Online advertising, also referred to as e-marketing, online marketing or Internet marketing, is the act of promoting and marketing various types of services and products through the Internet. E-mail marketing, e-mail spam, online classified advertising, pages banner ads, dynamic banner ads, social network advertising, blogs, rich media ads, interstitial ads, and cross-platform ads are examples of online advertising. An ad server delivers most of these advertisements.
The history of online advertising
According to records, online advertising was initiated in 1994 at the time HotWired traded its pioneer banner advertisements to a number of advertisers who had shown interest in the banner ads. In 2001, revenue in the U.S is said to have grown to about $7.1 billion or 3.1% of the total expenditure on advertising. Most of the players in the advertising industry were either destroyed or weakened by the dot com bust greatly reducing the demand for online advertising and other services linked to it.
When the business model for “Web 2.0″ was assembled by the year 2004, the industry recouped its impetus. This led to more companies being established leading to purchasing and selling of advertising columns on web pages.
Some companies which had previously operated web portals decided to use the conventional “Free-TV” model which meant creating traffic by simply distributing the content and in turn, selling it to buyers in the advertising industry. Majority of these websites, excluding business-oriented websites like eBay, create most of their income by selling inventories (the space set aside for promotion ads) to willing buyers in the industry. In the first 6 months of 2007, more than $10 billion was spent by advertisers on websites in the United States. This reflected to approximately 14% of the total amount spent on advertising.
It is believed that in a few years time, there will be a considerable increase in the online advertising industry. This is attributed to the steady rising number of devices such as television and mobile phones which are greatly linked to the Internet. This is evident going by the valuations being made on businesses linked to online advertising by capital markets. During the month of August 2004, its total market value was placed at $29 billion and in December 2007, Google had recorded a tremendous increase in its market value which stood at $215 billion. During that same year, a number of companies in the online adverting business were traded at the rate of 10 to 15 times of their revenues per annum.
2007 saw the advertising industry become more popular to the public. What drew much of this attention was the escalated stock price of Google as well as its inroads into other related industries like online payments, mobile telephones and word processing software. It was during this year that over 500 commentaries on Google featured in various magazines including Wall Street Journal, New York Times as well as in the Financial Times. This led to the European Commission and U.S Federal Trade Commission to conduct a detailed fraudulent inquiry in the acquisition of the DoubleClick which was used by Google to offer services and software knowledge to publishers and internet marketers.
At the time when government agencies and consumers decided to focus their attention on the large amounts of individual data stored and used by online advertising businesses, concerns about privacy came into focus. As from 2009, most businesses turned to social media for their business advertisements. Social networking devices like Twitter, social news (Digg Propeller, Reddit), Facebook, Hi-5, social photo and video sharing (Flickr, Photobucket, YouTube), and Social bookmarking tools (Simpy, Del.icio.us) are among the social media that have been largely turned to.
The social media tools have shown one great advantage; being mo