
Online advertising is proving to be a cost effective means to reach out to target customers. With more and more people spending time on the Internet in India, Internet advertising is all set to grow in a huge way. Industry sources believe online advertising will be worth $100 million by 2010-11. Considering the increasing number of Internet users in India, it is worth spending money on Internet advertising. On the other hand, it is one of the most common modes of revenues for web businesses.
There are various modes of online advertising. Some of the important ones are:
1) Pay per click (PPC): It is one of oldest method of online advertising. It is also known as cost-per-click. These are mainly keyword based ads which appear on the front page of a search engine. These ads either appear on the first two or three positions of the search results or in a column on the right side of the page. With search engines, advertisers typically bid on keyword phrases relevant to their target market. PPC adverts are also done on content websites where advertisers pay only when a visitor clicks on the advertisement.
2) Cost per sale: The term Cost Per Sale for advertising in which the advertiser pays only for those clicks where the user clicks through on the banner or ad and actually purchases a product on the advertiser's site.
3) Search engine optimization: This is basically the optimization of the content of your website by certain professionals depending on your target customers and keywords related to your business. It improves the chance of your website appearing on the first page of a search result.
4) Banner ads: These are the most common ads that we find while browsing the Internet. Banner ads are embedded on to a web page. These could be either in the horizontal or vertical format. When the viewer clicks on the banner, the viewer is directed to the website advertised in the banner. This is known as 'click through'. Banner ads function in two ways - CPA and CPI.
a) CPA (Cost per action) - This means that the advertiser only pays when a certain action is performed on the ads displayed. Accordingly, the actions are called cost-per-click through, cost per lead (free registration), cost per sale with click through, lead and sale as the actions.
b) CPI (Cost per impression) - This is a flat rate model where in the advertiser pays per impression. A single impression could mean loading of the web page. This could exclude reloading of the same page. Some web companies prefer this as it results in a consistent revenue.
5) Cost per mille (CPM) - CPM or cost per thousand is a measured form of advertising. It is the cost per thousand views of the ad.
To calculate CPM you take the cost of the campaign divided by the impressions divided by 1,000. [CPM = Ad Cost / (IMP/1000)]
To calculate Ad Cost you take the CPM cost times 1,000 and then divide the impression number by that result. [Ad Cost = IMP / (CPM * 1000)]
To calculate Impressions you take the Ad Cost divided by CPM and then multiply that number by 1,000. [IMP = (Ad Cost / CPM ) x 1000]
6) Pop-ups and Pop-downs - These are the small windows that appear when you first get onto a website. Pop-ups appear on your screen in full, pop-downs appear on the bar at the bottom of your screen and you have to open them to get rid of them. Surveys have found that most Internet users find pop-up adverts intrusive and annoying.
We will discuss about the trends and changing forms of online advertising in future.