Display advertising is buying the display of banners on a variety of different websites. A long time ago, this was done be contacting individual publishers. Now for the most part, banners are served through advertising networks. The largest is doubleclick/google, but there are others. Typically ads are bought on a Cost per thousand “CPM” impressions basis. An impression is counted every time your ad is served when a user is on a website. For example, you can typically purchase 1000 impressions for anywhere from $1.50 to $2.00.
The largest factor determining success is the click through rate. 1000 impressions at $1.50 with a .10% click though rate (rather standard) will net visitors at $1.50 per click. A more successful campaign will run at say a .41% click through rate and deliver visitors at a cost of $.36 per click (CPC). Once data is acquired, ad networks may allow you to convert your campaign to cost per click or even cost per acquisition (CPA). The two factors that will determine your click through rate is the design of your ad and more importantly the targeting of your ads.
The chart below illustrates average click through rates for banners in the United States in 2010.
Display Network Targeting
In the past the only type of targeting that was available was run of network (RON). An ad network would run your ads across a number of sites and optimize the sites with the most clicks. Now days there are other ways to target advertising. Depending on the type of targeting, click through rates can increase from the standard average of .10% to as high as 1%, allowing you to effectively market to your potential customers.
Types of Targeting
This type of targeting was pioneered by Google and instead of focusing on the site a consumer is on it targets the keywords on the page for the ads to show.
Advertisers target consumers based on their demographic characteristics like age, geography, sex, household income, language etc.
Also pioneered by Google. Allows advertisers to display ads depending on the search history of the customer. For example, I searched for a Porsche 944 the other day and now ads are coming up to sell me Porsche on NY Times, etc.
Retargeting is the placement of a cookie on a user’s browser when they hit your website or a related website. This allows the advertiser to run advertisements to the potential customer later as they continue browsing other websites.
This is similar to catalog cooperative databases whereby the computer attempts to build a data model of what a person who either buys on your website or clicks on your ads looks like and then targets ads to people who fit this profile.
The chart below shows the effectiveness of different types of targeting.