Online advertising

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Online advertising is a form of promotion that uses the Internet and World Wide Web to deliver marketing messages to attract customers. Examples of online advertising include contextual ads on search engine results pages, banner ads, blogs, Rich Media Ads, Social network advertising, interstitial ads, online classified advertising, advertising networks and e-mail marketing, including e-mail spam. Many of these types of ads are delivered by an Ad server.

Competitive advantage over traditional advertising

One major benefit of online advertising is the immediate publishing of information and content that is not limited by geography or time. To that end, the emerging area of interactive advertising presents fresh challenges for advertisers who have hitherto adopted an interruptive strategy.

Another benefit is the efficiency of advertiser's investment. Online advertising allows for the customization of advertisements, including content and posted websites. For example, AdWords, Yahoo! Search Marketing and Google AdSense enable ads to be shown on relevant web pages or alongside search result

Online advertisement

The internet has become an ongoing emerging source that tends to expand more and more. The growth of this particular media attracts the attention of advertisers as a more productive source to bring in consumers.

A clear advantage consumers have with online advertisement is the control they have over the item, choosing whether to check it out or not.^[1]

Online advertisements may also offer various forms of animation. In its most common use, the term "online advertising" comprises all sorts of banner, e-mail, in-game, and keyword advertising, on platforms such as Facebook, Twitter, or Myspace has received increased relevance. Web-87related advertising has a variety of sites to publicize and reach a niche audience to focus its attention to a specific group. Research has proven that online advertising has given results and is a growing business revenue.^[2] For the year 2012, Jupiter research predicted $34.5 billion in US online advertising spending.

Revenue models

Main article: Compensation methods

The three most common ways in which online advertising is purchased are CPM, CPC, and CPA.

• CPM (Cost Per Mille) or CPT (Cost Per Thousand Impressions) is when advertisers pay for exposure of their message to a specific audience. "Per mille" means per thousand impressions, or loads of an advertisement. However, some impressions may not be counted, such as a reload or internal user action.

• CPV (Cost Per Visitor) is when advertisers pay for the delivery of a Targeted Visitor to the advertisers website.

• CPV (Cost Per View) is when advertisers pay for each unique user view of an advertisement or website (usually used with pop-ups, pop-unders and interstitial ads).

• CPC (Cost Per Click) or PPC (Pay per click) is when advertisers pay each time a user clicks on their listing and is redirected to their website. They do not actually pay for the listing, but only when the listing is clicked on. This system allows advertising specialists to refine searches and gain information about their market. Under the Pay per click pricing system, advertisers pay for the right to be listed under a series of target rich words that direct relevant traffic to their website, and pay only when someone clicks on their listing which links directly to their website. CPC differs from CPV in that each click is paid for regardless of whether the user makes it to the target site.

• CPA (Cost Per Action or Cost Per Acquisition) or PPF (Pay Per Performance)^[3] advertising is performance based and is common in the affiliate marketing sector of the business. In this payment scheme, the publisher takes all the risk of running the ad, and the advertiser pays only for the amount of users who complete a transaction, such as a purchase or sign-up. This model ignores any inefficiency in the sellers web site conversion funnel. The following are common variants of CPA:
  • CPL (Cost Per Lead) advertising is identical to CPA advertising and is based on the user completing a form, registering for a newsletter or some other action that the merchant feels will lead to a sale.
  • CPS (Cost Per Sale), PPS (Pay Per Sale), or CPO (Cost Per Order) advertising is based on each time a sale is made.^[4]
  • CPE (Cost Per Engagement) is a form of Cost Per Action pricing first introduced in March 2008. Differing from cost-per-impression or cost-per-click models, a CPE model means advertising impressions are free and advertisers pay only when a user engages with their specific ad unit. Engagement is defined as a user interacting with an ad in any number of ways.^[5]

• Cost per conversion Describes the cost of acquiring a customer, typically calculated by dividing the total cost of an ad campaign by the number of conversions. The definition of "Conversion" varies depending on the situation: it is sometimes considered to be a lead, a sale, or a purchase.

Privacy

See also: HTTP cookie#Privacy and third-party cookies

The use of online advertising has implications on the privacy and anonymity of users. If an advertising company has placed banners in two Web sites. Hosting the banner images on its servers and using third-party cookies, the advertising company is able to track the browsing of users across these two sites.

Third-party cookies can be blocked by most browsers to increase privacy and reduce tracking by advertising and tracking companies without negatively affecting the user's Web experience. Many advertising operators have an opt-out option to behavioral advertising, with a generic cookie in the browser stopping behavioral advertising.

Malware

There is also a class of advertising methods which are considered unethical and may even be illegal. These include external applications which alter system settings (such as a browser's home page), spawn pop-ups, and insert advertisements into non-affiliated webpages. Such applications are usually labelled as spyware or adware. They may mask their questionable activities by performing a simple service, such as displaying the weather or providing a search bar. These programs are designed to dupe the user, acting effectively as Trojan horses. These applications are commonly designed so as to be difficult to remove or uninstall. The ever-increasing audience of online users, many of whom are not computer-savvy, frequently lack the knowledge and technical ability to protect themselves from these programs.

Ethics

Online advertising encompasses a range of types of advertising, some of which are deployed ethically and some are not. Some websites use large numbers of advertisements, including flashing banners that distract the user, and some have misleading images designed to look like error messages from the operating system, rather than advertisements. Websites that unethically use online advertising for revenue frequently do not monitor what advertisements on their website link to, allowing advertisements to lead to sites with malicious software or adult material. The ethical propriety of advertisers that use web searches for competitors' brands to trigger their own ads has been questioned. ^[6]

Website operators that ethically use online advertising typically use a small number of advertisements that are not intended to distract or irritate the user, and do not detract from the design and layout of their websites.^[7] Many website owners deal directly with companies that want to place ads, meaning that the website linked to by the advertisement is legitimate.

The overuse of technologies like Adobe Flash in online advertising has led to some users disabling it in their browsers, or using browser plug-ins like Adblock or NoScript. Many sites use centralized advertising services whose advertisement may be blocked as a side effect of security and privacy measures, because the services require JavaScript and cross-site requests to function, while such features are often not necessary to use the sites and are a potential source of vulnerabilities.

Some companies perform customer engagement studies in online marketing to insure consumer satisfaction, through the use of online compliance centers, building and deploying fraud detection tools, while inspecting websites and publishers to insure website pages offer the highest degree of information security and compliancy with Can Spam Requirements.^[8]

Types

Though, as seen above, the large majority of online advertising has a cost that is brought about by usage or interaction of an ad, there are a few other methods of advertising online that only require a one time payment. The Million Dollar Homepage is a very successful example of this. Visitors were able to pay $1 per pixel of advertising space and their advert would remain on the homepage for as long as the website exists with no extra costs.

• Floating ad: An ad which moves across the user's screen or floats above the content.
• Expanding ad: An ad which changes size and which may alter the contents of the webpage.
• Polite ad: A method by which a large ad will be downloaded in smaller pieces to minimize the disruption of the content being viewed
• Wallpaper ad: An ad which changes the background of the page being viewed.
• Trick banner: A banner ad that looks like a dialog box with buttons. It simulates an error message or an alert.
• Pop-up: A new window which opens in front of the current one, displaying an advertisement, or entire webpage.
• Pop-under: Similar to a Pop-Up except that the window is loaded or sent behind the current window so that the user does not see it until they close one or more active windows.
• Video ad: similar to a banner ad, except that instead of a static or animated image, actual moving video clips are displayed. This is the kind of advertising most prominent in television, and many advertisers will use the same clips for both television and online advertising.
• Map ad: text or graphics linked from, and appearing in or over, a location on an electronic map such as on Google Maps.
• Mobile ad: an SMS text or multi-media message sent to a cell phone.
• Superstitial: An animated adv on a Web page from Enliven Marketing Technologies. It uses video, 3D content or Flash to provide a TV-like advertisement. Used to be known as Unicast Transitional ads as they were originally made by Unicast Communications but the company was acquired by Viewpoint Corporation in 2004, which then changed its name to Enliven in 2008.^[9]
• Interstitial ad: a full-page ad that appears before a user reaches their original destination.

In addition, ads containing streaming video or streaming audio are becoming very popular with advertisers.

E-mail advertising

Legitimate Email advertising or E-mail marketing is often known as "opt-in e-mail advertising" to distinguish it from spam.

Display advertising

Display advertising appears on web pages in many forms, including web banners. These banners can consist of static or animated images, as well as interactive media that may include audio and video elements. Display advertising on the Internet is widely used for branding. This is why metrics like interaction time are becoming more relevant. This may change in the future as display advertising is becoming much more targeted to users, much like how search engine ads can be extremely relevant to users based on what they are searching for. Display advertisers use cookie and browser history to determine demographics and interests of users and target appropriate ads to those browsers. Banner ad standards have changed over the years to larger sizes, in part due to increased resolution of standard monitors and browsers, in part to provide advertisers with more impact for their investment. The standards continue to evolve. Banner ads can be targeted to internet users in many different ways in order to reach the advertiser's most relevant audience. Behavioral retargeting, demographic targeting, geographic targeting, and site based targeting are all common ways in which advertisers choose to target their banner ads.

Affiliate marketing

Main article: Affiliate marketing

Affiliate marketing is a form of online advertising where advertisers place campaigns with a potentially large number of small (and large) publishers, whom are only paid media fees when traffic to the advertiser is garnered, and usually upon a specific measurable campaign result (a form, a sale, a sign-up, etc.). Today, this is usually accomplished through contracting with an affiliate network.

Affiliate marketing was an invention by CDNow.com in 1994 and was excelled by Amazon.com when it launched its Affiliate Program, called Associate Program in 1996. The online retailer used its program to generate low cost brand exposure and provided at the same time small websites a way to earn some supplemental income.

Behavioral targeting

In addition to contextual targeting, online advertising can be targeted based on a user's online behavior. This practice is known as behavioral targeting. For example, if a user is known to have recently visited a number of automotive shopping / comparison sites based on clickstream analysis enabled by cookies stored on the user's computer, that user can then be served auto-related ads when they visit other, non-automotive sites.

In the United States the Federal Trade Commission has been involved in the oversight of behavioral targeting for some time. In 2011 the FTC proposed a "Do Not Track" mechanism to allow Internet users to opt-out of behavioral targeting.

Semantic advertising

Semantic advertising applies semantic analysis techniques to web pages. The process is meant to accurately interpret and classify the meaning and/or main subject of the page and then populate it with targeted advertising spots. By closely linking content to advertising, it is assumed that the viewer will be more likely to show an interest (i.e., through engagement) in the advertised product or service.

Ad server market structure

Given below is a list of top Ad server vendors in 2008 with figures in millions of viewers published in an Attributor survey. Since 2008 Google controls estimated 69% of the online advertising market.^[10]

Vendor	Ad viewers (millions)
Google	1,118
DoubleClick (Google)	1,079
Yahoo!	362
MSN (Microsoft)	309
AOL	156
Adbrite	73
Total	3,097

It should be noted that Google acquired DoubleClick in 2007 for a consideration of $3.1 billion. The above survey was based on a sample of 68 million domains.

See also

• Industry calculations:
  • Click Through Rate (CTR)
  • Cost Per Action (CPA)
    • effective Cost Per Action (eCPA)
  • Cost Per Click or Pay Per Click (CPC or PPC)
  • Cost Per Impression (CPI)
    • Cost Per Mille (CPM), also known as Cost Per Thousand (CPT)
      • effective Cost Per Mille (eCPM)
• Compensation methods
• Classified advertising
• Web advertising:
  • Ad filtering
  • Advertising network
  • Article marketing
  • Affiliate marketing
  • Central ad server
  • Click fraud
  • Dot Commercials
  • In-text advertising
  • Online classified advertising
  • Overlay
  • Pay per click
  • Pay per play
  • Performance-based advertising
  • Pop-up ad
  • Semantic advertising
  • Unicast ad
  • Web banner
• E-mail advertising:
  • e-mail spam
  • opt-in e-mail advertising
  • spamming
• Search Engines
  • Search Engine Marketing (SEM)
  • Search Engine Optimization (SEO)
• Mobile Advertising
  • Mobile Marketing
  • Mobile Development
  • WAP

References

1. ^ Wakolbinger, Lea; Michaela, Denk Oberecker, Kluas (September 2009). "The Effectiveness of combining Online and Print Advertisement". Advertisind Research 49 (3): 360–372. 
2. ^ Wakolbinger, Lea.(2009) "The Effectiveness of Combining Online and Print Advertisements"
3. ^ whyaffiliatemarketing.com
4. ^ Brick Marketing
5. ^ AdWeek
6. ^ Rosso, Mark; Jansen, Bernard (Jim) (August 2010), "Brand Names as Keywords in Sponsored Search Advertising", Communications of the Association for Information Systems 27 (1), http://aisel.aisnet.org/cais/vol27/iss1/6 
7. ^ http://modernl.com/article/ethical-blogging-101 Modern Life: Ethical Blogging 101
8. ^ Janis Kestenbaum, "Can Spam Requirements" Bureau of Consumer Protection, Federal Trade Commission, May 12, 2008
9. ^ http://www.pcmag.com/encyclopedia_term/0,2542,t=Superstitial&i=52250,00.asp
10. ^ 68 million domains