Introduction to Online Advertising
An advertiser is party that wants to advertise a product or service using different types of media. Examples of media include television, print, radio, outdoor billboards or online media. The advertising industry runs because of advertisers – it is the advertisers who allocate large sums of money to advertising their products and services any of the above media.
We are going to concentrate here only on online media since PubMatic is focused on this type of media. From time to time I may refer to offline media also since the basic concept is the same but the technology used is different. An Advertiser builds a unique relationship with his customers by advertising various features and the needs that he wants to advertise.
How does the whole process start? Well say you are owner of a company called “Company A” and you have introduced a product called “Branded Sports shoes” and would like to market your product since it’s new and no one is aware of this product. You then find that you are targeting youth since it’s a sports shoes with style and trendy looks, so you know that teens and adults from age 15 to 30 are only going to buy your products, sure you also have exceptions but majority of them. So this is known as your “Target audience”. You then discover after a bit of R&D that online is the best media to market the product. So you fix a budget say of 10 lakh rupees or say around $25000 USD$ budget. So in this case you become an Advertiser and since you are putting in some money in the market the whole process starts of advertising online.
Continuing the above example, you only know that you want to advertise online but you have no idea how to do it and what all things are involved in this. Take a day to day example where in if any of you has ever tried advertising in newspaper you wouldn’t have gone to a newspaper directly but would have rather gone to an Agency which would publish ad on behalf of you in the newspaper. The agency would suggest you which newspaper would be best for your type of ad and budget.
Well same is the case here but the only difference been that you would approach an Online Agency who specializes in giving you whole Online Media Plan according to your budget, target audience and what is your objective of advertising which is also known as campaign objective. An Advertising campaign is something which gives you a clear picture of the time from when the ads are going to start getting delivered and till when with how much of budget it will be spending and also states the Media plan. We will get into details about what is Online Media plan later in this document. So you will then go and approach the Online Media agency with your budget and campaign Objective giving them all the information about target audience and what region are you targeting.
Now the interesting part is that it can be the other way around. Say for example you are an Online Ad agency you just can’t wait for business to come to you, there should be some initiative been taken from your side also to bring in potential clients. So in this scenario what the agency does it searches for potential customers whom they know has a good scope of marketing online their products. Then again the same process is started where in the agency in this case proposes a plan to them with the statistics of Online and how it is going to help them increase their market reach.
Media Planning & Media Buying
Now using the same example that we have been using so far you go to an agency and give all the necessary information that the agency needs to prepare a Media Plan. Now what is a Media plan? A media plan defines how many impressions are going to be delivered on what websites for how long and then from how the campaign objective which can either generating more traffic on website ( we will learn about Websites in detail later in this document) or generating leads( which can enquiries, forms etc depending on the type of product that you are advertising) or also generating sales. So depending on the campaign objective the media planner then runs reports and past campaign performs from various Pubslihers who are perfectly suitable for your product since the media planner knows that the correct target audience is coming to these websites.
I know there are a lot of questions about how it is done and how everything happens? This is a very important part of Online advertising and needs a lot of knowledge about how market is performing and how users behave. There are various types of targeting that is been done which we will not go in to details since we don’t need to know as of now. If you would still like to know more please let me know I shall let you know more in depth how media planning is been done. So now coming back to what we were discussing is that once the publishers are finalized then the media plan I created spreaeding the budget across various websites which can come under one publisher or various publishers. I shall define in brief what is a publisher and the types of publishers.
A Media buyer is the specialist who deals with publishers to get the best rates possible in the market from them and then passes it on to the media planners. We shall discuss about the Purchasing variations in detail in the next topic. But now a days in agencies it is rarely to find a media buyer only doing this job, since he is also asked to do Media Planning.
Media planning goes deeper since what we have now read is only a short overview.
If you want to study bit more about what Media Planning below are few links:
- http://highered.mcgraw-hill.com/sites/0072415444/student_view0/chapter8/els.html (short overview about Media Planning & Buying)
Purchasing Variations in Online Advertising
CPM (Cost Per Impression) is where advertisers pay for exposure of their message to a specific audience. CPM costs are priced per thousand impressions. The M in the acronym is the Roman numeral for one thousand mile.
CPV (Cost Per Visitor) or (Cost per View in the case of Pop Ups and Unders) is where advertisers pay for the delivery of a Targeted Visitor to the advertisers website.
CPC (Cost Per Click) is also known as Pay per click (PPC). Advertisers pay every time a user clicks on their listing and is redirected to their website. They do not actually pay for the listing, but only when the listing is clicked on. This system allows advertising specialists to refine searches and gain information about their market. Under the Pay per click pricing system, advertisers pay for the right to be listed under a series of target rich words that direct relevant traffic to their website, and pay only when someone clicks on their listing which links directly to their website. CPC differs from CPV in that each click is paid for regardless of whether the user makes it to the target site.
CPA (Cost Per Action) or (Cost Per Acquisition) advertising is performance based and is common in the affiliate marketing sector of the business. In this payment scheme, the publisher takes all the risk of running the ad, and the advertiser pays only for the amount of users who complete a transaction, such as a purchase or sign-up. This is the best type of rate to pay for banner advertisements and the worst type of rate to charge. Similarly, CPL (Cost Per Lead) advertising is identical to CPA advertising and is based on the user completing a form, registering for a newsletter or some other action that the merchant feels will lead to a sale. Also common, CPO (Cost Per Order) advertising is based on each time an order is transacted.
Cost per conversion describes the cost of acquiring a customer, typically calculated by dividing the total cost of an ad campaign by the number of conversions. The definition of “Conversion” varies depending on the situation: it is sometimes considered to be a lead, a sale, or a purchase.
Though, as seen above, the large majority of online advertising has a cost that is brought about by usage or interaction of an ad, there are a few other methods of advertising online that only require a one time payment. The Million Dollar Homepage is a very successful example of this. Visitors were able to pay $1 per pixel of advertising space and their advert would remain on the homepage for as long as the website exists with no extra costs.
Creative and Banners
We have seen a lot of banners been put on streets that we usually travel. We see different types of sizes and shapes with advertisements. The same we also have the banners being put up on websites the same we see in a newspaper or on streets. Banners are of different ad sizes while majority of them are of standard size defined by IAB(http://www.iab.net) stands for Interactive Advertising Bureau which standardizes Banner ad sizes that can be used across all the websites. Even though a website owner has a choice to create an ad size of his own but this standards help the advertisers to know the correct rates of the banner ad sizes offered in the market and makes the life of both advertisers and publishers easy. Since you also have different ad networks, agencies working in getting advertisers in the market.
Please refer document on “ ad_positio and sizes” in the PDF format which gives you a fair idea about all the standard ad sizes. Just for your information below are the most common ad sizes been used across :
- 468×60 – Known as Banner – here 468 is width and 60 is height and the sizes are always in pixels. So first is always width of the ad and second is the height.
- 728×90 – Known as leaderboard
- 120×600 – Known as Skyscraper
- 160×600 – Known as Wide skyscraper
- 300×250 – Known as Medium Rectangle
- 336×280 – Half Page banner
There are several other ad sizes but these are the most common ones used. Various online tools are used to design these creatives which we will talk in the later part.
To design these creatives you have specialized agency. These agencies work on the brief the Advertisers give on the way their ad should look like and what message needs to be delivered. Most of the times the Media agencies will outsource this work to the creative agencies. Many times they will have a creative designing team in house also. Based on the approval of the advertiser the creatives are then sent back to the Media Agency.
Now the way we see the ads been served in a Television where in a specific ad is been served several times during a Football match or a Tennis match. Well this is usually been done using some system. You need specialists to work on this. The same way the ads are been delivered using Ad Servers and people working on Ad server who traffic the creatives according to the campaign needs that is where it needs to be delivered which part etc are known as Ad Traffickers. We will study in depth about ad servers. We need not get much into detail about Ad Trafficking.
You have ad servers on Media Agency side as well as on Publishers side. So once the creatives are ready they are sent to the agency side and then they are trafficked and sent to the publishers who then put those creatives on their website.
Please go through the Power point presentation now on Direct_Advertising which gives a short overview about what we studied now.