Online advertising is exactly what it says – advertising, but online. This method of advertising comes in many forms. Much like the online sphere, there is so much to choose from.
If you think of the main reasons you go online – from checking emails at work to scrolling through social media on your commute to even browsing shops when you get home – each and every platform has ads.
Understanding online advertising is the first step you need to take if you want to appeal to any target audience online. If you dive straight in – this is how mistakes are made and money is wasted. There is a lot to wrap your head around – but we have condensed it down to make it easy for you.
If you are new to advertising or are simply looking for new ways to expand your online reach – learning about online advertising and what it has to offer is a must.
Online advertising, with formats ranging from search and social to display and video, is the fastest growing media segment today – and for good reason. Digital ads provide unparalleled targeting precision to engage the most promising audiences at scale. They facilitate real-time optimization through continual experimentation and data analytics. And online ads deliver all these advantages at a fraction of the cost of traditional media.
It is no surprise then that global spend on digital advertising is approaching $400 billion. More telling – online ads now comprise over 60% of total media advertising dollars across the globe. Their flexibility, efficiency and reliability have made online ads indispensable growth engines for brands and businesses of all sizes.
Yet, for the uninitiated, the online advertising landscape can still seem complicated. With an ever expanding array of options, requirements and best practices, many have questions about where to start. This guide aims to walk through all aspects of running effective online ad campaigns in today’s digital ecosystem – from critical formats and platforms to typical costs-per-click and performance benchmarks.
Readers will also find the latest statistics demonstrating the explosive growth of online ads and illustrating why no modern marketing strategy is complete without them. Most importantly, they will discover how to harness data-empowered digital ads tailored to their own unique audience, budget and business goals for phenomenal returns.
Table of Contents
Understanding Online Advertising
Online advertising is a method of appealing to potential customers conveniently and strategically.
With online advertising, you can only place ads on websites. Instead, there are various platforms and services that will suit your intended audience and budget parameters.
With a thorough understanding of the most popular and prominent methods of advertising, your business can reach new levels of success. Online is where everyone is. According to Statista, almost 4.57 billion people were active internet users as of July 2020. This encompasses 59% of the entire global population.
This statistic goes to prove that if you haven’t advertised your business online yet – then now is certainly the time to do so!
When you think of online advertising – there are many ways this can be done.
What Are the Types of Online Advertising?
There are millions of new ads launched each day online throughout the world. From reading a blog you follow, scrolling through social media or enjoying a YouTube video, you will likely see plenty of ads.
Before social media, online advertising was much more restricted. This kept marketers limited to pinpointing a small pool of websites or networks. While this was good in its day, now ads are far more versatile and effective.
Here are some of the common types of online advertising:
Social Media Advertising
Social media comprises many platforms where people chat with friends, post personal updates and share interesting or entertaining content.
Many people tend to swerve towards Facebook, as it is the most used social channel across the world with over 2.7 billion active users. However, while Facebook houses the largest audience, this can often make it harder to wade through to the people you want to reach.
That’s why, depending on your business and who its primary customer is, you should investigate as many options as possible. Social media sites stretch far and wide. For example: there’s TikTok which is good for targeting teens, Instagram for millenials and LinkedIn for professionals.
Top tip: figure out which platform is best suited to your customer, and focus on mastering that first. Once you feel like you’re ready to conquer the next one, move onto the second most likely platform that your audience would use.
You can also check out our social media advertising checklist, a specialist guide on how to get started.
This method of advertising relies on the power of the written word, high quality graphics and sleek video. As the digital world continues to expand, the need for concise, engaging and profit-driving content marketing has never been stronger.
Content marketing drives traffic to your site. Whether this be keyword-focused copywriting to improve your SEO, or an eye-catching video to showcase your products or services – content marketing will enhance your online presence.
It is counted as a form of advertising as you are investing in creating content to put your business on the online map.
Top tip: get started by using a content calendar to help you brainstorm and organise your content ideas. This will help structure your thoughts and create a schedule.
When you think about it – almost every person you know has an email address whether it be for personal or business use.
How many times do you get asked to sign up for newsletters when you visit websites? A lot. This is because email is a great way to make people feel like they are part of a special subscription, as they usually incorporate exclusive news and offers.
Email marketing is a key player in advertising, as it is the most likely method to equate to customer retention. Now that explains all those emails!
Top tip: have a scroll through your inbox and evaluate other businesses’ newsletters/email offers. Could you offer something similar, if not better? This research will help you make crucial content decisions.
Search Engine Advertising
This is where companies pay to be higher up in the search engine results page (SERP) for chosen keywords. Versions of this include pay-per-click advertising (PPC), which allows a company to pay for each time a user clicks on their link in the search results. This can increase a company’s conversion rate and improve their ROI.
This way, your brand visibility and the likeliness of being clicked on, increases. When a visitor clicks, you pay. However, if you get a conversion from a customer, then the pros outweigh the cons.
Top tip: invest time into keyword research. This way, you can accurately find people searching for you. Try to think from the searcher’s point of view and take it from there.
Display advertising – also known as banner advertising – is a way of advertising on a third-party website.
You can place static or animated graphics on websites related to your business and, therefore, your audience. This advertising method is meaningful, as it is so tailored to the audience. For example, if you were a small business hosting an event – you could invest in display advertising on a local newspaper’s website to reach people nearby.
Display advertising has long been a staple for businesses wanting to advertise online. Mostly due to its effectiveness in raising brand awareness over actual click-through rates.
Top tip: imagery is everything. Make sure you make your display ad creative, clear and concise to grab attention and encourage clicks.
The Difference Between Impressions and Click-Through Rates
You will hear this term often in online advertising as it is a core metric in measuring ad impact.
Anytime you launch a new campaign online, it is possible to track live results. Impressions in online advertising refer to the number of times your text, banner, or social ad has appeared in front of users online.
Impressions are not the same as ‘hits’ or ‘clicks’. Instead, they simply show how frequently your banner or advertisement has been viewed.
Comparing your click-through rate and your impressions is a way to determine just how effective the campaign you are running is. The higher your click rate is for each campaign – the more successful your ad placement and visual appeal is to your target audience.
Advantages of Online Advertising
As previously mentioned, online is where a huge portion of the worldwide population currently are. Therefore, advertising online is a much more beneficial way of advertising than traditional methods, due to their ability to be uniquely personalised.
Online advertising provides you with more opportunity. You can advertise where people tend to chat with their friends – which heightens the chance of your ad being shared amongst other people. You can advertise where people go to read the news – so you can provide them with information on your business or event.
When you choose to advertise only offline and in the print world, you limit your ability to create a convenience for people. In turn, this helps you generate new leads, customers and revenue.
Using online advertising is also insightful to learn more about your prospective customers and clients regarding what they want and need from your company. You can discover what works and doesn’t work. Ultimately, this will improve your advertising strategy going forward.
The more familiar you become with online advertising, the easier it is to understand metrics and use these to your advantage. Whether you prefer content marketing or display advertising – understanding all of the tools and resources you have available is essential to get started on the right path to success.
Online Advertising is a New Necessity
In the world of digital advertising – designing your branded message is only the beginning of a successful campaign. Bringing that message to a targeted audience, on the right platforms at the right time of day requires skill, insight and extensive experience.
Regardless of your sector of industry, ProfileTree can steer your product or service towards real success with online advertising that informs, engages and inspires. Our specialist teams combine their skills to devise campaigns with real, measurable results.
Expand on Types/Formats of Online Ads
Display Ads: Display ads appear alongside other content on websites and apps. They come in standard sizes and can use text, logos, images, or video. Common display ad formats include banner ads along tops or sides of pages, rectangular boxes and skyscrapers in the main content area, and newer options like expandables and floaters that catch user attention.
Search Engine Marketing (SEM): SEM ads appear alongside organic search engine results. Google Ads is the largest SEM platform. SEM ads can be text-based largely focused on keywords, or incorporate eye catching visuals. Users tend to favor SEM ads highly relevant to search terms used.
Social Media Ads: Social platforms like Facebook, Instagram, and LinkedIn offer paid advertising that leverages user data to precision target key demographics and personas based on their interests, behaviors, location, purchase intent signals and more. Creative social ads tend to get high engagement.
Latest Online Ad Spending Statistics
- Total digital ad spending in the U.S. reached $246 billion in 2022, making up 67% of total media ad spending which was $368 billion (source)
- U.S. paid search ad spending made up over 43% of total digital ad spending in 2022 ($105 billion) (source)
- Typical cost-per-click (CPC) averages for Google Ads keywords in 2022 range from $1 to $5 in high commercial intent categories like direct navigation and loans (source)
Advantages/Importance of Online Advertising
Reach: Over 293 million digital consumers can be accessed online worldwide vs traditional media limitations (source)
Targeting Precision: From keywords tosites visited to purchase history, online ads can target the most promising, intent audiences
Low Costs: Online ads provide a very strong ROI potential, especially in high commercial intent categories, due to precise reach and low costs vs high impact
Flexibility & Testing: Message, visuals, targeting can all be optimized through easy online testing to improve conversions
Real Time Performance: Detailed analytics provide impression and performance data to optimize campaigns and spending
Advantages/Importance of Online Ads
- Over 293 million digital consumers accessed in 2021, expected to grow to 334 million by 2025 (Source)
- Global internet penetration reached 63% in 2021, increasing accessibility (Source)
- 91% of survey respondents said targeted social ads are more likely to influence purchase decisions (Source)
- Location targeting via geo-fencing drives over 20% higher conversion rates (Source)
Low Costs vs High ROI:
- Average CPC for Google Search ads was $1.86 in 2021, 66% lower than in 2011 (Source)
- Search ads have an average conversion rate of 17%, highest among all digital ad formats (Source)
Effective Online Ad Campaign Examples
- Old Spice’s viral video ads on YouTube led to 800% YoY sales increases (Source)
- Skittles’ interactive hullabaloo social campaign generated over 200 million impressions (Source)
- Amazon leverages retargeting ads leading to 50% more conversions for advertisers (Source)
Online Advertising FAQ
Q: What are average costs per click (CPC)?
A: In 2021, average CPC was $1.86 for Google Search ads, and $0.53 for Facebook ads (Source)
Q: What targeting options are available?
A: From location and demographics to interests, behaviors, intent signals, remarketing, context, and more
Q: How is online ad performance tracked?
A: Detailed real-time analytics provide metrics on impressions, clicks, conversions, engagement, ROI and multi-touch attribution
Online advertising has become an essential component of marketing strategies in the modern digital era. As audiences continue to fragment across digital devices and platforms, the ability to reach specific, targeted segments programmatically is more important than ever.
With over 63% of the world now accessible online, the sheer size of addressable audience via digital advertising provides unparalleled reach and scale. Meanwhile, granular data and real-time analytics enable precise targeting and optimization to drive higher conversion rates across the funnel.
While traditional media offers far less flexibility, online ads can be instantly edited and refined to convert better. The combination of instant feedback loops and inexpensive adjustments means digital ads facilitate rapid experimentation and improvement.
With costs-per-click and costs-per-impression exponentially lower than traditional formats, online ads deliver consumer impressions and engagements extremely cost-efficiently. And with typical click-through and conversion rates significantly outpacing other mediums, they offer among the highest ROI potential.
As spend on digital advertising approaches $400 billion globally, it is clear data-driven personalized ads represent the future of all media budgets. Online ads now dominate marketing strategies from enterprise brands to small businesses for an obvious reason – they work.
For more information, contact us now.