What is Online Advertising and How Does It Work?

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Put in few words, online advertisement is a way of delivering market messages over the Internet. But the variations are many, and we are going to look at them one by one:

  • Search engine results page
  • Banner ads
  • Rich (interactive) media ads
  • Social network advertisement
  • Interstitial ads and hyperstitial ads
  • Email marketing (including spam)

To start with the basics. Most of the online advertisement styles above are delivered by an ad server. Ad serving describes the technique that takes place when you see ads on different webpages.

The ad servers use several different methods to optimize ad positioning online, including:

  • Behavioural targeting: Looks at a web user’s online behaviour. For example, if you have previously visited car rental webpages, ads about car rental will show up on other websites as well.
  • Contextual targeting: If you are reading an article about fishing, you will get a related ad. Maybe one about fishing rods. The ad server uses the content (the words) provided in the article to select relevant ads.
We will also throw in some examples of how ad server usage can go, frankly, horribly wrong.

Search engine results page

Have you noticed that sometimes when you search using Google, there are a few links in the top with another background colour? These are actually not search results, but sponsored ads.

Image of Search engine results page
An example of search engine results page ads, responding to search keywords.

The webpages listed when you preform a search depends on what words you have typed into the search box. They work as keywords. All mayor search engines use a series of metrics to decide which webpages are relevant.

To show up on top, websites pay the search engines to have their sites appear if certain words are entered (as seen in the image above). Depending on how often a specific word, or series of words, are written – the price to appear increases.

Banner ads

A banner ad is an online ad delivered by an ad server. The ad is a clickable image, that serves as a link to the homepage of the advertiser.

The advertiser counts the number of visits generated by users clicking their banner ad and send the content provider a small amount of money, usually a fraction of a US dollar.

Online ad blockers

Many web users find online ads annoying. That is why most web browsers offer the option to block pup-ups (images that pop up in separate browser windows, on top of the webpage you are viewing). Also, it has been made possible to block content from certain webpages.

Some online browsers actually allow extensions that block banners (and other) ads:

Image of AdBlock for Chrome extension
AdBlock for Chrome removes (almost) all online banners.

Rich (interactive) media ads

The rich media ads are very similar to banner ads, but are interactive. Viewers can sometimes browse different products, or play a game before they are taken to the webpage/company behind the ad.

Image of Rich media ads
A online rich media ad of Microsoft, allowing you to browse a selection of products.

Social network advertisement

Ads presented on social networks, such as Facebook or MySpace, usually work the same way as banner ads.

Facebook ad
Facebook ads partly use demographics to target possible audiences.

What differentiates social network ads is that for example, the Like button on Facebook is easily incorporated. Also, on social networks, it is easy for the advertiser to take advantage of the member’s demographics to target their ads to certain groups of people.

Interstitial ads and hyperstitial ads

The idea of both hyperstitial and interstitial ads is practically the same. The difference is how the ads are presented. A hyperstitial ad is like a webpage that you need to go through before you can reach the content you are expecting.

Snapshot of a Hyperstitial ad at Expressen
At the Swedish news paper Expressen, an ad about online gaming appears before you can visit their main site. To move forward, you need to click the X in the upper right corner.

Interstitial ads show up over the content, and need to be closed before you can access the webpage content.

Image of an Interstitial ad
The interstitial ad blocks the view of the content you are after, forcing you to make notice of it before you can proceed.

Both ad types force you to confront the ad before you reach the web content you are after.

At times, you have to actively click for the ad to disappear. Other times a timer is also incorporated, forwarding you after 10-20 seconds.

Email marketing (including spam)

Company marketing

Not all email marketing is dodgy. Email advertisement can many times be appreciated by users who subscribe to mailing lists.

Companies send emails to merchants or clients to improve their relationship, or to encourage an immediate purchase of a product or service. Groupon, a discount provider, takes great advantage of this sort of service.

Spam

Ever got an email saying you are the winner of $1,000,000,000? It is probably spam.

Spam is a definition of untrustworthy, malicious and or mass produced messages most commonly sent to email accounts from electronic messaging systems.

Probably spam?
Probably an email spam message?

Today, most email services have developed advanced techniques to avoid spam mail from reaching your inbox, but it is a hassle for both private persons and companies.

Ad server failures

Before we end this article, let us look at one of the more troublesome aspects of online ads. As mentioned, many times the ads you see are reacting to keywords on different webpages. This can many times be good, but other times devastating.

Source: Gearfuse
Source: Gearfuse

Visit our gallery below to see some of the more… unfortunate online ad placements (my favourite one is the one about Anatidaephobia.)

And do not forget to tell us in the comments, have you ever used online ads – as a consumer or as merchant? What is your experience?