Online Advertising


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Online Advertising

  1. 1. PRESENTED BY: PATRICK HUANG Online Advertising
  2. 2. What is so important about Online Advertising? <ul><ul><li>The user base is enormous no other media source will allow you to advertise to so many people, and the user base is just going to keep growing as computer proliferation keeps growing </li></ul></ul><ul><ul><li>World Statistics </li></ul></ul><ul><ul><ul><li>In 2000- 360,985,492 </li></ul></ul></ul><ul><ul><ul><li>In 2009- 1,668,870,408 </li></ul></ul></ul><ul><ul><ul><li>362.3 % in usage in only nine years! </li></ul></ul></ul><ul><ul><li>The U.S. has a population of about 340,831,831 people </li></ul></ul><ul><ul><li>Of those people 251,735,500 of them are internet users </li></ul></ul><ul><ul><li>This is almost 73.9 % of the population in the United States </li></ul></ul><ul><li>Google's index now stands at 8 billion pages </li></ul><ul><li>It took 38 years for radio to reach 50 million users, 13 years for TV, and only 5 years for the Internet </li></ul>
  3. 3. Positive Trends in Online Advertising <ul><li>Online advertising companies are using new ways and new innovations to come up with unique business models </li></ul><ul><li>The amount of spending on online advertising has been rising steadily across the world </li></ul><ul><ul><li>Online ad spending has risen from 5% in 2006 to 6% in 2007 to 7% in 2008 </li></ul></ul>
  4. 4. Major Players <ul><li>Publisher: </li></ul><ul><ul><li>This is basically the website owner and the maker of the site </li></ul></ul><ul><li>Ad Networks: </li></ul><ul><ul><li>The Publisher comes to ad networks to sell their unused space on their website </li></ul></ul><ul><li>Advertisers: </li></ul><ul><ul><li>The companies who want to advertise their product </li></ul></ul><ul><li>Advertiser’s agencies: </li></ul><ul><ul><li>Advertisers come to agencies to make ads and also to find place to put their ads </li></ul></ul>
  5. 5. The Online Advertising Value Chain <ul><li>Today the value chain is much more complicated </li></ul><ul><ul><li>The demand side of the value chain: </li></ul></ul><ul><ul><ul><li>There are advertisers and their agencies </li></ul></ul></ul><ul><ul><li>The supply side of the value chain: </li></ul></ul><ul><ul><ul><li>There are publishers and ad networks </li></ul></ul></ul><ul><li>In the beginning the online advertising chain was fairly simple </li></ul><ul><ul><li>Buyers (Advertisers) talked to Sellers (Publishers) if they wanted to get ad space on a website </li></ul></ul>
  6. 6. Evolution of the Online Advertising Market <ul><li>In the Beginning -----------------  </li></ul><ul><ul><li>There was a buyer and seller advertisers contacted publishers for ad space </li></ul></ul><ul><ul><li>The ad was placed on the actual publishers website </li></ul></ul><ul><li>The first evolution ---------------  </li></ul><ul><ul><li>Publishers began to get tired of changing their entire webpage to change an ad </li></ul></ul><ul><ul><li>Soon publishers decided to create a whole new server for their ads </li></ul></ul>
  7. 7. Evolution of the Online Advertising Market <ul><li>The second phase of Online Advertising -----------------  </li></ul><ul><ul><li>Advertisers then began putting up their own servers </li></ul></ul><ul><ul><li>The publisher’s servers begin redirecting the ad request to the advertiser’s server where they have the actual ad </li></ul></ul><ul><li>The third step to the ever changing online ad market  </li></ul><ul><ul><li>Advertisers are now beginning to out source their own ads to CDN’s (Content Delivery Network) </li></ul></ul><ul><ul><li>CDNs have the actual ads which come on websites </li></ul></ul>
  8. 8. Ad Networks <ul><li>Ad networks make money by selling the inventory for a higher price than they buy it </li></ul><ul><ul><li>Simple arbitrage </li></ul></ul><ul><ul><ul><li>Buying and selling ad space at rock bottom prices </li></ul></ul></ul><ul><ul><li>Geographically arbitrage </li></ul></ul><ul><ul><ul><li>Selling ad space in a certain region of the world </li></ul></ul></ul><ul><ul><li>Vertical aggregation </li></ul></ul><ul><ul><ul><li>Selling ad space to a specific audience </li></ul></ul></ul><ul><ul><li>Price model arbitrage </li></ul></ul><ul><ul><ul><li>Selling thousand of ads through a cost per click type program </li></ul></ul></ul><ul><ul><li>Platform specialization </li></ul></ul><ul><ul><ul><li>Selling ad space to specialized platforms like video and mobiles </li></ul></ul></ul><ul><ul><li>Behavioral targeting </li></ul></ul><ul><ul><ul><li>Using Cookies to find what the user is most interested in </li></ul></ul></ul>
  9. 9. Ad Networks, how do they actually work? <ul><li>Small publishers ----------  </li></ul><ul><ul><li>Publishers use ad networks as the servers for their ads </li></ul></ul><ul><ul><li>Advertisers contact ad networks to determine where the ads will go </li></ul></ul><ul><ul><li>Ad networks serve as a middle man to the process </li></ul></ul><ul><li>Large publishers ----------  </li></ul><ul><ul><li>Large websites have their own ad servers which redirect the request to the ad networks which redirects the request to the ad server who finally places the ad on the website </li></ul></ul>
  10. 10. Rich Media <ul><li>This is the new innovative side to online advertising </li></ul><ul><ul><li>An expandable banner with embedded video </li></ul></ul><ul><ul><li>An “advergame”, a mini-game embedded inside an ad unit </li></ul></ul><ul><ul><li>A video ad served before, after or during a video clip </li></ul></ul><ul><ul><li>A “page takeover” ad, an ad which covers the page it’s on, or interacts with that page or the other ads on it in some way </li></ul></ul><ul><li>Online advertisers are also using flash movies to communicate their messages </li></ul>
  11. 11. RTB- Real Time Bidding, what is it? <ul><li>New technology in online advertising </li></ul><ul><li>First started with Ad exchanges </li></ul><ul><ul><li>All networks are put on to one specific network where ads can be bid on for the highest bidder </li></ul></ul><ul><li>How is ad exchanges and RTB different? </li></ul><ul><ul><li>To be on a ad exchange all of the ad networks need to be using the same type of programming </li></ul></ul><ul><ul><li>While with RTB any third party company can join the bidding </li></ul></ul><ul><li>RTB is basically Ad space on websites are bided on </li></ul><ul><ul><li>The publisher asks each advertiser on every impression what he’s willing to pay he also maximizes revenue as every impression goes to the highest paying buyer </li></ul></ul>
  12. 12. RTB and its impact on Online Advertising <ul><li>RTB has the potential to change the way online advertising is done </li></ul><ul><ul><li>Advertisers will find it easier to reach the audience they need to advertise to </li></ul></ul><ul><ul><li>Publishers are able to hang onto a bigger chunk of the price of their inventory, and are able to make more money for their ad space </li></ul></ul><ul><ul><li>Exchanges could end up changing the balance of power between direct-sold and network-sold inventory </li></ul></ul><ul><ul><ul><li>If a publisher can get a better margin by sending some inventory that was direct-sold to the exchange they will </li></ul></ul></ul><ul><ul><li>Ad Networks will begin to disappear </li></ul></ul><ul><ul><ul><li>Ad networks will need to increase their value over the simple aggregation </li></ul></ul></ul><ul><ul><ul><li>Networks need new innovation to find a way to stay in business </li></ul></ul></ul><ul><ul><ul><li>Ad-networks today thrive because they have large business development teams that have developed deep relationships with supply </li></ul></ul></ul>
  13. 13. Top Online Advertising Companies <ul><li>Google- has become the biggest player in all of the different fields </li></ul><ul><ul><li>Ad networks: Google has Google Adsense </li></ul></ul><ul><ul><li>RTB: Google has recently announced its in interest in Google exchange </li></ul></ul><ul><ul><li>Ad servers: Google has Google Ad Manager </li></ul></ul><ul><li>Yahoo! </li></ul><ul><ul><li>First to step into the field of online advertising and has a very strong foot hold on the business and how the business operates </li></ul></ul><ul><li>AOL’s </li></ul><ul><ul><li>Also made a very large impact on all fields </li></ul></ul>
  14. 14. New Technologies and Advancements in Online Advertising <ul><li>Behavior based advertising </li></ul><ul><ul><li>This is getting revamped companies are reworking this aspect of online advertising </li></ul></ul><ul><ul><ul><li>Knowing what consumers will want to see by their cookies is a great way of finding what you are interested in </li></ul></ul></ul><ul><li>Mobile advertising </li></ul><ul><ul><li>Marketing ads for mobile internet sites </li></ul></ul><ul><li>Synchronizing social networks and advertising </li></ul><ul><ul><li>The idea behind Facebook and MySpace advertising </li></ul></ul><ul><ul><ul><li>Taking free information from profiles to determine what your interests are </li></ul></ul></ul><ul><ul><ul><li>Putting ads which have your interest already built in </li></ul></ul></ul>
  15. 15. Online Advertising and its implications for Better Business Network <ul><li>Very important as far as small businesses are concerned </li></ul><ul><ul><li>Brings in more revenue to for small businesses </li></ul></ul><ul><li>Question? </li></ul><ul><ul><li>I do not see the, How this specifically relates to Better Business Network? </li></ul></ul><ul><ul><ul><li>Only for the revenue of small businesses how they can pull in from using online advertising </li></ul></ul></ul>