This contribution was posted by Rachel Gary during the Fall 2013 semester.

Online advertising, or often referred to as Internet advertising, is defined as the goal of driving customers to a company’s website or location, or to make a call regarding their products or services. Ads are delivered to a consumer audience by means of banners, pay-per-call ads, pay-per-click ads, and pop-ups. Companies also utilize other online resources such as: compatible websites, in online versions of newspapers and magazines, on search engines, and e-newsletters. Online advertising follows traditional forms of advertising in that it adheres to the guidelines and content requirement. ^[1] The business of online advertising is large and fast- moving. In 2011, revenue from online advertising almost exceeded that of broadcast television. Data shows that in 2012 there was a 15.2% increase in online advertising revenue over the previous year, totaling \$36.57 billion versus \$31.74 billion. The popularity of this advertising method can be attributed to its cross-industry applications. ^[2]

1 History

Online advertising was not present in the early years of the Internet. The predecessor networks known as ARPANET and NSFNet implemented “acceptable use policies” that banned “use for commercial activities by for profit institutions.” ^[3] In 1991, NSFNet began eradicating the ban. ^[4]

E-mail. After the ban was lifted, e-mail became the first widely publicized method of online advertising. ^[4]On May 3, 1978, a marketer from Digital Equipment Corporation sent e-mail to the majority of ARPANET’s West Coast users advertising an open house for a new model of a DEC computer. ^[5] In subsequent years after the first initial e-mail contact, the electronic mail market expanded at a rapid pace; it ultimately led to classifying this as “spam.” ^[6]

Display Ads. In the early 1990s, page owners sought additional venues to generate revenue and to support their page. In 1993, the first clickable website advertisement was sold by Global Network Navigator to a Silicon Valley law firm. ^[7] Web banner advertising became mainstream the subsequent year when the online component of *Wired Magazine*, HotWired, sold ad spots to AT&T along with other companies. ^[8]

Search Ads. The first search advertising keyword auction was implemented by GoTo.com in 1998. ^[9] In 2000, Google launched its search advertising program coined “AdWords.” ^[10]

Societal Trends. Social media along with mobile advertising is being adopted by advertisers. ^[11]Advertisers are embracing such methods rapidly, for mobile ad spending has grown 90% each year from 2010 to 2013. ^[2]

2 Methods of Delivery

Display advertising is the use of text, logos, videos, photographs, or other graphics in its advertising message. Online advertisers generally use cookies, which are identifiers of specific computers, to target a certain consumer. ^[12] Banner ads are graphical ads displayed within a web page itself. ^[13] Search engine marketing is specifically designed to increase the prevalence of a website’s visibility in search engine results. ^[9] Social media marketing is the use of social media for commercial promotion. ^[11]

3 Online Advertising Benefits

Cost. The reduced cost for displaying online advertisements compared to traditional advertisements is a benefit to companies. The returns from online advertisement are greater. ^[14]

Coverage. Online advertising is able to span to every global market, and influence offline sales. ^[15]

4 Cons of Online Advertising

Banner blindness. Studies that focused on eye-tracking have shown that online users disregard the areas on web pages where the advertisements are located; this is called “banner blindness.” This problem is worse online than offline. ^[16]

5 Regulation

Consumer protection laws apply to both online and offline media. ^[17] In the realm of privacy and data collection, the users must give consent for advertisers to track the user’s activities and contact them. Affirmative consent or “opt-in”, however, is difficult and expensive to obtain. ^[18]

6 References

1. Online Advertising. (2013). Retrieved from http://www.entrepreneur.com/encyclopedia/online-advertising\#

2. “IAB internet advertising revenue report: 2012 full year results.” PricewaterhouseCoopers Internet Advertising Bureau. April 2013.

3. “Information Policies: A Compilation of Position Statements, Principles, Statutes, and Other Pertinent Statements”. Coalition for Networked Information.

4. “NSFNet—National Science Foundation Network”. Living Internet. 2011.

5. Templeton, Brad (2008). “Reflections on the 25th Anniversary of Spam”.

6. Denning, Peter J. (1 March 1982). “ACM President’s Letter: Electronic Junk”. Communications of the ACM. 25 (3). Association for Computing Machinery.

7. Briggs, Rex; Hollis, Nigel (April 1997). Advertising on the Web: Is there Response Before Clickthrough?. Journal of Advertising Research. pp. 33–45.

8. Morrissey, Brian (12 April 2013). “How the Banner Ad Was Born”. Digiday. Retrieved 12 June 2013.

9. Jansen, B.J.; Mullen, T. (2008). “Sponsored search: an overview of the concept, history, and technology”. International Journal of Electronic Business 6 (2): 114–131

10. “Google Launches Self-Service Advertising Program”. Google. October 2000. Retrieved 13 June    2013.

11. Curtis, Dr. Anthony (2013). “The Brief History of Social Media”. Mass Communication Department, University of North Carolina at Pembroke.

12. Helft, Miguel; Vega, Tanzina (29 August 2010). “Retargeting Ads Follow Surfers to Other Sites”.

13. Siu, Eric (9 April 2013). “The Time for Video Advertising is Now”

14. Hu, Yu; Shin, Jiwoong; Tang, Zhulei (September 2012). “Performance-based Pricing Models in Online Advertising: Cost per Click versus Cost per Action”.

15. Measuring the effectiveness of online advertising". pwc.com. PricewaterhouseCoopers France, IAB France, Syndicat des Regies Internet. 2010.

16. Pieters, Rik (2008). “A Review of Eye-Tracking Research in Marketing”. Review of Marketing Research

17. Disclosures: How to Make Effective Disclosures in Digital Advertising". Federal Trade Commission. March 2013.

18. Goldfarb, Avi; Tucker, Catherine E. (2011). “Privacy Regulation and Online Advertising”. Management Science