Online Advertising

In 2007, online advertising spending is estimated to be $19.5 billion in the US. (eMarketer).

Advertisers will spend $7.5 billion to reach all Western Europeans in 2007 (Phillips, 2007).

In 2006, all forms of online advertising expenditures reached $16 billion in the United States and $6 billion in Europe.

Growth

Online advertising growth in the United States is forecast at 18-19 % and European growth is estimated at 25% per year (Stone, 2007).

PricewaterhouseCoopers (2006) estimates that online advertising revenues by 2010 will be $25.5 Billion in the United States, $14.9 Billion in (EMEA) Europe, the Middle East and Africa, $9.9 Billion in the Asia Pacific, $812 million in Canada, and $512 million in Latin America.

IMPACT of Online Advertising

The economic impact of online advertising is documented in a report by Patti Freeman Evans, a senior analyst in the business-to-consumer market at Jupiter Research. She forecasts U.S. online sales will be $116 billion in 2007. Offline sales influenced by online research should reach $1 trillion by 2011 (Dawley, 2007).

Types of Online Advertising

A few companies dominate the search advertising market- Google, Yahoo, MSN, Ask, and AOL. Search engine preferences have some demographic elements. Here is an example of the gender demographics of searches:

Search Advertising is the major type of online advertising. Search ads can be based on the keywords that are typed, contextual advertising or behavioral targeting. The costs of keywords can vary greatly depending on the demand for the term, the nature of the target market and the placement of the ad.

For example, HDTV on AOL cost $2.02 one day in October while the term HDTV-bargain prices cost $.50.

Contextual advertising uses the context of an page, article or story a user is reading and matches it with an associated product or service ad. Someone reading articles on a new cars might receive ads related to BMW, Honda, car dealers or car review books.

Tacoda explains behavioral targeting as the ability to reach desired segments outside of contextually relevant areas. “Behavioral targeting” is a technology that recognizes when web-site visitors are seeking a particular product or service and then serves an ad relevant to their search – at a later date – on another, unrelated page (Oser, 2004 p.4).” For example, a surfer who looks at real estate listings on a newspaper site on a Monday might is served an ad from a real estate agent on Thursday night when the surfer views the Sports section (Oser, 2004). Behavioral targeting uses a surprise effect with precise behavioral segments to work.

Rich media “…allow advertisers to take traditional media assets like video, audio, animation, and photos, and combine them into a multimedia branding experience that streams from an ad server to the client machine (Koegel, 2003).” Rich media technologies include Flash, Unicast, Eyeblaster, EyeWonder, and PointRoll.

Classified advertising is increasingly moving from traditional print newspapers to online formats. Recruitment, real estate and automotive are the major types of classified ads. Monster, Career Builder and Hot Jobs are the top ranked recruitment sites. Traditional newspapers have launched online versions to increase their advertising. Craigslist is an example of a totally online company in the classified online market.

Online advertisers ran 257.7 billion display ads in December 2006 according to Nielsen//NetRatings AdRelevance. Yahoo's e-mail service drew 36.4% of ads and MSN Hotmail captured 6.4% of ads. Financial services marketers had 29% of the online display ads Web media resented 17% , Retail goods and services had 16% of impressions, telecoms had for 13%, and public services had 6%.

There are two types of email advertising:

1) opt-in or permission based email. For example, permission based email is when a user signs up for a newsletter or other information from a comapny or organization.

2) spam- studies estimate as much as 90% of email sent is spam.

"183 billion e-mails were sent each day in 2006 and wireless e-mail users will grow ‘from 14 million in 2006, to 228 million in 2010 (Brownlow, 2006).”

Some new trends in online advertising include the increase social advertising on sites like MySpace. Social network advertising is expected to grow to $2 billion by 2010. Another important development is user generated content (UGC). User generated content has appeared on the recent Superbowl, and the increase of video advertising on sites such as YouTube. Another trend is podcast advertising which is expected to grow to $400 million by 2011.

Ad placement

Google uses AdWORDS
"we use the Quality Score to set minimum bids for keywords based on keyword clickthrough rate (CTR), ad text relevance, the historical performance of the keyword on Google, and the user experience on the ad's landing page. Keywords with a higher Quality Score are rewarded with a lower minimum bid, so it costs less for those ads to be eligible for display. (Google, Feb. 2007)"

Quality Score = (keyword's CTR, ad text relevance, keyword relevance, landing page relevance)*

6 SEO Tips to improve your Adwords Quality Score

Yahoo

According to Fred Vogelstein’s Wired article last month: “When Yahoo decided it was going to buy Overture in 2002, Overture dominated search-related advertising; its revenue was two times Google's. By the time the deal was actually announced in 2003, the two companies were neck and neck. Two years later, Google's revenue was 2.5 times Overture's.”

Yahoo introduces a new Advertising System- Project Panama -Lifts user clicks. Based on ComScore data of 1 million users.

Yahoo! Sites experienced a noticeable lift in its sponsored search click-through rate. The week ending February 11 saw a 5-percent increase, while the week ending February 18 showed a 9-percent jump.