Online advertising, also known as online marketing, Internet advertising, digital advertising or web advertising, is a form of marketing and advertising that uses the Internet to promote products and services to audiences and platform users.[1] 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.[2]
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.
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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[6] 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.[7]
In the early days of the Internet, online advertising was mostly prohibited. For example, two of the predecessor networks to the Internet, ARPANET and NSFNet, had "acceptable use policies" that banned network "use for commercial activities by for-profit institutions".[9][10] The NSFNet began phasing out its commercial use ban in 1991.[11][12][13][14]
The first widely publicized example of online advertising was conducted via electronic mail. On 3 May 1978, a marketer from DEC (Digital Equipment Corporation), Gary Thuerk, sent an email to most of the ARPANET's American west coast users, advertising an open house for a new model of a DEC computer.[10][15] Despite the prevailing acceptable use policies, electronic mail marketing rapidly expanded[16] and eventually became known as "spam."
The first known large-scale non-commercial spam message was sent on 18 January 1994 by an Andrews University system administrator, by cross-posting a religious message to all USENET newsgroups.[17] In January 1994 Mark Eberra started the first email marketing company for opt-in email lists under the domain Insideconnect.com. He also started the Direct Email Marketing Association to help stop unwanted email and prevent spam.[18][19]
Online banner advertising began in the early 1990s as page owners sought additional revenue streams to support their content. Commercial online service Prodigy displayed banners at the bottom of the screen to promote Sears products. The first clickable web ad was sold by Global Network Navigator in 1993 to a Silicon Valley law firm.[21] In 1994, web banner advertising became mainstream when HotWired, the online component of Wired Magazine, and Time Warner's Pathfinder[22] sold banner ads to AT&T and other companies. The first AT&T ad on HotWired had a 44% click-through rate, and instead of directing clickers to AT&T's website, the ad linked to an online tour of seven of the world's most acclaimed art museums.[23][24]
Display advertising conveys its advertising message visually using text, logos, animations, videos, photographs, or other graphics. Display advertising is ubiquitous across online systems including websites, search engines, social media platforms, mobile applications and email. Google and Facebook dominate online display advertising, which has become highly concentrated market, with estimates that they were responsible for 70% of overall US digital advertising revenue in 2016.[2] The goal of display advertising is to obtain more traffic, clicks, or popularity for the advertising brand or organization. Display advertisers frequently target users with particular traits to increase the ads' effect.[33]
Banner ads can use rich media to incorporate video, audio, animations, buttons, forms, or other interactive elements using Java applets, HTML5, Adobe Flash, and other programs. Frame ads were the first form of web banners.[23] The 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. The Interactive Advertising Bureau's Ad Unit Guidelines proposes standardized pixel dimensions for ad units.[34]
Floating ad: A floating ad, or overlay ad, is a type of rich media advertisement that appears superimposed over the requested website's content. Floating ads may disappear or become less obtrusive after a pre-set time period.
Expanding ad: An expanding ad is a rich media frame ad that changes dimensions upon a predefined condition, such as a preset amount of time a visitor spends on a webpage, the user's click on the ad, or the user's mouse movement over the ad.[37] Expanding ads allow advertisers to fit more information into a restricted ad space.
Trick banners: 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.[38] Trick banners typically do not mention the advertiser in the initial ad, and thus they are a form of bait-and-switch.[39][40] Trick banners commonly attract a higher-than-average click-through rate, but tricked users may resent the advertiser for deceiving them.[41]
"News Feed Ads", also called "Sponsored Stories", "Boosted Posts", typically exist on social media platforms that offer a steady stream of information updates ("news feed"[42]) 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.
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.[46][47]
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. Alternatively ads may be outsourced to an advertising agency under contract with the publisher, and served from the advertising agency's servers or ad space may be offered for sale in a bidding market using an ad exchange and real-time bidding, known as programmatic advertising.
Programmatic advertising involves automating the sale and delivery of digital advertising on websites and platforms via software rather than direct human decision-making.[2] Advertisements are selected and targeted to audiences via ad servers which often use cookies, 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 later retarget the user with ads from the site the user visited.[48]
Advertisers may also deliver ads based on a user's suspected geography through geotargeting. A user's IP address communicates some geographic information (at minimum, the user's 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.[33] For example, with mobile devices, advertisers can sometimes use a phone's GPS receiver or the location of nearby mobile towers.[51] Cookies and other persistent data on a user's machine may help narrow down a user's location even further.
This involves many parties interacting automatically in real time. In response to a request from the user's browser, the publisher content server sends the web page content to the user's browser over the Internet. The page does not yet contain ads, but contains links which cause the user's 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 as cookies and the page being viewed, is transmitted to the publisher ad server.
The publisher ad server then communicates with a supply-side platform server. The publisher is offering ad space for sale, so they are considered the supplier. The supply side platform also receives the user's identifying information, which it sends to a data management platform. At the data management platform, the user's identifying information is used to look up demographic information, previous purchases, and other information of interest to advertisers. The process is sometimes described as a 'waterfall'.[52]
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 an ad exchange.
The ad exchange puts the offer out for bid to demand-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 the Internet Advertising Bureau, a demand side platform has 10 milliseconds to respond to an offer. The ad exchange picks the winning bid and informs both parties. 152ee80cbc
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