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Insights into Online Advertising

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In recent years, the online advertising space has grown at an astounding pace. More and more businesses are counting on the online medium, thanks to the reach and measurability. Whether it’s pay per click advertising, search engine optimization, email marketing or social media marketing, advertisers can easily reach out to their target audience more efficiently––no matter where they are located and what they do.

Having started with a conventional model, online advertising has grown to a complex and innovative business model today. Be it the view, pricing, type and/or ad positioning, change has become the only constant. An ad that was once nothing more than a simple unoptimized image, has now become a dynamic and versatile communication asset that rotates, animates, speaks (audio) and plays (video).

The what, where, why, when and how of ad display have become critical factors that determine the success of online advertising. As new functionalities/features/opportunities get unveiled every single day, today’s advertisers are game to increase their online spending.
Let us first have a look at the nuts and bolts of online advertising, and then go through more complex concepts in this fast evolving domain.

In this post, let us have a look at the role of advertisers, publishers and networks, and understand some of the critical terminologies commonly used in the domain.

Key Players in Online Advertising
There are multiple roles that come into play in the world of online advertising.
Advertisers:
The advertiser’s primary role is to provide the actual ads and campaign parameters. It is up to the advertisers to decide what ad they want to run, where they want to run, how long they want it to run, and how much they are want to spend. Apart from providing the actual ad, the advertisers may want to examine reports to see if advertising is meeting their desired goals.
Publishers:
Publishers run websites, and these websites have specific ad spots where advertisements can be placed. Generally, the publisher is also responsible for managing and running ads on their web site. An advertiser tells the publisher to run a campaign, but the publisher has to make sure that the campaign is set up properly and delivered as promised.
Networks:
Most advertisers do not have time to search for sites to run their campaigns, and many publishers do not have the time or resources to handle ad sales. An ad network will have extensive relationships with advertisers and publishers. An advertiser might go to that network and say they want to run a campaign across the whole network, or on specific category of sites. The advertiser gets the maximum number of audience, without having to deal with each individual site. The publisher gets the benefit of receiving a higher number of campaigns that they might not be able to attract on their own.
Rates and Fees:
Most widely asked questions are “What rate should I charge?” or “How much should I pay?” Unfortunately, there are no simple answers to these questions. The rate can be based on several factors like demographic and geographic targeting, total impressions served, etc. Few of them are listed below:

  1. CPM (Cost per Mile)- Is a flat fee for thousand-page impressions.
  2. CPC (Cost per Click) – Has become popular because of Google, where an advertiser only pays when a user clicks on the advertisement.
  3. Fixed Cost- Advertisers pay a fixed cost for delivery of ads online, usually over a specified time period, irrespective of the ad’s visibility or users’ response to it.

 

My next post will delve deeper into more advanced concepts in online advertising! Keep watching this space.

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