Learn more about what web advertising is in this article.
Web advertising, also known as online advertising, or internet advertising, is the process of promoting goods and services on the World Wide Web. Web advertising can come in the form of SEM, web banner ads, interstitial ads, popup ads, and social media advertising. Online ads are generated by ad servers which deliver the ad and track statistics, such as clicks and impressions. They always involve an advertiser who provides the ads displayed on the publisher's content in the hope of more website traffic and the publisher who embeds the ads in the online content in the hope of revenue, similar to other types of advertising.
Types Of Online Ads
Banner ads - These are embedded ads on a website delivered from an ad server. When clicked on, the user will leave the current website and be redirected to the advertiser's website. Banner ads come in different formats, including skyscraper, square, and leaderboard.
Sticky ads - These remain visible when the user scrolls down the page and stays in exactly the same position when the user scrolls up and down. The ad is 'glued' to the webpage and can only be closed by clicking on the 'x' button. Sticky ads were created to resolve the problems associated with banner blindness and improve the visibility of ads.
Native ads - These are designed to blend in with the content around the page, provide a better user experience and generate higher conversion rates for advertisers and higher chances of revenue for publishers. Native ads can be difficult to differentiate from the actual content of the website, so they should be labelled as 'Advertisement', 'Sponsored', 'Suggested post' or 'Ad' to avoid deceiving users and indicate that they are paid ads.
Popup ads - These generate ads in a new browser window or cover parts of the webpage with JavaScript to generate an action from a visitor. Some may open in a separate window that displays the ad, although most web browsers block popups that open in a new window by default, so this type of ad is not very popular. Instead, most popup ads only display in the current window as a graphical overlay on top of the content as a promotional offer.
Interstitial ads - These are interactive, full-screen ads that cover the interface of their app or website. They are similar to popup ads, but their full-screen coverage is what differentiates them from other types.
Search engine ads (SEM) - These are the paid ads and shopping results that appear at the top before the organic results that are labelled as 'ad'.
Affiliate marketing - This is when an advertiser allows publishers to generate customers for them by publishers placing a promotional banner on a website. If a customer clicks through the link and makes a purchase, the publisher will earn a small commission.
Payment Calculation Methods
Advertisers and publishers use a range of payment calculation methods to determine how much advertisers have to pay and how much publishers earn. Advertisers can place a bid on their ads depending on what they are advertising. They cost no more than advertisers are willing to pay through a bidding system. Once the advertiser's budget has been reached, their ads are automatically removed from the publisher's website for the rest of the billing period. Payment calculation methods include:
CPM (cost per mille) - The amount of money an advertiser has to pay a publisher every 1000 impressions, which means every time one of their ads is successfully displayed to a unique visitor 1000 times on a webpage. CPM is similar to RPM (revenue per mille), which is how much a publisher will earn every 1000 impressions, but instead of measuring the revenue per 1000 impressions, CPM measures the advertiser's costs.
CPC (cost per click) - The amount of money an advertiser has to pay to a publisher each time their PPC ad is clicked on. Advertisers are charged based on the number of times visitors click on an ad and visit the advertiser's website. Every click is recorded by the advertising network and the cost per click is determined by the advertiser as some will spend more per click than others based on what they are advertising.
CPL (cost per lead) - The amount of money an advertiser will have to pay to a publisher for each lead. CPL is not the same as CPC (cost per click). Instead of advertisers paying a publisher each time a visitor clicks on their ad, they only have to pay for each potential customer. An example of CPL advertising is affiliate marketing.
CPE (cost per engagement) - The amount of money an advertiser will have to pay to a publisher each time a viewer interacted with an ad. The publisher does not have to pay for an ad just loading on a page or an impression.
CPI (cost per install) - Limited to mobile applications and mobile advertising. It is the amount of money an advertiser will have to pay a publisher only when the application is installed.
Fixed cost - Advertisers pay a fixed cost to publishers for placing ads on their website, often over a specified time period. An example of fixed cost advertising is CPD (cost per day) where advertisers pay a fixed cost for publishing an ad for a day, regardless of the number of impressions or clicks.
Concerns Over Web Advertising
There are some concerns over web advertising, which include:
Click fraud - Click fraud occurs on pay-per-click (PPC) ads where individuals or bots fraudulently click on ads over and over again with the sole intention of artificially increasing the advertiser's costs or generating more revenue for the publisher. They may manually click on them multiple times or use automated software, scripts, or bots that are programmed to click on these ads and mimic a human clicking on ads on webpages without having actual interest in the content of the ad. These cause advertisers to be overcharged for advertisers and can cost them a lot of money.
Security issues - Web advertising can lead to security issues, such as malvertising, where web advertising is used to spread malware that harms computers. Malvertisements may contain malicious code that redirects users to malicious websites that download malware on the user's computer.
Banner blindness - It is believed that users often ignore web page zones likely to contain display ads. Users might miss out on the ads and not notice them.
Ad blocking - Ad blocking is a technology that prevents ads from being loaded on a webpage using an adblocker. By default, most web browsers block unsolicited popup ads. Other software programs or browser extensions may also block the loading of ads, or block elements on a page with the characteristic of ads. Impressions will not be counted from users with an adblocker as the ad will not be loaded.
Privacy concerns - The collection of user information by publishers and advertisers to understand and track users and display personalised ads has led to privacy concerns. Users can be worried by advertisers targeting them based on sensitive information, such as financial or health status. According to a 2011 survey conducted by Harris Interactive, over 50% of internet users had a negative impression of online behavioural advertising, and 40% worried that their personally identifiable information had been shared with advertisers without their permission.
Intrusive ads - Some ads, especially ones that cover the whole page and appear after another one has been closed can be intrusive to users and disrupt their experience. This can encourage users to leave websites.
History
Online advertising was mostly prohibited in the early days of the internet. 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". The NSFNet began phasing out its commercial use ban in 1991.
The first widely publicised example of online advertising was performed using 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. Electronic mail marketing greatly increased and eventually became known as spam.
Online banner advertising began in the early 1990s as website owners generated revenue 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.
