Simply put, online advertising is advertising on the Internet. Online advertising encompasses advertisements on search engine results pages, advertisements placed in e-mails, and other ways in which advertisers use the Internet.

  • Whether online or off, the main objective of advertising is to increase sales. Advertising also aims to increase brand awareness. Advertising is based on the simple economics of supply and demand. Advertisers aim to stimulate a consumer's need and then satisfy that need.
  • One of the greatest benefits of online display advertising is that the messages are not restricted by geography or time.
  • Online advertisements are also much more interactive than offline advertising. While both online and offline advertising can be disruptive, interactive online advertising can be designed to be perceived as less so.
  • Online display advertising began as simple hyperlinked images shown on a Web site and has since progressed to include video, sound, and many other modern technologies. Today, messages and interactions can be contained within the advertising display without ever taking consumers to a landing page.
  • Although the Internet provides new scope for creative approaches to advertising, we see its true advantage when we realize how trackable, and therefore measurable, Internet advertising is. Or, to take it from Eric Schmidt, CEO of Google, “The Internet will transform advertising because of its trackability, not its beauty.”

History of Online Advertising:

Online advertising rapidly followed the developing Internet. And, as consumers are increasingly spending more time online, and hours spent on the Internet start to eclipse hours spent watching television, the medium becomes increasingly important to any advertiser.

According to Wikipedia, the first clickable banner advertisement was sold to a law firm in 1993 by Global Network Navigator. HotWired, an early Web magazine, was the first to sell advertising space in large quantities to a number of advertisers. One of the very first advertisers was AT&T (a U.S. telecom company), which went online in October 1994.


                                         Figure 3.1 An Early Banner Ad for AT&T

This was part of a campaign that AT&T was running to promote the Internet to consumers, and included television and outdoor advertising. Believe it or not, this was cutting edge back in 1994! As Web technology has developed, so has the technology that is used to create and serve to advertise online.

Definition of Online Advertising:

Online advertising is a marketing strategy that involves the use of the Internet as a medium to obtain website traffic and target and deliver marketing messages to the right customers. Online advertising is geared toward defining markets through unique and useful applications.

Since the early 1990s there has been an exponential increase in the growth of online advertising, which has evolved into a standard for small and large organizations. Online advertising is also known as Internet advertising.

A major advantage of online advertising is the quick promotion of product information without geographical boundary limits. A major challenge is the evolving field of interactive advertising, which poses new challenges for online advertisers.

Online advertisements are purchased through one of the following common vehicles:

  • Cost per Thousand (CPM): Advertisers pay when their messages are exposed to specific
  • Cost per Click (CPC): Advertisers pay every time a user clicks on their ads.
  • Cost per Action (CPA): Advertisers only pay when a specific action (generally a purchase) is performed.

Examples of online advertising include banner ads, search engine results pages, social networking ads, email spam, online classified ads, pop-ups, contextual ads, and spyware.