History of Online Advertising
– Rise of digital advertising and decline of print media in advertising revenue as a percent of US GDP since 1995
– Early prohibition of online advertising on networks like ARPANET and NSFNet
– Phasing out of commercial use ban by NSFNet in 1991
– Widely publicized example of online advertising via email by DEC in 1978
– Evolution of email marketing and the emergence of spam
– Emergence of spam and its association with email marketing
– Establishment of the first email marketing company by Mark Eberra in 1994
– Canter and Siegel’s Green Card USENET spam raising the profile of online advertising
– Introduction of online banner advertising in the early 1990s
– Prodigy’s use of banners to promote Sears products
– First clickable web ad sold by Global Network Navigator in 1993
– Mainstream adoption of web banner advertising by HotWired in 1994
– AT&T’s successful banner ad campaign on HotWired
– Creation of the first search advertising keyword auction by GoTo.com in 1998
– Launch of Google’s AdWords search advertising program in 2000
– Introduction of quality-based ranking allocation by Google in 2002
– Sorting of search advertisements based on bid price and click likelihood
– Growing importance of search ads in online advertising
– Integration of advertising messages into editorial content and valuable services
– Examples of companies merging advertising with content or services (e.g., Red Bull, Coca-Cola, Nike)
– Embracing of social media and mobile advertising
– Significant growth in mobile ad spending from 2010 to 2013
– Digital work contributing over half of agency revenue in 2017
Types of Online Ads
– Floating ads: appear superimposed over the requested website’s content and may disappear after a pre-set time period
– Expanding ads: change dimensions based on predefined conditions such as user interaction or time spent on a webpage
– Trick banners: imitate common screen elements to induce ad clicks, often without mentioning the advertiser initially
– News Feed Ads: blend into non-paid news updates on social media platforms, offering various types of content promotion
– Interstitial ads: display before users can access requested content, often used during loading times
Advertising Sales and Delivery Models
– Simple publisher case: website publisher selects and serves the ads
– Ad agency case: ads outsourced to an advertising agency and served from their servers
– Online bidding case: ad space offered for sale in a bidding market using an ad exchange and real-time bidding
– Programmatic advertising: automating the sale and delivery of digital advertising using software and targeting algorithms
– Behavioral targeting: using data collected across multiple websites to create detailed user profiles for targeted advertising
Programmatic Advertising Process
– Advertisements selected and targeted to audiences via ad servers
– Cookies used to track user behavior and enable retargeting
– Contextual advertising delivers display ads related to the content of web pages
– Geotargeting delivers ads based on a user’s suspected geography
– Real-time interaction between multiple parties in the ad serving process
Data Management Platforms
– First-party data: retrieved from CRM platforms and customer behaviors
– Second-party data: statistics related to cookie pools on external publications and platforms
– Third-party data: sourced from external providers and aggregated from numerous websites
– Customer information combined and returned to the supply side platform
– Ad exchange puts the offer out for bid to demand-side platforms
– Demand-side platforms act on behalf of ad agencies, searching for users to view ads
– Bidders decide how much to offer based on user information
– Ad exchange picks the winning bid and informs both parties
– Ad content delivered to the user’s browser for confirmation
– Mobile advertising process involves mobile carriers and handset software manufacturers
Search Engine Marketing (SEM)
– SEM increases website visibility in search engine results pages (SERPs)
– Search engines provide sponsored and organic results based on search queries
– Visual cues differentiate sponsored and organic results
– SEM includes actions to make a website listing more prominent for keywords
– Google popularized SEM with its PPC and Analytics tools
Search Engine Optimization (SEO)
– SEO improves a website’s organic search rankings
– Search engines penalize poor quality sites that try to game their rankings
– SEO is a moving target for advertisers due to algorithm updates
– Many vendors offer SEO services
– Optimization aims to increase website relevance to search terms
Sponsored Search
– Sponsored search allows advertisers to be included in search results for selected keywords
– Search ads are often sold via real-time auctions
– Bids may include constraints such as time, language, and geography
– Search engines originally sold listings based on highest bids
– Modern search engines rank sponsored listings based on bid price, click-through rate, relevancy, and site quality
Social Media Marketing
– Social media marketing is commercial promotion on social media websites
– Companies promote products through frequent updates and special offers
– Videos, interactive quizzes, and sponsored posts are common in social media marketing
– Ads are found on platforms like Facebook, Instagram, Twitter, and Snapchat
– Social media profiles are utilized for promotion
Mobile Advertising
– Mobile advertising delivers ad copy through wireless mobile devices
– It can be in the form of static or rich media display ads
– SMS or MMS are used for mobile advertising
– Mobile advertising targets smartphones, feature phones, and tablet computers
– Ads are designed to be compatible with mobile devices.
Online advertising, also known as online marketing, Internet advertising, digital advertising or web advertising, is a form of marketing and advertising which uses the Internet to promote products and services to audiences and platform users. Online advertising includes email marketing, search engine marketing (SEM), social media marketing, many types of display advertising (including web banner advertising), and mobile advertising. Advertisements are increasingly being delivered via automated software systems operating across multiple websites, media services and platforms, known as programmatic advertising.
Like other advertising media, online advertising frequently involves a publisher, who integrates advertisements into its online content, and an advertiser, who provides the advertisements to be displayed on the publisher's content. Other potential participants include advertising agencies that help generate and place the ad copy, an ad server which technologically delivers the ad and tracks statistics, and advertising affiliates who do independent promotional work for the advertiser.
In 2016, Internet advertising revenues in the United States surpassed those of cable television and broadcast television. In 2017, Internet advertising revenues in the United States totaled $83.0 billion, a 14% increase over the $72.50 billion in revenues in 2016. And research estimates for 2019's online advertising spend put it at $125.2 billion in the United States, some $54.8 billion higher than the spend on television ($70.4 billion).
Many common online advertising practices are controversial and, as a result, have become increasingly subject to regulation. Many internet users also find online advertising disruptive and have increasingly turned to ad blocking for a variety of reasons. Online ad revenues also may not adequately replace other publishers' revenue streams. Declining ad revenue has led some publishers to place their content behind paywalls.
