The world is currently going through the internet ad revolution, courtesy of the digital transformation, higher internet accessibility, and increasingly intense market competition. The global internet advertising market was estimated at $319 billion in 2019, and it is projected to reach $1089 billion by 2029.
While in the past, advertising was limited to certain ways such as word-of-mouth publicity, pamphlets, etc., the advertising realm today has turned towards becoming more digitally centric. Catering to the significant changes to human lifestyle over the time, the internet ad revolution has made advertising seamless and more effective. The shift seems to be a short journey, however, there are several layers to the history of internet advertising. Here are the different stages of the internet ad revolution.
The Emergence of Banner Ads
In 1994, the concept of banner ads was introduced which completely transformed the world of advertising. HotWired—one of the world’s first commercial online magazines—was seeking ways to generate revenue and pay its writers. In the process, the company came up with a plan to set aside some portion of its website and sell that space to advertisers. These advertisement spaces were called banner ads.
The first banner ad was a part of AT&T’s advertising campaign. The company paid HotWired $30000 to place its banner ad on their site. The ad was a huge success as it received a whopping 44% click-through rate. This became a trendsetter as numerous websites started using this strategy to generate more revenue, while businesses also started tapping into the potentials of banner ads as an effective advertising strategy. As the number of internet users started growing exponentially, banner ads became more targeted to specific consumers, thereby driving more revenue for the marketers.
The Arrival of Tools to Track ROI
Although banner ads became a huge hit, the advertisers did not have a way to calculate if these ads were delivering the desired results. The marketing websites also needed a process to manage their campaigns effectively using insights about the customer responses. Heeding this, several ROI tools started to develop that provided the D.A.R.T. (Dynamic Advertising Reporting & Targeting) service. The service allowed companies to keep track of the views and clicks on the ad.
A distinguishing feature of the D.A.R.T. service was that the advertisers could track the ad performance and make changes to a live campaign. For instance, if a marketer recognized his ad was underperforming on a particular website, he could remove the ad and focus his resources on another website where the ad is performing better. The emergence of the ROI tools gave birth to a new pricing model called Cost per Impression (CPM).
Paid Research and Pay-per-Click
With time, the web started to expand rapidly across industries. As search engines also started gaining popularity, advertisers seeking quick results turned towards sponsored searches. The first pay-for-placement search engine service was started in 1999 by GoTo.com, a search engine company that was later acquired by Yahoo. The company gave advertisers the opportunity to bid for the top search engine results on select keywords.
The concept of pay-for-placement evolved with time to become pay-per-click and companies started bidding for search result placements on the basis of pay-per-click. For instance, if a company pays $2 per click, the search engine would put the company at the top of the search results. This eventually meant that the company that pays more will be listed at the top.
To address this issue, Google introduced AdWords in 2000. The aim behind AdWords was to create a sponsored search experience that would generate revenue without compromising the relevancy and quality of the search results. Unlike other paid search models, AdWords launched a Quality Score model which considered a particular ad’s click-through rate while placing it on search results.
Targeted Digital Advertisements
In the mid-2000s, social media platforms started picking up pace. Marketers sought new ways to engage the audience as more young audiences started using social media platforms to explore and express themselves. The audiences’ gravitation towards website and banner ads slowly started to decline as they spent a majority of their time on social media platforms. Newly emerging companies like Facebook—despite the initial resistance—started allowing ads on its platform.
The advertisements started with small display ads and sponsored links ultimately changed to the ads targeted to a specific user. This method of targeting consumers with relevant ads has now become a standard practice for advertisers that focus primarily on social media marketing. Alongside Facebook, other platforms like Twitter, Google+, YouTube, etc. are also providing their users a seamless advertising experience.
The concept of native advertising started gaining ground as numerous media companies started to emerge. In native advertising, the advertiser pays for producing articles, scripts, and other types of content for media or news sites. Although the content is promotional, it is framed in a way that looks like a regular content piece on that particular website.
Leveraging native advertising, marketers can develop promotional content that supplements a user’s online experience. Websites that typically relied on traditional advertising started to realize the importance of providing a better user experience with native ads.
Digital Advertising Today
Today, advertising has become a different ball game altogether. As customers are spending more time online than ever before, marketers are able to focus on their target consumers with precision. Several trends like AI-powered optimization, programmatic advertising, chatbots, conversational marketing, etc. are taking the advertising industry by storm today. As the reliance on digital advertising for revenue generation has been on a rise, large organizations are focusing their efforts on digital advertising. Here is how much some of the largest organizations spent on advertisements in the U.S. in the past three years.
|Company Name/ Ad Spend||2018||2019||2020|
|Amazon||US$ 4.47 billion||US$ 6.8 billion||US$ 6.8 billion|
|US$ 1.1 billion||US$ 1.5 billion||US$ 2.2 billion|
|Walmart||US$ 2.6 billion||US$ 2.7 billion||US$ 2.4 billion|
|Alphabet||US$ 2.9 billion||US$ 3.1 billion||US$ 2.5 billion|
What does the Future Hold?
The pace at which the world is witnessing digital transformation is overwhelming, to say the least. Consumer behavior changes with the new technology and so do the marketing and advertising trends. While it is difficult to precisely predict the future of digital advertising, the introduction of newer concepts like the Metaverse is expected to take advertising to a new level altogether. Get ready for a world of advertising which is more sophisticated, personalized, and relevant.
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