What is online advertising and how does it work?
This article was first published in the downloadable first issue of markonmag. The article has since been updated by Keeven Cheong.
Have you ever wondered how the advertisements you see online get delivered to you?
Behind that one simple advertisement lies a great ecosystem of agencies, media buyers and planners, and creative departments working together to convince you to convert via the ad.
But before I get into the nitty-gritty details about how online advertising works, let’s first address the question. What is online advertising?
What is online/internet advertising? - Three main types
In digital marketing, there are primarily three areas that companies launch their digital marketing efforts to make consumers today buy their product/service online:
Search Marketing
Social Media
Programmatic.
Take a look at the funnel to understand how each area affects each phase of the consumer journey.
The funnel maps out different parts of the consumer journey.
Social Media and Programmatic advertising are primarily designed for the Awareness and Behaviour phase, where visual advertisements are used to generate awareness and interest in the products/service.
Search Engine Marketing campaigns are typically designed for the Conversion phase. Once the consumer displays an interest in buying (by clicking on the prior advertisements), the advertising copies will be Conversion-based in nature to initiate sales. This happens as consumers are highly likely to make a conversion at the Conversion stage.
Let us now dive into the various types of online advertising!
1) What is social media advertising
Social media advertising is a digital marketing strategy that allows you to run paid advertisements on social media platforms. The most common types of social media advertising include:
In-feed ads that appear directly in your social media feed
Sponsored posts of influencers using a certain product on social media
Story ads that are clickable for apps that have a ‘story’ feature like Facebook and Instagram and appear between the stories
With nearly 2.5 billion active monthly users on Facebook, 1 billion on Instagram, and 330 million on Twitter worldwide, there is a large pool of consumers for advertisers to tap on which makes online advertising with social media so appealing.
Additionally, what differentiates social media advertising from other types of advertising is that it allows you to reach a larger audience.
By targeting users based on their interests, behaviours, and other demographic data, social media ads can generate greater awareness of your product or services by connecting with new people who have not used your product/service before.
How does social media advertising work?
Data used by social media ads are collected by the social media platforms themselves, allowing advertisers to target a specific audience as broadly or narrowly as they wish.
For example, Facebook’s ad platform allows you to target specific users based on parameters such as age, demographics, and interests.
You can also target ‘lookalike’ audiences based on your business’ email list or run campaigns solely for people who’ve visited your website before.
This means that you need to know the characteristics of your audience to assess your opportunities, target demographics and choose which products to promote to increase the chances of your online advertising working.
Another crucial aspect of social media ads is bidding.
There are two options here: either a daily limit or a lifetime limit. A daily limit would mean that the social media platform would optimise spending for a particular day while a lifetime limit would result in days where more of your budget might be spent compared to other days.
2) What is programmatic?
Programmatic advertising is the automated buying and selling of online advertising spaces on advertising networks like Google, Instagram, and Facebook.
This process connects advertisers, who want to buy advertising space on the internet, with publishers, who own the advertising spaces. Think of it as a marketplace for the online advertising world.
Programmatic advertising uses real-time data and targeting tactics to identify the online advertising space most commonly used by its target audience.
These targeting tactics then allow advertisers to target specific markets whilst taking into consideration their budgets, and goals when deciding on which bids to place for different advertising spaces.
How does programmatic work?
When someone clicks on a website that uses programmatic advertising, the website starts the automated bidding to serve an ad to this particular viewer. The particular ad space is put up for auction and artificial intelligence (AI) helps advertisers to determine factors like geography, demographics, and interests of the user.
If the user is found to be a good fit for the product/service, a bid is placed on that particular ad space and the highest bidder wins the right to that ad space and is served to the user who would hopefully click on it!
From an advertiser’s viewpoint, take a look at the following example. If you’re trying to sell a new high-tech winter jacket, you may choose to only target ski enthusiasts from Western Canada to increase e-commerce purchases.
A programmatic campaign would take all these parameters and, with the help of AI, will select the best ad platforms and bids to drive maximum ecommerce sales.
3) What is search engine marketing
Search Engine Marketing (SEM) is a subset of search marketing, with the other component being Search Engine Optimisation (SEO). But we’ll save that story for another day 😉
Here, we will focus on what SEM entails.
SEM is the use of paid methods/strategies to increase the visibility of companies’ products or services in search engine results pages (SERPs). These types of ads typically show up above search results that are ranking organically.
In SEM, the biggest player in this space is no doubt Google (92.71%), followed by Bing and DuckDuckGo. You didn’t think Google was the only search engine, did you? 🤔
SEM typically contains 2 two components: the pay-per-click model and budget. Pay-per-click, or PPC, starts with choosing the right keywords to bid on, meaning that sufficient research should be done to determine what keywords to bid on.
For budget, if it is small, you may only wish to focus on keywords with buying intent/at the conversion stage. However, if you have a larger budget, you can target earlier stages of the buyer’s journey like the awareness and behaviour stages.
How does SEM work?
Companies bid on the keywords they want to appear on SERPs and those with the highest bids would have their ads placed at the top to gain more visibility and prominence. When a user types in a certain keyword, your business appears as a top result for that search query to increase the likelihood of it being clicked. If a user clicks on your link, your online advertisement has worked!
Types of keywords that can be used in an SEM campaign include:
Broad match keywords which include variations of a term and similar phrases
Phrase match keywords that target the exact phrase and phrases that have words before or after the target keyword.
Exact match keywords which target misspellings, singular or plural forms, and abbreviations of the target keyword.
Negative keywords exclude terms that you don’t want to target and include variations of keywords that you don’t want to use in your campaign.
Up to date on what online advertising is about now?
I hope this has helped you gain an insight into the realm of digital advertising and how the various types of online advertising work.
We live in the digital age and traditional ad agencies are becoming obsolete. It is an incredibly exciting time to learn more about and even work in digital advertising.
That said, digital advertising isn’t the only field of marketing out there. Marketing is an incredibly diverse field with many different sub-branches.
To learn more about the various types of marketing, check out the content put out by this free online marketing magazine!
