ads using the right metrics , rather than just click-through rate, consistently find them worth the ad spend.

What is a display ad in a newspaper?

In a traditional print newspaper, a display ad is a paid advertisement that uses visual design—images, headlines, and formatted layouts—to stand out from the editorial content around it. These are the ads that take up a quarter page or more, as opposed to classified ads that are text-only and listed in small type. The term "display advertising" in digital marketing borrows directly from this print tradition, referring to visual ads that appear alongside content rather than in response to a search.