Online Advertising
Latest Developments and Trends
Ahmad Anvari
I-AIM Visiting Lecturer
Sharif University of Technology
October 2007

Agenda
History and Background
Online Advertising Type and Pricing
Models
Major Players
Recent M&A
Future and Trends
Online Advertising ٢

History and Background
90s Early 2000 2005
•Banner Ads •Text Ads •Display
•Classifieds (Contextual) •Search
•Email •Multimedia (rich)
Marketing •Text ads
Online Advertising ٣

Value
Web is becoming hot again…
Online Advertising is
primarily responsible
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Online Advertising
Revenue and Growth
Source: PwC/IAB Internet Advertising Revenue Report (www.iab.net)
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Online Advertising
Revenue and Growth
$10BN in first FH 2006 FH 2007
Search 40% ($3,164) 41% ($4,097)
half of 2007 Classifieds 20% ($1,582) 17% ($1,699)
– Iran’s GDP is Referrals/Lead Generation 7%($592) 8% ($799)
$212BN E-mail 2% ($158) 2% ($200)
Display Related: 31% ($2,413) 32%($3,198)
27% increase – Rich Media (Includes Video) 6% ($475) 8%($799)
comparing to – Ad Banners / Display Ads 21% ($1,622) 21%($2,099)
2006 – Sponsorships 4% ($316) 3% ($300)
– Slotting Fees <1% (<1$) <1% (<$1)
More than $5BN
in the 2nd
quarter Source: The Interactive Advertising Bureau
(IAB) and PricewaterhouseCoopers (PwC)
Online Advertising ٦

Types of Online Advertising
Text (contextual)
– Search
– Web
– Inline
Display
– Static
– Rich Media
– Pop-up/Pop-under
Online Advertising ٧

Behavioral Advertising
Knowledge of each user’s behavior
and demographic information
Targets users based on their browsing
history and other attributes
Location, Age, Gender, Salary, etc.
Online Advertising ٨

Pricing Models
CPM
– Advertiser pays when an ad is shown to a user
Performance
– CPC
Advertiser pays when users click on an ad
– CPA
Advertiser pays when a click leads to an action
Sometimes even a click is not needed
Online Advertising ٩

Pricing Models
Revenue Breakdown
Model FH 2006 FH 2007
CPM 48% ($3,797) 45%($4,497)
Performance Deals 47% ($3,717) 50%($4,997)
Hybrid 5% ($395) 5% ($499)
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Contextual Advertising
Web pages crawled by the Advertising
Network
Intelligent algorithms parse and
understand the content
Ads that are relevant to the content
are chosen real-time by the ad servers
Google AdSense, Kanoodle, IntelliText
(Inline)
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Contextual Advertising
Example
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Contextual Advertising
Gone Wrong
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Contextual Advertising
Gone Wrong
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Contextual Advertising
Gone Wrong
Online Advertising ١٥

Major Players
Google
Yahoo! Network
America Online
Microsoft Network
Turn
TribalFusion
AdBrite
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Major Players - Google
Contextual Advertising
– Text, Display, Rich Media
Products
– AdSense – Publisher Network
– AdWords – Advertiser Network
Recent Acquisitions
– DoubleClick: $3BN
Online Advertising ١٧

Major Players – Yahoo!
New Platform: Panama
Has demographic information of a
large network of Yahoo! Users
Has started building verticals: finance,
travel, women, college, sports, auto
Recent Acquisitions
– RightMedia: $680MM
Online Advertising ١٨

Major Players – AOL
Led by Advertising.com
– Largest reach (90% US Internet Users)
Recent Acquisitions
– LighteningCast: Video Advertising
– 3rd Screen Media: Mobile Advertising
– ADTECH: Ad Serving Technology
– Tacoda: Behavioral Targeting
Online Advertising ١٩

Major Players – MSN
Microsoft AdCenter
Recent Acquisitions
– aQuantive: $6BN
Microsoft’s biggest acquisition by a large
margin
– A 1.6% stake in facebook for $240MM
Online Advertising ٢٠

Recent M&A
aQuantive (MSN): $6BN
DoubleClick (Google): $3BN
RightMedia (Yahoo!): $680BN
AdTech, TSM, LighteningCast (AOL)
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Future and Trends
Mobile Advertising is hot
Video (pre-roll, post-roll, and in-video)
advertising is next
Contextual Advertising will continue to
grow
New technologies allow behavioral
targeting
Blog Advertising (small networks)
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Questions?
anvari@yahoo.com
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