Understanding Online Advertising

How to market your business on the Web

Collette McKenna Parker

May 1, 2008

The advertising world has gotten a lot more targeted and more efficient, and a lot more complicated. Used to be you could place an ad on television, a newspaper, magazine ­ or maybe a billboard. Now, of course, the possibilities are endless.

Want to let mobile IT specialists know about a new product? Send a text message to a targeted group. Want to tell shoppers about a new toilet paper?

Probably not going to text message that, but how about a contextual ad in an online article?

Advertising on the Web means bringing your message to a more specific group of people, and that means a bigger bang ­ and one you can measure ­ for your buck. "The main benefit of online advertising is measurability," says Chris Thornton, chief marketing officer for Definition 6, an interactive marketing and e-commerce company. "It becomes very easy to quantify and measure the benefits and track results."

For example, with television advertising, if your target audience is women between the ages of 18 and 25, you can buy time during a show that also targets that audience. And that's about all you know. Advertise online and you can show it to that group only. Advertising can get very specific because groups like Yahoo track demographic information about their users.

So they can be relatively certain your ad reaches your target. You can also have a geographic target; Atlanta-only companies might not want to waste any money on West Coast people clicking on their ad, so they can limit their ads to Georgia eyeballs, much like cable TV advertising.

Beyond clicking on the ad, online advertising can also tell you how many of those people were actually led to make a purchase, or, at least fill out a form (so now you have a sales lead). Those numbers help quantify the return on your investment. "Because online advertising is very measurable, you can optimize how you spend your money," says Thornton.

Where to Begin

There are endless possibilities of spending your advertising dollars online, but there are some starting points. Thornton recommends businesses start with search. "Search is effective for everyone. Especially for a small business, typically you want to start with a paid search campaign ­ companies like Google, Yahoo or MSN," says Thornton. Charges for this method are performance-based, so you are only a charged if people click on the ad; you are not charged by how many people see the ad. This method makes it very easy to measure and monitor the success of your campaign.  "If you choose this method," recommends Thornton, "it's important to understand your goals and to make sure you have an end goal in mind."

Budgets can range from $5 to $250,000 per month for this type of advertising. Another benefit for small companies starting out ­ maybe with a budget of $500 a month ­ is they can set up the account and manage the search themselves. There's a low barrier to entry here, and search engines will usually help you build a Web site for free. Definition 6 has seen companies budget $250,000 per month for search ­ – that's millions of words – so in this case the company will hire professionals like Definition 6 to manage their account.

Other forms of Web advertising include ad networks, which allow you to buy space on a conglomerate of Web sites that cater to your targeted market. Some networks will also charge for performance, so you only pay if people click on your ad, not if they merely see it. Other ads include banner ads, contextual advertising (where a word in an article is highlighted and a click takes you to the ad); you can choose to do an email marketing campaign, or marketing through social networking like MySpace and Facebook.

Online advertising has been around awhile, and though it continues to change daily ­ about as quickly as technology changes ­ it also becomes more relevant every day. "We're seeing is huge shift in the amount of time people spend in front of computers," says Thornton. And television advertising is becoming more difficult. We can now watch our shows online, On Demand, Tivo-ed or DVR-ed and skip almost as many ads as we want. "It makes the ads harder to force on people," says Thornton.

Changes in watching television coupled with the amount of time we spend in front of our computers are forcing the advertising world to create value for that targeted consumer, says Thornton. "Now the ad must include information, entertainment or add some immediate value to what that customer wants. You have to look at advertising in that light now. You have to take it from the consumer's perspective, rather than from what you as the advertiser want them to see."

Which makes it harder ­ and easier - than ever to reach your market.