Understanding the Landscape of Online Advertising

Online advertising involves the various ways you can make your internet audience aware of your products and services. Online advertising should be a major part of your strategy to gain Internet presence of products and services.

More and more consumers trust and turn to online advertising for information about brands, according to a new study among 29,000 people worldwide that Nielsen published in September, 2013. The study shows that consumer trust in online advertising jumped 9 percent between 2007 and 2013. About 69% of consumers today trust online advertising, making it the second most trusted source of information after word-of-mouth advertising at 84 percent. The study also shows increased consumer trust with various types of online ads including email messages, search engine results, video, social networks, banner ads, display ads and text ads.

There are many ways to advertise online. Plus there are different pricing methods. Here are some of the most common approaches.

Common Types of Online Advertising

Banner Ads
Banner ads were among the first type of online advertising. In essence, a banner ad is a portion of “real estate” on a particular website that advertises your product or service. The size of the ads can differ widely depending on vendor. Most banner ads are horizontal in shape such as 728 pixels wide by 90 pixels high or 468 pixels wide by 60 pixels high and placed either near the top of the page or above the fold for maximum effect. Placing your ad above the fold assures it will get higher visibility than when you place it below the fold. You can create your ad so that it is static, or you can create motion to attract attention.

Despite its popularity, banner ads are not very effective compared to other media. Banner ads are an interactive form of marketing. Yet consumer response to banner ads is lower than offline advertising, such as television and radio, media that is not interactive. Internet users have seen them so often – with a low response - that they now almost appear invisible.

Text Ads
Text ads are a form of online advertising. It contains one or a few words on a web-page. The user can click on it and link to the advertiser’s website. Like banner ads, text ads are not always that effective unless you target the right audience and create the right message.

Search Engine Ads
Search engine marketing advertising is among the fastest growing areas of online marketing. That’s in part because your ads show up to your targeted audience when they search for keywords that are associated with your brand. To maximize your results, you’ll need to continuously research and improve your keyword lists. Plus you’ll need to do high amounts of data mining for words and phrases that searchers use on Google, Yahoo, Bing and other search engines. When you analyze the results you’ll likely find trends and opportunities.

Video
Online video is gaining robust results in advertising effectiveness. Online video ads are equally or more effective than traditional TV, according to most advertising executives. Online video ads also have more impact than display ads and social media. And executives project this trend to continue for online and mobile video.

The challenge you face as the advertiser is to find the sites that are best fit to advertise your product to your target audience. You also need to consider the format the ad will be on and how you will measure the effectiveness of the ad.

Email
Email – along with search - tops the list of the most popular activities consumers do every day online. So it makes marketing sense to advertise where your audience is located. There are a few ways your company can advertise on email.

The first way is with a solo ad. Publishers deliver an email in which the content focuses on your offer. Although these ads can be more expensive than other types of online advertising, they yield the most-cost effective response. Plus you can measure and see the results quickly.

Another way is by sponsoring a newsletter. Publishers often sell space in the form of a text or banner ad or logo placement.

A third way is with email list rental – a strategy in which you send your email to a list of targeted prospects. This is a cost effective strategy for qualified lead generation.

Email marketing is an online form of direct response marketing. To be successful you’ll need to test different audiences, content and landing pages.

Social Networks
Millions of people – some likely your target audience – spend part of each day on social networks, such as Facebook, LinkedIn and Twitter. These social networks enable advertisers to zero in on their target audience, making it a prime way to advertise your products and services.

Social media advertising is a young and growing market. According to Business Insider, social media advertising will grow to $10 billion globally by 2017. And while social media may represent only 1 to 10% of ad budgets among many companies, the amount spent will likely continue to grow for years to come.

Mobile Ads
Mobile ads are where the biggest growth is today, according to Google in a report that USA published on October 18, 2013. The surge in mobile ads – which cost less per unit though have lower click rates than those same ads on desktop computers – has caused the price for cost-per-click advertising on the Internet to go down.

Mobile ads on video have surged even faster. About 40% of traffic on YouTube comes from mobile device users in 2013 compared to only 6% two years ago.

Nonetheless, just because there is a huge increased trend in the number of mobile users does not justify why your company should advertise there if the click-rates are lower. The key is to target the right audience with the type of ad that will entice them to respond.

The sweet spot is on tablet users. Click-rates are much better on tablets than they are on smart phones. And this comes at a time when the cost-per-click is lower than a year ago.

Pricing Methods

Cost-Per-Mille (CPM)
CPM is the traditional advertising pricing method. Publishers price it at 1,000 impressions. CPM is associated with an inventory product and not a performance metric. That’s why many publishers prefer to price an ad this way. They bill on the number of impressions your ad will get. So if they know the number of people who will see your ad – such as the number of subscribers – then they are able to calculate the fee.

Pay-Per-Click (PPC)/Cost-Per Click (CPC)
PPC/CPC is the fastest growing pricing method in online advertising. PPC/CPC is a performance-based metric. You pay the publisher only when a user clicks on your ad, no matter how many impressions your ad may get. Marketers prefer this pricing model, especially small and mid-sized companies without an established brand that most people know about. That’s because you incur a small risk compared to CPM priced models. PPC/CPC is fairly easy to execute. Plus it’s very cost effective. You can scale up or down no matter your budget.

What’s Next?

The online advertising world is moving very fast. By this time next year there may be a new form of advertising through the Internet and mobile media. Nonetheless, it’s a world where so many people interact every day. To survive your business must have an online marketing strategy to increase your presence in front of your target audience. So what’s your strategy?