Online Advertising Primer

 I sat down with a client recently and went through the steps involved in setting up an online advertising campaign. The first meeting was a bit slow as we spent the entire time going over the terminology associated with online ad campaigns. Here’s a sampling of what we had to cover before we could begin to work on the terms of the deal.

What types of ads are there? Everyone has heard of banners, and often that term is used for any online ad, but there’s more to it than that. The Interactive Advertising Bureau has laid down voluntary guidelines for ads (which they call Ad Units). These guidelines are widely followed and lay out clearly standards for sizes and formats for the variety of ads being used today, be they banners, buttons, skyscrapers, or other more exotic formats. Visit the IAB site to become fluent in the terminology of this realm. (www.iab.net)

What kinds of campaigns can you create? Ad campaigns are generally sold on the basis of either Impressions, Clicks, or Duration.

An Impressions Campaign: If you sign up for an Impressions Campaign you buy a set number of impressions or “views” of the ads. An Impression occurs when a banner is downloaded to a web page and (presumably) seen by the visitor to the website. Accurate calculation of Impressions is difficult, but the important thing to remember is that the number of page views the site registers is not necessarily an accurate indicator of ad impressions. Some page views do not generate opportunities for a visitor to see you ad and accordingly you should not be charged according to that “gross” number; rather, you should insist that certain page views are removed from the calculation. Specifically, make sure they do not count visits from spiders, pages that generated errors, or redirects. This concept is called “valid hits” and that is what you want to be billed for.

A Click Campaign: This method of selling ads is performance based and is easier to measure and benchmark. Essentially, you only pay when someone clicks on the ad. This method of ad measurement is less prone to manipulation and therefore preferred by many advertisers. Clicks can be measured both from their ad tracking software and from your site traffic reports.

A Duration Campaign: Sometimes called a “Fixed Placement”, this type of campaign is based on the old fashioned model of buying a position on a page for a set period of time; say you want the ad at the top of page one for one month. It is a simple and easy to calculate approach to online advertising, but it is often impossible to arrange on active sites, which tend to use one of the two approaches outlined above.

How do you structure payment? Different campaign types use different payment models. While a Duration Campaign is likely to charge a flat fee, the two other types mentioned above use CPM and CPC.

CPM (Cost Per thousand): CPM is used for Impression Campaigns and represents the cost per thousand impressions. For example, a website that charges $5,000 per banner and guarantees 250,000 impressions has a CPM of $20 ($5,000 divided by 250). You banner will run until the 250,000 impressions are achieved, then it will be removed.

CPC (Cost Per Click): CPC is used for Click Campaigns and represents the amount you pay each time someone clicks on your ad. Some programs, like Google’s AdWords, provide a bidding system where you bid for a position on the page in terms of the maximum you are willing to pay to appear in that position. The actual price you pay is not determined until the page is displayed and the various bids are taken into account. If you pay in advance, your ad runs until the number of clicks you purchased is achieved, then the ad is removed. If you are billed monthly, the total clicks for the month are tallied then the amount of the charges billed to you.

How do you measure success? While every firm has their own benchmarks for measuring performance, the two metrics described below are commonly used.

Click Through Rate (CTR): CTR is the rate at which visitors click on an advertisement. It is usually calculated as a percentage of the ad impressions. If you are doing 0.2% or higher, you are doing well.

Conversion Rate: This metric refers to the rate at which users complete a sale or registration once they reach your site. Calculating conversion rates can be a bit of an art form, but if you tie your ads to pages that give clear links to the action you desire the visitor to take, for example registration for a newsletter or site membership, you can benchmark this with some accuracy.

Of course there is much more to the world of online advertising then this short list, but at least it is start. Online advertising has been growing up fast and it is now possible to find people who are fluent in buying for this media. Shop around and find a professional and you will benefit in the long run.

written by: Ric Shreves,
http://www.waterandstone.com

About the Author

Ric Shreves is an Internet consultant and author specializing in web technologies. He is a partner in Water & Stone, a web design agency focused on Mambo, osCommerce, and other open source tools. Read more of his work online at: http://www.waterandstone.com.

 Ric Shreves

More Articles 

Advertising in RSS Feeds: Are we risking disaster? - Joe Duchesne
Advertising in RSS feeds is something that Google is considering offering to its Adwords and Adsense customers. RSS stands for Really Simply Syndication and is a really easy way for a webmaster to share their news and information stories to the...

Why Your Online Advertising Traffic Leaves as Soon as It Arrives - Joel Walsh
****By placing this creative work in a website, newsletter, or publishing or distributing it in any way, you agree to be bound by the terms of the following license. If you do not agree, do not publish or distribute this article. Modifications...

Microsoft and PPC Advertising -- Not Quite a Flirt Anymore - Iulia Pascanu
Google AdWords and Yahoo! Search Marketing (formerly Overture) face new competition from Microsoft's newly released PPC program, MSN AdCenter . Currently, MSN still displays search ads from Yahoo! Search Marketing, through a contract that...

Yellow Pages Advertising ... 13 Ways to Spice Up Your Results - Kris Mills
Each year businesses around the world spend a small fortune on Yellow Pages advertising. It's perhaps one of the largest single investments you'll make in advertising all year so it makes sense to ensure your ad packs the biggest punch and gives...

Inexpensive and Effective Advertising for Your Web Site - Kevin Nunley
With so many businesses on the web and so many different ways of promoting your site it is easy to spend far too much on advertising and get far too little in return. Here are some tried and true ways of promoting your business that are simple and...

The Ugly Truth About Advertising On FFA Pages - Marketing Basics
FFA stands for "Free-For All," and one of the biggest myths on the Internet is that if you advertise your website's URL on thousands of FFA pages, you'll be flooded with traffic, and increase your link popularity and search engine ranking. ...

Is it Really this Easy to Get Free Advertising? - Nicole Dean
One of the best ways to get free advertising is by writing content and giving it away. I'm going to say it again in case this is a new concept for you. Simply write articles and give them away. 1. Why Should You Write Articles?  Newsletter and...

Looking for Free advertising, here it is! - Veronica Bath
There are lots of ways to advertise for free but they are time consuming so I guess technically, they are not free because your time is worth something! But if you have the time and not the money this is for you. I posed the question of “free...

Ezine Advertising Strategy Exposed-16 Tips To Boost Your Profits - Greg Root
In my opinion, Electronic Magazine (Ezine) advertising is thegreatest, untapped source of online advertising available today. The reason: Ezine Advertising (EA) matches your product or ideato people with similar interests. Example: who better to...

Going Beyond Banner Advertising - R M Blackledge
Going Beyond Banner Advertising R.M. Blackledge ©Copyright 2005 A major stumbling block for many internet marketing newbies is the false belief that the placement of a banner ad on a web page is all that's required to immediately start making a...