, is a form ofmarketingand advertising which uses the Internet to deliverpromotionalmarketing messages to consumers. Consumers view online advertising as an unwanted distraction with few benefits and have increasingly turned toad blockingfor a variety of reasons.
It includes email marketing,search engine marketing(SEM),social media marketing, many types ofdisplay advertising(includingweb banneradvertising), andmobile advertising. Like other advertising media, online advertising frequently involves both a publisher, who integrates advertisements into its online content, and an advertiser, who provides the advertisements to be displayed on the publishers content. Other potential participants includeadvertising agencieswho help generate and place the ad copy, anad serverwhich technologically delivers the ad and tracks statistics, andadvertising affiliateswho do independent promotional work for the advertiser.
In 2016, Internet advertising revenues in the United States surpassed those ofcable televisionandbroadcast television.1:14In 2017, Internet advertising revenues in the United States totaled $83.0 billion, a 14% increase over the $72.50 billion in revenues in 2016.2
Many common online advertising practices are controversial and increasingly subject to regulation. Online ad revenues may not adequately replace other publishers revenue streams. Declining ad revenue has led some publishers to hide their content behindpaywalls.3
In early days of the Internet, online advertising was mostly prohibited. For example, two of the predecessor networks to the Internet,ARPANETandNSFNet, had acceptable use policies that banned network use for commercial activities by for-profit institutions.45The NSFNet began phasing out its commercial use ban in 1991.6789
The first widely publicized example of online advertising was conducted via electronic mail. On 3 May 1978, a marketer fromDEC(Digital Equipment Corporation),Gary Thuerk, sent an email to most of the ARPANETs American west coast users, advertising an open house for a new model of a DEC computer.510Despite the prevailing acceptable use policies, electronic mail marketing rapidly expanded11and eventually became known asspam.
The first known large-scale non-commercial spam message was sent on 18 January 1994 by anAndrews Universitysystem administrator, bycross-postinga religious message to allUSENETnewsgroups.12In January 1994 Mark Eberra started the first email marketing company for opt in email list under the domain . He also started the Direct Email Marketing Association to help stop unwanted email and prevent spam.1314
Four months later,Laurence Canter and Martha Siegel, partners in a law firm, broadly promoted their legal services in a USENET posting titled Green Card Lottery Final One?15Canter and Siegels Green Card USENET spam raised the profile of online advertising, stimulating widespread interest in advertising via both Usenet and traditional email.12More recently, spam has evolved into a more industrial operation, wherespammersuse armies of virus-infected computers (botnets) to send spam remotely.10
Onlinebanner advertisingbegan in the early 1990s as page owners sought additional revenue streams to support their content. Commercial online serviceProdigydisplayed banners at the bottom of the screen to promoteSearsproducts. The first clickable web ad was sold byGlobal Network Navigatorin 1993 to a Silicon Valley law firm.16In 1994, web banner advertising became mainstream whenHotWired, the online component ofWired Magazine, sold banner ads toAT&Tand other companies. The first AT&T ad on HotWired had a 44% click-through rate, and instead of directing clickers to AT&Ts website, the ad linked to an online tour of seven of the worlds most acclaimed art museums.1718
Search ads19:119Googlelaunched its AdWords search advertising program in 200020and introduced quality-based ranking allocation in 2002,21which sorts search advertisements by a combination of bid price and searchers likeliness to click on the ads.19:123
More recently, companies have sought to merge their advertising messages into editorial content or valuable services. Examples includeRed Bulls Red Bull Media House streamingFelix Baumgartners jump from space online,Coca-Colas online magazines, andNikes free applications for performance tracking.18Advertisers are also embracing social media2223and mobile advertising; mobile ad spending has grown 90% each year from 2010 to 2013.24:13
Display advertisingconveys its advertising message visually using text, logos, animations, videos, photographs, or other graphics. Display advertisers frequentlytargetusers with particular traits to increase the ads effect. Online advertisers (typically through their ad servers) often usecookies, which are unique identifiers of specific computers, to decide which ads to serve to a particular consumer. Cookies can track whether a user left a page without buying anything, so the advertiser can laterretargetthe user with ads from the site the user visited.25
As advertisers collect data across multiple external websites about a users online activity, they can create a detailed profile of the users interests to deliver even more targeted advertising. This aggregation of data is calledbehavioral targeting.26Advertisers can also target their audience by usingcontextualto deliver display ads related to the content of the web page where the ads appear.19:118Retargeting, behavioral targeting, and contextual advertising all are designed to increase an advertisersreturn on investment, or ROI, over untargeted ads.27
Advertisers may also deliver ads based on a users suspected geography throughgeotargeting. A usersIP addresscommunicates some geographic information (at minimum, the users country or general region). The geographic information from an IP can be supplemented and refined with other proxies or information to narrow the range of possible locations.28For example, with mobile devices, advertisers can sometimes use a phonesGPSreceiver or the location of nearby mobile towers.29Cookies and other persistent data on a users machine may provide help narrowing a users location further.28
Web bannersorbanner adstypically are graphical ads displayed within a web page. Many banner ads are delivered by acentral ad server.
Banner ads can userich mediato incorporate video, audio, animations, buttons, forms, or other interactive elements usingJava appletsHTML5Adobe Flash, and other programs.
Frame ads were the first form of web banners.17The colloquial usage of banner ads often refers to traditional frame ads. Website publishers incorporate frame ads by setting aside a particular space on the web page. TheInteractive Advertising Bureaus Ad Unit Guidelines proposes standardized pixel dimensions for ad units.30
Apop-up adis displayed in a new web browser window that opens above a website visitors initial browser window.31Apop-under adopens a new browser window under a website visitors initial browser window.24:22Pop-under ads and similar technologies are now advised against by online authorities such as Google, who state that they do not condone this practice.32
A floating ad, or overlay ad, is a type of rich media advertisement that appears superimposed over the requested websites content. Floating ads may disappear or become less obtrusive after a preset time period.
An expanding ad is arich mediaframe ad that changes dimensions upon a predefined condition, such as a preset amount of time a visitor spends on a webpage, the users click on the ad, or the users mouse movement over the ad.33Expanding ads allow advertisers to fit more information into a restricted ad space.
A trick banner is a banner ad where the ad copy imitates some screen element users commonly encounter, such as an operating system message or popular application message, to induce ad clicks.34Trick banners typically do not mention the advertiser in the initial ad, and thus they are a form ofbait-and-switch.3536Trick banners commonly attract a higher-than-averageclick-through rate, but tricked users may resent the advertiser for deceiving them.37
News Feed Ads, also called Sponsored Stories, Boosted Posts, typically exist on social media platforms that offer a steady stream of information updates (news feed38) in regulated formats (i.e. in similar sized small boxes with a uniform style). Those advertisements are intertwined with non-promoted news that the users are reading through. Those advertisements can be of any content, such as promoting a website, a fan page, an app, or a product.
Some examples are: Facebooks Sponsored Stories,39LinkedIns Sponsored Updates,40and Twitters Promoted Tweets.41
This display ads format falls into its own category because unlike banner ads which are quite distinguishable, News Feed Ads format blends well into non-paid news updates. This format of online advertisement yields much higher click-through rates than traditional display ads.4243
The process by which online advertising is displayed can involve many parties. In the simplest case, the website publisher selects and serves the ads. Publishers which operate their own advertising departments may use this method.
The ads may be outsourced to an advertising agency under contract with the publisher, and served from the advertising agencys servers.
Alternatively, ad space may be offered for sale in a bidding market using anad exchangeand real-time bidding. This involves many parties interacting automatically in real time. In response to a request from the users browser, the publisher content server sends the web page content to the users browser over the Internet. The page does not yet contain ads, but contains links which cause the users browser to connect to the publisher ad server to request that the spaces left for ads be filled in with ads. Information identifying the user, such ascookiesand the page being viewed, is transmitted to the publisher ad server.
The publisher ad server then communicates with asupply-side platformserver. The publisher is offering ad space for sale, so they are considered the supplier. The supply side platform also receives the users identifying information, which it sends to a data management platform. At the data management platform, the users identifying information is used to look up demographic information, previous purchases, and other information of interest to advertisers.
Broadly speaking, there are three types of data obtained through such a data management platform:
refers to the data retrieved fromcustomer relationship management(CRM) platforms, in addition to website and paid media content or cross-platform data. This can include data from customer behaviors, actions or interests.
refers to an amalgamation of statistics related to cookie pools on external publications and platforms. The data is provided directly from the source (adservers, hosted solutions for social or an analytics platform). It is also possible to negotiate a deal with a particular publisher to secure specific data points or audiences.
is sourced from external providers and often aggregated from numerous websites. Businesses sell third-party data and are able to share this via an array of distribution avenues.
This customer information is combined and returned to the supply side platform, which can now package up the offer of ad space along with information about the user who will view it. The supply side platform sends that offer to anad exchange.
The ad exchange puts the offer out for bid todemand-side platforms. Demand side platforms act on behalf of ad agencies, who sell ads which advertise brands. Demand side platforms thus have ads ready to display, and are searching for users to view them. Bidders get the information about the user ready to view the ad, and decide, based on that information, how much to offer to buy the ad space. According to theInternet Advertising Bureau, a demand side platform has 10millisecondsto respond to an offer. The ad exchange picks the winning bid and informs both parties.
The ad exchange then passes the link to the ad back through the supply side platform and the publishers ad server to the users browser, which then requests the ad content from the agencys ad server. The ad agency can thus confirm that the ad was delivered to the browser.46
This is simplified, according to the IAB. Exchanges may try to unload unsold (remnant) space at low prices through other exchanges. Some agencies maintain semi-permanent pre-cached bids with ad exchanges, and those may be examined before going out to additional demand side platforms for bids. The process for mobile advertising is different and may involve mobile carriers and handset software manufacturers.46
An interstitial ad displays before a user can access requested content, sometimes while the user is waiting for the content to load.47Interstitial ads are a form ofinterruption marketing.4849
A text ad displays text-basedhyperlinks. Text-based ads may display separately from a web pages primary content, or they can be embedded by hyperlinking individual words or phrases to advertisers websites. Text ads may also be delivered throughemail marketingortext message marketing. Text-based ads often render faster than graphical ads and can be harder for ad-blocking software to block.50
Search engine marketing, or SEM, is designed to increase a websites visibility insearch engine results pages(SERPs). Search engines provide sponsored results and organic (non-sponsored) results based on a web searchers query.19:117Search engines often employ visual cues to differentiate sponsored results from organic results. Search engine marketing includes all of an advertisers actions to make a websites listing more prominent for topical keywords.
Search engine optimization, or SEO, attempts to improve a websitesorganic searchrankings in SERPs by increasing the website contents relevance to search terms. Search engines regularly update their algorithms to penalize poor quality sites that try to game their rankings, making optimization a moving target for advertisers.5152Many vendors offer SEO services.24:22
Sponsored search(also called sponsored links, search ads, or paid search) allows advertisers to be included in the sponsored results of a search for selected keywords. Search ads are often sold via real-time auctions, where advertisers bid on keywords.19:11853In addition to setting a maximum price per keyword, bids may include time, language, geographical, and other constraints.19:118Search engines originally sold listings in order of highest bids.19:119Modern search engines rank sponsored listings based on a combination of bid price, expected click-through rate, keyword relevancy and site quality.21
Social media marketingis commercial promotion conducted throughsocial mediawebsites. Many companies promote their products by posting frequent updates and providing special offers through their social media profiles.54
Mobile advertisingis ad copy delivered through wireless mobile devices such assmartphonesfeature phones, or tablet computers. Mobile advertising may take the form of static or rich media display ads, SMS (Short Message Service) orMMS(Multimedia Messaging Service) ads, mobile search ads, advertising within mobile websites, or ads within mobile applications or games (such as interstitial ads,advergaming, or application sponsorship).24:23Industry groups such as the Mobile Marketing Association have attempted to standardize mobile ad unit specifications, similar to the IABs efforts for general online advertising.49
Mobile advertising is growing rapidly for several reasons. There are more mobile devices in the field, connectivity speeds have improved (which, among other things, allows for richer media ads to be served quickly), screen resolutions have advanced, mobile publishers are becoming more sophisticated about incorporating ads, and consumers are using mobile devices more extensively.24:14The Interactive Advertising Bureau predicts continued growth in mobile advertising with the adoption of location-based targeting and other technological features not available or relevant on personal computers.24:14In July 2014Facebookreported advertising revenue for the June 2014 quarter of $2.68 billion, an increase of 67 percent over the second quarter of 2013. Of that, mobile advertising revenue accounted for around 62 percent, an increase of 41 percent on the previous year.
Email advertising is ad copy comprising an entire email or a portion of an email message.24:22Email marketing may be unsolicited, in which case the sender may give the recipient an option to opt out of future emails, or it may be sent with the recipients prior consent (opt-in).
As opposed to static messaging, chat advertising refers to real time messages dropped to users on certain sites. This is done by the usage of live chat software or tracking applications installed within certain websites with the operating personnel behind the site often dropping adverts on the traffic surfing around the sites. In reality this is a subset of the email advertising but different because of its time window.
Online classified advertising is advertising posted online in a categorical listing of specific products or services. Examples include online job boards, online real estate listings, automotive listings, onlineyellow pages, and online auction-based listings.24:22CraigslistandeBayare two prominent providers of online classified listings.
Adwareis software that, once installed, automatically displays advertisements on a users computer. The ads may appear in the software itself, integrated into web pages visited by the user, or in pop-ups/pop-unders.55Adware installed without the users permission is a type ofmalware.56
Affiliate marketing occurs when advertisers organize third parties to generate potential customers for them. Third-party affiliates receive payment based on sales generated through their promotion.24:22Affiliate marketers generate traffic to offers fromaffiliate networks, and when the desired action is taken by the visitor, the affiliate earns a commission. These desired actions can be an email submission, a phone call, filling out an online form, or an online order being completed.
Content marketingis any marketing that involves the creation and sharing of media and publishing content in order to acquire and retain customers. This information can be presented in a variety of formats, including blogs, news, video, white papers, e-books, infographics, case studies, how-to guides and more.
Considering that most marketing involves some form of published media, it is almost (though not entirely) redundant to call content marketing anything other than simply marketing. There are, of course, other forms of marketing (in-person marketing, telephone-based marketing, word of mouth marketing, etc.) where the label is more useful for identifying the type of marketing. However, even these are usually merely presenting content that they are marketing as information in a way that is different from traditional print, radio, TV, film, email, or web media.
Online marketing platform (OMP) is an integratedweb-basedplatform that combines the benefits of abusiness directorylocal searchengine,search engine optimisation(SEO) tool,customer relationship management(CRM) package andcontent management system(CMS).EbayandAmazonare used as online marketing andlogistics managementplatforms. OnFacebookTwitterYouTubePinterestLinkedIn, and otherSocial Mediaretailonline marketing is also used. Onlinebusiness marketingplatforms such asMarketoAprimo, MarketBright and Pardot have been bought bymajor IT companiesEloquaOracleNeolaneAdobeandUnicaIBM).
Unlike television marketing in whichNeilsen TV Ratingscan be relied upon forviewing metrics, online advertisers do not have an independent party to verify viewing claims made by the big online platforms.57
Advertisers and publishers use a wide range of payment calculation methods. In 2012, advertisers calculated 32% of online advertising transactions on a cost-per-impression basis, 66% on customer performance (e.g. cost per click or cost per acquisition), and 2% on hybrids of impression and performance methods.24:17
Cost per mille, often abbreviated toCPM, means that advertisers pay for every thousand displays of their message to potential customers (mille is the Latin word for thousand). In the online context, ad displays are usually called impressions. Definitions of an impression vary among publishers,58and some impressions may not be charged because they dont represent a new exposure to an actual customer. Advertisers can use technologies such asweb bugsto verify if an impression is actually delivered.5960:59
Publishers use a variety of techniques to increase page views, such as dividing content across multiple pages, repurposing someone elses content, using sensational titles, or publishing tabloid or sexual content.61
CPM advertising is susceptible to impression fraud, and advertisers who want visitors to their sites may not find per-impression payments a good proxy for the results they desire.62:14
CPC(Cost Per Click) or PPC (Pay per click) means advertisers pay each time a user clicks on the ad. CPC advertising works well when advertisers want visitors to their sites, but its a less accurate measurement for advertisers looking to build brand awareness.63CPCs market share has grown each year since its introduction, eclipsing CPM to dominate two-thirds of all online advertising compensation methods.24:1862:1
Like impressions, not all recorded clicks are valuable to advertisers. GoldSpot Media reported that up to 50% of clicks on static mobile banner ads are accidental and resulted in redirected visitors leaving the new site immediately.64
Cost per engagement aims to track not just that an ad unit loaded on the page (i.e., animpressionwas served), but also that the viewer actually saw and/or interacted with the ad.6566
Cost per view video advertising. Both Google and TubeMogul endorsed this standardized CPV metric to the IABs (Interactive Advertising Bureau) Digital Video Committee, and its garnering a notable amount of industry support.67CPV is the primary benchmark used inYouTubeAdvertising Campaigns, as part of GooglesAdWordsplatform.
The CPI compensation method is specific tomobile applicationsandmobile advertising. In CPI ad campaigns brands are charged a fixed of bid rate only when the application was installed.
In marketing, attribution is the measurement of effectiveness of particular ads in a consumers ultimate decision to purchase. Multiple ad impressions may lead to a consumer click or other action. A single action may lead to revenue being paid to multiple ad space sellers.68
CPA (Cost Per Actionor Cost Per Acquisition) or PPP (Pay Per Performance) advertising means the advertiser pays for the number of users who perform a desired activity, such as completing a purchase or filling out a registration form. Performance-based compensation can also incorporaterevenue sharing, where publishers earn a percentage of the advertisers profits made as a result of the ad. Performance-based compensation shifts the risk of failed advertising onto publishers.62:4, 16
Fixed cost compensation means advertisers pay a fixed cost for delivery of ads online, usually over a specified time period, irrespective of the ads visibility or users response to it. One examples is CPD (cost per day) where advertisers pay a fixed cost for publishing an ad for a day irrespective of impressions served or clicks.
The low costs of electronic communication reduce the cost of displaying online advertisements compared to offline ads. Online advertising, and in particular social media, provides a low-cost means for advertisers to engage with large established communities.54Advertising online offers better returns than in other media.62:1
Online advertisers can collect data on their ads effectiveness, such as the size of the potential audience or actual audience response,19:119how a visitor reached their advertisement, whether the advertisement resulted in a sale, and whether an ad actually loaded within a visitors view.5960:59This helps online advertisers improve their ad campaigns over time.
Advertisers have a wide variety of ways of presenting their promotional messages, including the ability to convey images, video, audio, and links. Unlike many offline ads, online ads also can be interactive.18For example, some ads let users input queries69or let users follow the advertiser on social media.70Online ads can even incorporate games.71
Publishers can offer advertisers the ability to reach customizable and narrow market segments for targeted advertising. Online advertising may use geo-targeting to display relevant advertisements to the users geography. Advertisers can customize each individual ad to a particular user based on the users previous preferences.27Advertisers can also track whether a visitor has already seen a particular ad in order to reduce unwanted repetitious exposures and provide adequate time gaps between exposures.72
Online advertising can reach nearly every global market, and online advertising influences offline sales.737475
Once ad design is complete, online ads can be deployed immediately. The delivery of online ads does not need to be linked to the publishers publication schedule. Furthermore, online advertisers can modify or replace ad copy more rapidly than their offline counterparts.76
According to a US Senate investigation, the current state of online advertising endangers the security and privacy of users.77
Eye-tracking studies have shown that Internet users often ignore web page zones likely to contain display ads (sometimes calledbanner blindness), and this problem is worse online than in offline media.78On the other hand, studies suggest that even those ads ignored by the users may influence the user subconsciously.79
There are numerous ways that advertisers can be overcharged for their advertising. For example,click fraudoccurs when a publisher or third parties click (manually or through automated means) on a CPC ad with no legitimate buying intent.80For example, click fraud can occur when a competitor clicks on ads to deplete its rivals advertising budget, or when publishers attempt to manufacture revenue.80
Click fraud is especially associated with pornography sites. In 2011, certain scamming porn websites launched dozens of hidden pages on each visitors computer, forcing the visitors computer to click on hundreds of paid links without the visitors knowledge.81
As with offline publications, online impression fraud can occur when publishers overstate the number of ad impressions they have delivered to their advertisers. To combat impression fraud, several publishing and advertising industry associations are developing ways to count online impressions credibly.8283
Because users have different operating systems, web browsers84and computer hardware (including mobile devices and different screen sizes), online ads may appear to users differently from how the advertiser intended, or the ads may not display properly at all. A 2012comScorestudy revealed that, on average, 31% of ads were not in-view when rendered, meaning they never had an opportunity to be seen.85Rich media ads create even greater compatibility problems, as some developers may use competing (and exclusive) software to render the ads (see parison of HTML 5 and Flash).
Furthermore, advertisers may encounter legal problems if legally required information doesnt actually display to users, even if that failure is due to technological heterogeneity.86:iIn the United States, the FTC has released a set of guidelines indicating that its the advertisers responsibility to ensure the ads display any required disclosures or disclaimers, irrespective of the users technology.86:48
Ad blocking, or ad filtering, means the ads do not appear to the user because the user uses technology to screen out ads. Many browsers block unsolicited pop-up ads by default.87Other software programs or browser add-ons may also block the loading of ads, or block elements on a page with behaviors characteristic of ads (e.g. HTML autoplay of both audio and video). Approximately 9% of all online page views come from browsers with ad-blocking software installed,88and some publishers have 40%+ of their visitors using ad-blockers.3
The collection of user information by publishers and advertisers has raised consumer concerns about their privacy.2860Sixty percent of Internet users would use Do Not Track technology to block all collection of information if given an opportunity.9293Over half of all Google and Facebook users are concerned about their privacy when using Google and Facebook, according toGallup.94
Many consumers have reservations about onlinebehavioral targeting. By tracking users online activities, advertisers are able to understand consumers quite well. Advertisers often use technology, such as web bugs and respawning cookies, to maximizing their abilities to track consumers.60:60