Web Advertising 101

At this point, I think all three of them understood how important advertising is to the Web. Stef had actually taken an advertising course at college, so it wasn't news to her. "We spent a couple of classes discussing online advertising," she said, "but it's a pretty broad topic and we didn't have time to cover it all. There were a lot of details, though, a lot of terms to understand and memorize."

"I'm not surprised," I said, "because online advertising is a broad topic. But we're looking at a narrower topic, Web-based advertising, and it's important that we all understand basic Web advertising concepts." I then gave them a crash course in Web advertising.

Ad Formats

The format of an advertisement refers to its type and its position on a page. The first advertisement format on the Web was the banner ad, a clickable rectangular image (wider than it is tall) displayed at the top of a Web page. In order to accommodate limited screen sizesremember, this was back when Windows-based screen resolutions of 640 pixels wide by 480 pixels high were still commonbanners at the time were fairly small; a popular size was 468 pixels wide by 60 pixels high.

Banner Blindness

Animation and other eye-grabbing techniques are sometimes used to combat banner blindnesssee www.memwg.com/bannerblindness for more details.

Banner ads are still used today, though they're often larger than the early banners. However, one problem with banner ads is that Web page visitors often ignore them. This phenomenon was first described in 1998 by researchers at Rice University, who called it banner blindness.

Block Those Pop-Ups

For more on pop-up ads and how to block them, see www.memwg.com/pop-up-blockers.

Other image-based advertisement formats used today include the tower ad (basically a vertical banner ad shown to the left or right of content) and the inline ad (an ad inserted in the middle of content). Some ads are even interactive, letting the visitors play games or take quizzes. Another format that's becoming popular is the video-based ad, such as the series created for American Express featuring comedian Jerry Seinfeld and an animated Superman character.

Image ads are generally inoffensive, though sometimes the animations are annoying. More annoying are the aggressive ad formats that actively interfere with the viewing of a Web page. The most infamous of these is the pop-up ad, an ad that literally pops up in a new browser window. This has led to the creation of special pop-up blockers like the ones used by Stef and Claude. (There is also a related and slightly less offensive format called a pop-under, in which the new browser window opens underneath the existing window instead of on top of it.) To combat pop-up blockers, advertisers sometimes use alternative formats like sliding ads (ads that appear to slide around the Web page, covering some of the content until they are dismissed) and interstitials (ads that are shown when a visitor jumps between pages).

Compared to visually-oriented advertisements, text-based advertisements are plain and simple. A text adalso called a sponsored linkis a block of descriptive text that links to an advertiser's Web site.

Interested readers will follow the link to learn more about the product or service that the advertiser is promoting. Subtle visual clues like borders, spacing, and shading distinguish text ads from the actual content of the page.

Text ads work well in places where image ads are too constrained (there's not enough space to show the image) or somehow inappropriate (such as on pages that are mostly text and have very simple formatting). Search engines and Web directories like Google and Yahoo! make extensive and effective use of text ads. Also, you don't have to be a graphic designer or use special software to create appealing text ads. You can string a set of text ads together horizontally or vertically to form text ad "banners" or embed the ads directly into the page content (Figure 2.2).

Figure 2.2. Sample AdSense ads. Many other sizes and formats are available. Note that image-based ads are also offered.

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Ad Argot

Fastclick offers a specialized and useful glossary of Web advertising jargon at www.fastclick.com/pu_glossary.html.

Ad Costs

Conventional media charge advertisers fees based mostly on the number of people who are going to see or hear an advertisement. In a magazine, for example, a full-page advertisement near the front costs more than a small ad buried in the back because more readers will see the first ad. In television, the cost to air a commercial alongside a hit show is substantially more than the cost for a show that nobody's watching.

These media are really charging based on impressions, the number of times a human has seen or heard an advertisement. Calculating impressions is mostly educated guesswork, based primarily on raw circulation or viewer numbers. This is why television and radio stations are so concerned with their ratings in key demographic segments of the population, such as 18-to-35-year-olds: The stations with higher ratings can charge more for commercials and other promotions.

Web sites often charge advertisers by impression. Impression tracking seems easier with a Web site because the Web server knows precisely how many times a given page has been accessed. But it's not that simple, unfortunately. Page data may be cached (copied) by a closer Web server known as a proxy server, so not all page accesses are tracked by the original Web site. On the other hand, access counts get inflated by crawlers, automated Web site analysis and cataloging tools used by Google and other search engines, which fetch pages without displaying them.

Advertisers really want to track how many humans are exposed to a given advertisement. Counting page accesseseven accounting for proxy servers and crawlersis easy, but it isn't very accurate. Some visitors turn off images and don't see image-based ads. Some run ad-blocking software and don't see any ads. Even tracking unique Internet addresses isn't enough, because at large companies it's possible for thousands of computers to share a single public Internet address. That's why advertising services often use cookies and similar techniques to track individuals. None of these methods is perfect, however.

Have a Cookie

A cookie is a small piece of data stored in a Web browser on request by a Web site and returned to the Web site whenever the browser revisits it. See www.memwg.com/cookies for more information.

One alternative to tracking impressions is to track clicks. In other words, instead of charging based on the (estimated) number of people who view an ad, charge advertisers based on the number of people who click the ad. This is sometimes referred to as pay-per-click advertising, since the advertiser only pays when someone clicks on the ad.

Advocates of pay-per-click advertising consider that counting clicks is a more accurate measure of the effectiveness of an advertisement. The counting itself is trivial: The click takes the user to a special Web site run by the advertising service that records the click detailswhich ad was clicked on which pageand then sends the user to the final destination as determined by the advertiser. The final destination is usually a page on the advertiser's Web site. The advertiser can easily determine which ad the visitor clicked, too, giving the advertiser valuable information about its ad campaign. (Note that the ads shown in impression-based advertising can also be clicked and also provide valuable context data to the advertiser, but the advertiser pays whether the ad is clicked or not.)

Normally, each click in a pay-per-click scheme represents a particular individual interested in learning more about a product or service. The assumption is that an individual will click a given ad only once and that a click demonstrates that the person is interested in the advertiser's offering. In other words, the individual who arrives at the advertiser's site due to a click is a prequalified sales lead, a potential customer with an expressed interest in what the advertiser sells. These are valuable people, because they're more likely than the general public to buy the advertiser's products or services. That's what makes pay-per-click advertising so appealing: The advertiser gets a measurable, prequalified stream of visitors to its Web site.

Which is the better model, impression tracking or click tracking? It really depends on what the advertiser is trying to achieve. For overall brand awareness, maybe impression tracking is better. For individual product sales, click tracking may make more sense. These are the kinds of issues that advertisers have to grapple with in order to make the best use of limited advertising budgets.

Click Fraud

One problem with pay-per-click advertising is that it is more susceptible to fraud than impression-based advertising. Pay-per-click fraud is often referred to as click fraud, and there are two common scenarios.

The first scenario occurs when a competitor or a disgruntled customer (or even worse, a group of disgruntled customers) clicks a specific advertiser's ads. Each click costs the advertiser some money, depleting its budget for that particular advertising campaign and bringing the campaign to a premature stop. This also means that some of the visitors arriving at the advertiser's site are not interested in buying anything from the company.

The second scenario is more problematic and occurs when an advertising service shares its revenues with third parties. Unscrupulous Web-site owners arrange for others to randomly click ads on their sites in order to generate additional revenue. They may pay people to do this, farming out the work to people in different countries, or they may build automated systems for doing it. Either way, the advertisers lose.

As you can imagine, the advertising services do their best to combat click fraud. Amateurish click fraud is easy to spotsomebody who quickly clicks several links on a site within the span of a few seconds and from the same Web address is obviously not looking at the advertisements. A well-designed scheme is harder to track down, but the services are getting better at it. They have toif they allow too much click fraud, the advertisers will lose faith in the pay-per-click method and the services will lose their revenue stream. It's definitely a challenge for them. As you can imagine, these companies take click fraud very seriously.

Click Fraud

The chief financial officer of Google, for example, has publicly stated that click fraud threatens Google's business mode. See www.memwg.com/click-fraud for the details.

Don't Be Part of the Problem Once your Web site is up and running, don't become an unintentional party to click fraud. When you tell friends and family about your site, ask them to avoid clicking the ads just to make you money. They may think they're doing you a favor by clicking ads at random, when in fact they're jeopardizing your membership in the AdSense program. The same thing applies to you: Don't click ads on your own site! Let your regular visitors click the ads.