Introduction to Online Advertising

Our next lesson covers the main items for online advertising. Advertising is probably the most important promotion tool for big brick-and-mortar companies. However, with a SEM businesses, advertising is only a supporting factor. The problem is that the majority of SEM businesses lack the scale to be able to effectively contact large numbers of prospects and clients. Furthermore, there aren't many places on the Web where prospective clients come in flocks. Therefore, advertising is largely PPC-oriented.

Actually, online advertising is advertising on the Internet. This particular form of advertising is a source of revenue for an increasing number of websites and companies.

A significant number of firms, from small businesses to multinational corporations, incorporate online advertising into their marketing strategy. Online advertisements typically involve at least two separate firms: the advertiser or agency which purchases or sponsors the advertisement and the publisher or network which distributes the ad for display. Because of the close relationship between technical innovation and online advertising, many firms specialize in both. For example, most search engines couple their search service with an advertising program, exploiting the benefits of keyword-based search technology by including ads in search results.

Let’s look closer on the most popular online advertising form as traditional banner. PPC advertising form will be explained in details in 8 lessons of our next Step.

Traditional Banner

A Web banner or banner ad is a widely used form of advertising on the Internet. This kind of online advertising entails embedding an advertisement into a Web page. It is intended to attract traffic to a website by linking them to the advertiser’s website.

Generally the advertisement is constructed from an image (GIF, JPEG, PNG), JavaScript program or multimedia object employing technologies such as Java, Shockwave or Flash, and often employing animation or sound to maximize presence. Images are usually in a high-aspect ratio shape. Banners are usually placed on Web pages that have interesting content, such as a newspaper article or an opinion piece.

The Web banner is displayed when a Web page that references the banner is loaded into a Web browser. This event is known as an "impression". When the viewer clicks on the banner, the viewer is directed to the website advertised in the banner. This event is known as a "click-through". Many banner ads work on a click-through payback system.

At the base of a click-through system are mathematic calculations of the number of users (users clicking on an ad) divided by impression number. We remember that the term impression means the number of times the ad was delivered. For example, if your banner ad was delivered 100 times (impressions delivered) and 1 person clicked on it (clicks recorded), then the resulting CTR would be 1%.

It should be noted that banner ad click-through rates have fallen over time, often measuring significantly less than 1% and choice of an appropriate advertising site with high affinity is very important crucial factor in this situation. Personalized ads, unusual formats, and more obtrusive ads typically have higher click-through rates than standard banner ads.

When the advertiser scans their log files and detects that a Web user has visited the advertiser's site from the content site by clicking on the banner ad, the advertiser sends the content provider a small amount of money (usually around five to ten US cents). This payback system is often how the content provider is able to pay for the Internet access to supply the content in the first place.

Nine Common Banner Ad Mistakes to Avoid

Banner advertising expert Rob Frankel advises e-marketers to avoid the following mistakes when creating their banner ads:

1. Overloaded. Too many colors. Too slow to load. Too hard to read. Nobody wants to grow old waiting for your banner ad to load. Frankel advises designing banner ads that will load and view easily with last year's technology. "Personally, I design pages for people running no more than Netscape 2.0 on the equivalent of a 486 running at 66 MHz and 256 colors," says Frankel. "That means your art should still be no deeper than eight bits, unless you're a true minimalist and can bring it in at no more than four."
2. Unattractive. People like good-looking stuff. What works for Cindy Crawford can work for you, too. So if you're not a digital Da Vinci, find someone who is and pay him or her a few bucks to make your banner look great.
3. Too many bells and whistles. Just because technology offers you bells and whistles doesn't mean you have to use every one of them. Chances are that the average Web surfer has been through several sites before he or she gets to your banner. Give the reader a break. Don't overdo motion, movement, or message changes. And allow some time to digest what you're displaying.
4. Illiteracy and illegibility. These are the ads that make you scrunch up your face and twist your head trying to make some sense out of the illegible scrawls that some knucklehead thinks are cool. But prospects don't care how cool you think it looks. If they can't read it, you've lost any chance of their clicking on it.
5. Missing link. Your banner looks great but isn't linked to anything. That's a mistake that anyone should be able to detect and prevent with a simple check.
6. Link errors. Your banner looks great. The link works . . . directly to a 404 message (meaning the requested Web page was not found). Maybe this one isn't your fault. Maybe your webmaster inadvertently forgot to tell you he or she switched servers. But even if it was the webmaster's fault, who do you think will catch the blame? Keep checking those banner links every few days.
7. Weak message. The same things that make good ads make good banners. Unfortunately, the same things that make bad ads make horrible banners. If you don't know how to write and design a clever, compelling message, hire someone who does. Nothing turns off poten­tial prospects more than a really stupid attempt at being clever, an offense usually committed with the aid of a bad pun. Remember that your ad is a representative of you, containing a smattering of your personality and ability. If it looks dopey to a viewer, guess what they're going to think about you? It's better to be clear than clever.
8. Confusing message. Your banner looks pretty, but nobody understands what the heck you're talking about. This is the number-one mistake made by do-it-yourselfers.
9. Boring banners. One common mistake is that your banner doesn't compel your recipients to respond within a certain time frame. Without a deadline, there is no immediacy to act, which means they scroll away until they forget it.

Web banners function the same way as traditional advertisements are intended to function: notifying consumers of the product or service and presenting reasons why the consumer should choose the product in question, although Web banners differ in that the results for advertisement campaigns may be monitored real-time and may be targeted to the viewer's interests.

The evidence shows that Web banner ads are restricted by high cost and limited physical banner area. Let's look at the Marketplace section of SearchEngineWatch.com:



Out of 10 advertisers only 3 are in the SEM services business. These companies - BruceClay, KeywordRanking and MoreVisibility - are the largest players in the industry; they have enough wherewithal to run these ads and enough resources to satisfy a large flow of traffic.

Pay per click advertising

Pay per click or PPC advertising is an arrangement in which webmasters (operators of websites), acting as publishers, display clickable links from advertisers, in exchange for a charge per click. As this industry evolved, a number of advertising networks developed which acted as middlemen between these two groups (publishers and advertisers). Each time a (believed to be) valid Web user clicks on an ad, the advertiser pays the advertising network, who in turn pays the publisher a share of this money. This revenue sharing system is seen as an incentive for click fraud.

Though many companies offer pay per click system as one of their services. Google AdWords and Yahoo! Search Marketing (formerly Overture) and MSN AdCenter are top players in this field.
As far as PPC advertising is the first advertising option for any new on-line businesses it became one of the dominant and widely used marketing tools.

What you should remember:

1. A Web banner is displayed when a Web page that references the banner is loaded into a Web browser. This event is known as an "impression". When the viewer clicks on the banner, the viewer is directed to the website advertised in the banner. This event is known as a "click-through".
2. Banners should be placed on Web pages that have interesting content, such as a newspaper article or an opinion piece.

Introduction to PPC and Basic Concepts

Next, let’s take a look at PPC advertising which nowadays is the fastest growing marketing tool. The successful growth in this area is the result of the beneficial characteristics of PPC such as affordability and effectiveness. Actually, any site owner starting a SEO/SEM campaign will receive targeted traffic when using proper keywords directly relevant to site’s content. It is advisable to use PPC advertising in the periods before good organic rankings come about. Another added benefit of PPC is that it protects you from long organic re-indexation periods and seasonality by providing a steady stream of traffic.
As the definition states, pay per click (PPC) is an advertising technique used on websites, advertising networks and search engines.
Advertisers bid on "keywords" that they believe their target market (people they think would be interested in their offer) would type in the search bar when they are looking for their type of product or service. For example, if an advertiser sells tennis balls, they would bid on the keyword "tennis balls", hoping a user would type those words in the search bar, see their ad, click on it and buy. Keywords should be directly relevant to site content as it is easy to lose money with improper choices.
These ads are called "sponsored links" or "sponsored ads" and appear next to and sometimes above natural or organic results on the page. The advertiser pays only when the user clicks on the ad.
Abuse of the pay per click model can result in “click fraud”.  Click fraud occurs in pay per click online advertising when a person, automated script, or computer program imitates a legitimate user of a Web browser clicking on an ad, for the purpose of generating an improper charge per click. Click fraud is the subject of some controversy and increasing litigation due a situation where advertising networks are also a key beneficiary of the fraud whether intentional or not.
Use of a computer to commit this type of internet fraud is a felony in many jurisdictions, for example it is covered by Penal code 502 in California, USA, and the Computer Misuse Act 1990 in the United Kingdom. There have been arrests relating to click fraud with regard to malicious clicking in order to deplete a competitor's advertising budget.
While many companies exist in this space, Google AdWords and Yahoo! Search Marketing are the largest network operators as of 2008. MSN offers their own PPC services with their MSN adCenter. There are more PPC search engines available such as Ask.com, Kanoodle, LookSmart, Miva, etc.
Depending on the search engine, minimum prices per click start at $0.01 (up to $0.50). Very popular search terms can cost much more on popular engines.
Before starting PPC campaigns, make sure the following is done:

• Analyze your business niche and learn who your competitors are (the Web CEO Keyword Suggestion tool can definitely be of great help to achieve this);
• Pinpoint the search terms that you will use in your ad (keywords you are going to target and the negative keywords that you should omit);
• Learn how to write good ad copy which will have a high clickthrough rate;
• Work hard on the landing page you will link your ad to - make sure  visitors do not navigate away from the sales area of your site;
• Think ahead about tracking solution that will help track and analyze your PPC campaigns, prevent click fraud, etc.

Generally, to get started you will need about $50 for the first month of Google AdWords advertising, and $50 – for Yahoo! Search Marketing. Our next lesson depicts these top PPC providers and the advertising process itself.
Another PPC advertising provider you might be interested in is LookSmart with its Silver, Gold and Platinum levels of service (http://adcenter.looksmart.com). LookSmart has a built-in Conversion Tracking system that will help you measure your cost-per acquisition (CPA), the total amount you spend for each conversion. LookSmart results feed CNET's Search.com, Ask, ABCsearch, Bravenet Media, Copernic , Wikia, Enhance, Kontera and Search.com.
Experienced Search Engine marketers are playing with bids and keywords by starting from small sums and gradually growing successful keywords. This technique is depicted in more detail in our next lessons. In general dollars spent on targeted keywords for your site should have a chance for success. Any good marketing Internet based business relies on fast feedback loops to help it improve. At the beginning you want to overspend on your ads so that you can see which ones are effective. After a while regroup your ads by cost and then slash your bid price down. Ineffective ad groups or keywords will automatically shut off and just your effective ads will keep displaying.
To sum up pay-per-click is a better advertising medium for small SEM businesses because with proper keyword selection it can be affordable for any site owner. That’s why if you are starting a new site marketing strategy the first advertising option to consider should be PPC search engine promotion. After this, the best course of action would be to assess the mix of organic and paid search engine traffic as a whole, and to implement a wide-ranging search engine marketing strategy.

What You Should Remember:

1. If you use PPC your site gets instant and measurable targeted traffic;
2. PPC helps to get prime exposure on Google, Yahoo! and other major search engines;
3. You only pay for the clicks you receive;
4. Most importantly - there's no limit to the traffic.

Major PPC Providers (Google AdWords, Yahoo! Search Marketing, Microsoft adCenter)

As we look at the pay-per-click advertising medium we should acknowledge that there are many different PPC search engines where one can spend money. Keep in mind that when using larger pay per click search engines (that will charge you more for your ad campaigns), the chances are also higher that you will be getting good traffic and that your business model will be scalable. Smaller engines provide slower feedback loops and some may not even provide quality traffic.
The major players are Google AdWords, Yahoo! Search Marketing (formerly Overture), Microsoft adCenter, others include Ask, Kanoodle, LookSmart, etc.
Let's examine the top players of the pay-per-click advertising medium.
Google AdWords
Yahoo! Search Marketing
Microsoft adCenter
PPC Programs Comparison

Google AdWords - http://adwords.google.com/

PPC Advertising is an essential element of a pay-for-performance strategy. And Google AdWords is definitely your first and arguably most important stop.
AdWords is Google's flagship advertising product, and it's main source of revenue. AdWords offers pay-per-click (PPC) advertising, and site-targeted advertising for both text and banner ads. The AdWords program includes local, national, and international distribution. Google's text advertisements are short, consisting of one title line and two content text lines.
Let's look at Google's results for "Search engine marketing" to see it in use. (You might see somewhat different results in your browser due to Google's geotargeting).



Among the top paid results we can see are SEM businesses – this confirms our assertion that PPC advertising is better suited for the needs of an SEM business, because of exposure to a highly targeted audience. Costs per click for keywords like "search engine marketing" or "search engine marketing firm" are about $10 / click. Therefore, if your services cost on average $2000, you should have a 0.5% conversion to break even.
Obviously, costs-per-click varies with different keywords and sectors, but $50/mo for each and careful keyword selection will be enough to give you a good start.
One vital factor to remember about Google AdWords ad is your advertisement display URL. It will be seen on your ad and needs proper attention while creating the advertisement for listing. For more advice on creating your ad, please refer to Lesson Ad Writing Tips. Where do you want your visitors to go after clicking the ad? Don't waste an opportunity by sending your customers to unfocused pages. More tips and guidelines on ad writing and a detailed explanation of how to direct visitors will be available in our next lessons.
Getting Feedback from Your Account:
When opening up a Google AdWords account many people are hesitant to spend much money. In spending too small amount the business is essentially ignoring the feedback loop Google has set up.
Is it better to lose 100 dollars today, than to lose it over three months to finally come to the conclusion that you need to change? We think you would rather want to know what you need to change now. Not all industries will make money from AdWords. It is not a business model that will work perfectly across the board.
Lower-placing ads have a lower bid price. That can help save money if the top placed ads are overpriced. Another great benefit of having a lower-placed ad is that a user that clicks on one is more prequalified to make a purchase. By scrolling through a bunch of ads they have displayed a greater intent to make a purchase.
These two mathematical facts often mean that listing at 5 or 6 often provides a better ROI than listing at the top. You will need to determine the profit elasticity for your market to see what ad locations will return the highest overall profits.
Lowering Click Price after Bidding:
After you get 10 or 20 clicks and have a decent click-through rate you may want to slash your bids in half or by 2/3. Often it is best to start off with your ad around the #1 or #2 positions to collect feedback and then let it fall back after you drop ad price.
Expanding Breadth:
It is advisable to limit your ad budget by help of the availability of well targeted ads. If your ad spend is limited by a budget and you are showing high for many of the search terms lower your max bid to lower the position down to 5, 6, or 7.
Thus you can show up on more search results and people who are looking at the lower ad positions are more prequalified to buy.
Google's AdWords is a great opportunity for your business to get customers who are searching for what you sell. During the search using one of your keywords your ad will appear directly with the relevant results on SERP. Moreover only a highly targeted audience interested in your services will see your listings.
Demographic Targeting
The Demographic targeting feature introduced by Google AdWords program is a way to find and run your ads on sites with the right audience for your add campaigns.
The right audience or demographic group is an audience that shares a particular trait or characteristic such as age, gender, income, etc. Some site-publishers (e. g. social networks) ask their users to identify themselves by age and gender.
Armed with this kind of information, Google can display your AdWords ads to the demographic groups that you prefer, or prevent your ads from displaying to groups you don't want to reach.
The system will analyze the preferences you choose and create a list of available Google Network sites that are popular with that audience.
Learn more about AdWords demographic targeting.

Yahoo! Search Marketing – http://searchmarketing.yahoo.com

If you are serious about pay-per-click advertising, Yahoo! Search Marketing is a reliable top player for your advertising campaign.

Lately Yahoo! had an upgrade of their Paid Search Advertising Platform. The Update dubbed "Panama" is replacing the system that Yahoo! acquired from Overture (formerly Goto.com). The new Yahoo Search Marketing Interface provides you with the new Sponsored Search.
Sponsored Search is a form of search engine marketing with new, improved features: budget control for the marketing expenses, targeting ads to the specific audience and/or customers, easy management of tools and features. Content Match – new feature can extend your business's reach and increase web site traffic by featuring your ads on publisher sites and in newsletters and emails.
In the base of the new Sponsored Search is the New Ranking Model. With the new ranking model, an ad's rank in search results is determined by bid amount and ad quality. Thus, ads with higher quality can deliver a lower cost per click and/or may receive better placement on the results page relative to lower quality ads.
Ad quality is determined by quality index calculated each time your ad is shown. The ad's click-through rate relative to its position and to other ads displayed at the same time will affect the quality index. Remember you may be rewarded with a better rank or lower cost on your ads making your ads more appealing.
Yahoo! Sponsored Search lets you create ads that appear in search results on the Web's most popular destination and other sites in the Yahoo! distribution network. Their Start-Up helps to get your campaign online with five easy steps.
Generally all the pay per click solutions will require you to take the steps like following to list your ad.
5 steps for listing via the Yahoo! Search Marketing service:
Step 1. Select keywords directly relevant to your site content. The editorial staff of Yahoo! Search marketing will check your site content for  correspondence with your keywords.
Step 2. Write a search listing which consists of a title, description about your site and what you have to offer and URL.
Step 3. Determine bid amounts for your search listing.
Step 4. Your listing is distributed across the web.
Step 5. Finally, your listing appears in the results of search engines.
If you use Yahoo! Search Marketing as any other pay per click provider you get only the targeted prospects and pay only when prospects click on your listing. Fortunately, it is a powerful way to find your site for customers who are searching for what you sell.

Microsoft adCenter - https://adcenter.microsoft.com/Default.aspx

Microsoft offers their own pay-per-click ad-bidding system called Microsoft adCenter that pairs search results with sponsored text messages from advertisers.
They help to start your online advertising campaign and target ads to the times, places, and customers you want the most. This program also has built-in tools to manage your advertising process for better results.
Keyword generation tool will automatically generate keywords based on the word or website address you choose.
This add-in has been developed for Excel 2007. Among its basic functions are building or expanding your keyword list, monitoring performance and researching trends. Keyword Forecasting option gives historical and future forecasted impression counts for the specific keywords, monthly reports and shows daily traffic.
Moreover, you can optimize ad campaign performance by preparing timely reports with help of another special built-in tool. Thus you can create the advertisement for listing, define keyword match options, set your own price per click and manage the campaign to see when your clicks lead to sales.
All you need is a credit card and $5 for a one-time sign-up fee to create your Microsoft adCenter account. To start registering go here https://adcenter.microsoft.com/Default.aspx.

Here you can see the top PPC programs comparison:

	Google Adwords	Yahoo! Sponsored Search	Microsoft adCenter
Product Features:
Geo-targeting	+	+	+
Demographic targeting	Limited to the U. S. area ads only.	+	+
Dynamic keyword insertion	+	+	+
Keyword matching options (allow you to control how precisely you want a user's query to match your specified keyword)	+	+	+ (bidding types)
Reports	+	+	+
Ranking (important factors in how an ad is ranked)	A combination of several relevance factors including CPC and clickthrough rate	Bid amount and ad quality (ad quality is determined by quality index calculated each time your ad is shown.)	Bid, click-through rate, and relevance.
Minimum deposit to start	$5	$5	$5
Tools
Keyword analysis	Enhanced Keyword Tool	The ROI calculator – CPC, CPM (cost per thousand) Note: Keyword research feature for keyword ideas	Keyword Generation Tool (a plug-in for MS Excel 2007)
Traffic estimation	Traffic Estimator Tool Get quick traffic estimates for new keywords without adding them to an account or using the AdWords sign-up wizard. You can see clicks per day, average CPC, cost per day and average estimated position.	-	-
Ad management	-	-	AdCenter Desktop application to manage your ads.
More Features
Ad exposure	Advertising network of sites and products for increased ad exposure.	Content Match extends your business reach via publisher sites, newsletters and emails.	Content Ads displays content-targeted ads on Web pages.
Ad testing	-	Test multiple versions of your ads to determine which message works best for your customers. The Sponsored Search system automatically displays the ads receiving the most clicks.	-
Competitive pricing	AdWords Discounter automatically monitors your competition and lowers your CPC to one cent above theirs.	-	-
Campaign budgeting	Daily	Daily	Daily or monthly
Ad scheduling	Run your ads on the days and hours you want.	Set specific start and end dates for your campaigns and choose time-of-day / time-of-week for each campaign.	Set a schedule to run your ads on the days and hours you want.
Learning center	+	+	+

What You Should Remember:

1. Using the PPC advertisement method prepare your ads properly.  The most important point here is to select keywords directly relevant to your site content.
2. Lower-placed ads have a lower bid price. That can help save money if the top placed ads are overpriced. If you are running your ads correctly then the availability of well targeted ads should be what is limiting your spending.