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Online Advertising

The internet has become an ongoing emerging source that tends to expand more and more. The growth of this particular media attracts the attention of advertisers as a more productive source to bring in consumer. A clear advantage a consumer has with online advertisement is that he or she has control over the item, choosing whether to check it out or not. Online advertisements also can offer various forms of animation. In its most common use, the term online advertising comprises all sorts of banner advertisement, e-mail advertising, in game advertising, and keyword advertising, on platforms such as Facebook, Twitter, or Myspace has received increased relevance. Web-87related advertising has a variety of sites to publicize and reach a niche audience to focus its attention to a specific group. Research has proven that online advertising has given results and is a growing business revenue. For the year 2012, Jupiter research predicted $34.5 billion in US online advertising spending.

Revenue Models

The three most common ways in which online advertising is purchased are CPM, CPC, and CPA.

• CPM (Cost Per Mille) or CPT (Cost Per Thousand Impressions) is when advertisers pay for exposure of their message to a specific audience. “Per mille” means per thousand impressions, or loads of an advertisement. However, some impressions may not be counted, such as a reload or internal user action.
• CPV (Cost Per Visitor) is when advertisers pay for the delivery of a Targeted Visitor to the advertisers website.
• CPV (Cost Per View) is when advertisers pay for each unique user view of an advertisement or website (usually used with pop-ups, pop-unders and interstitial ads).
• CPC (Cost Per Click) or PPC (Pay per click) is when advertisers pay each 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) or PPF (Pay Per Performance) 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 model ignores any inefficiency in the sellers web site conversion funnel. The following are common variants of CPA:
• 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.
• CPS (Cost Per Sale), PPS (Pay Per Sale), or CPO (Cost Per Order) advertising is based on each time a sale is made.
• CPE (Cost Per Engagement) is a form of Cost Per Action pricing first introduced in March 2008. Differing from cost-per-impression or cost-per-click models, a CPE model means advertising impressions are free and advertisers pay only when a user engages with their specific ad unit. Engagement is defined as a user interacting with an ad in any number of ways.
• 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.

Interactive Advertising

Interactive advertising objectives

The goals of interactive advertising are usually akin to the traditional objectives of advertising, i.e. to sell a product. This in turn means that many of the traditional elements of advertising impact and effectiveness remain relevant, even within the scope of interactive media. However, according to the Journal of Interactive Advertising 2001, interactive advertising also has some properties that expand the range of potential objectives and that improve advertising effectiveness. Interactive advertising also has the potential to decrease the losses associated with poorly coordinated advertising, to reduce the difficulties commonly encountered in clearly communicating an advertising message and to help overcome new product hurdles, such as a consumer rejection.

Elements of interactive advertising

There are many different facets to Interactive Advertising, including varying methods and types. Using many different types of cognitive tools and advert presentations, organizations can enhance the impact of their campaigns with this type of advertising. According to Thorson (1996), all advertisements can be classified into one of five basic categories, including: product/service, public service announcement, issue, corporate and political. Advert types also interact with the user’s motives to influence outcomes, or consumer responses, reinforcing the need for Interactive Advertising as a means of persuading potential consumers and target audiences.

Using the Internet as the main medium for Interactive Advertising to study the methods, types and outcomes, we can then sound out the different user or advertiser controlled aspects.

User generated/controlled aspects

Functions, Internet motives and mode are the main factors of user [controlled aspects. In fact, a number of researchers and practitioners argue that consumers have more control on the Internet than do advertisers (Roehm & Haugtvedt, 1999). Some have gone so far as to argue that interactive marketing and advertising techniques will not work unless practitioners “step into the shoes” of and approach the Internet from the consumer’s vantage point (Cross & Smith, 1997).

Advertiser controlled aspects

Various aspects of Internet advertising are under the control of the advertiser. Most of these variables include structural elements, such as ad types, formats and features. This does not mean that consumers never control the structure of the interactive ads. Banner Ads, sponsorship, hyperlinks and non-carrier websites are examples of advertiser controlled interactive advertising.