How do on-line display ads work?

Once upon a time, on-line display advertising was complicated and expensive.

Of course, some advertising programs are still complicated and expensive, but basic access to display advertising has become far more accessible and less costly than it was only a few years ago. Part of this democratization has been courtesy of Google, who purchased on-line advertising giant DoubleClick in March of 2008.

The many ways to buy display advertising

In the beginning, on-line advertisers would buy banner ads on websites directly from website owners. Most on-line advertising required substantial up-front commitments, due to the complexity and overhead of getting ads published. If an advertiser wanted to have access to visitors to multiple sites in order to cover their various market segments, that meant negotiating separately with each site owner.

In order to improve access for both site owners and advertisers, various types of ad networks, ad exchanges and other types of aggregators eventually began to appear. These organizations would bring together multiple buyers and sellers of ad space, and make it easier for both to achieve their goals. More recently, demand side platforms (DSP) are aggregating inventory from multiple ad exchanges, making it even easier for advertisers and their agencies to buy ads.

Google is quickly becoming the elephant in the ad industry

One of the more recent entries into this fray has been Google, which now holds about 25% of the display ad market, while its largest competitors hold less than 10% market share each. Google had already become wildly successful with Google AdWords, placing small text ads on their search engine results pages, but they had been a small player in display advertising until their purchase of DoubleClick.

After this purchase, they turned DoubleClick into Google Ad Exchange, and have integrated it into their existing advertising platform. This allows Google AdWords users to place display ads through Ad Exchange (plus the existing Google Content Network), and purchase display advertising across an enormous number of sites. Advertisers bid for ad space in real time, and can choose where ads appear based on site visitor demographics and numerous other factors.

Remarketing – be everywhere, even when you’re not

Have you ever seen the same display ad on one website after another, and marveled at how that advertiser seems to be everywhere?

Well, it probably just isn’t true. Unlike TV, radio and magazines, on-line advertisers have a few tricks available that allow them to create the impression that they are everywhere, when in fact they may only be investing in a tiny media spend. Enter the magic of remarketing.

With remarketing, a cookie is placed on a person’s computer when they click on an on-line ad, or take some other action. Then, whenever they access a page from a website in the same advertising network, the advertiser’s ad will display. With a widely used ad network such as Google with access to most on-line advertising properties, it can literally look like the advertiser is everywhere. The beauty is that this advertising deluge is highly targeted, since it is only delivered to people with a strong enough interest to click through on one of your ads.

The visitor may only be observing a few hundred web pages over a period of months, and display advertising is measured in a cost per thousand, so the overall cost of impressing you this way may only be a few dollars. Contrast that with the cost of having a commercial appear on every TV show you watch in the same period.

Frequency is at the heart of successful advertising, and you achieve enough frequency with these important folks so that it is unlikely that they will overlook you as an option if they plan to purchase something you sell. Remarketing is particularly valuable for high ticket or recurring sales, where a purchase decision may take several months and the first vendors the customer discovers may be easily forgotten.