Online Advertising: Targeted, Measurable and
Cost Efficient

Online advertising doesn't have to be risky. Because it is more targeted, measurable and cost efficient, even small businesses can successfully advertise online. Furthermore, Internet advertising can be a two way street. Depending on your business model, you can also publish various types of advertising on your own website.

The online advertising opportunities are as many and varied as traditional advertising. If you are a small business looking to advertise online, you should consider two factors:

  • your main purpose(s) for advertising, and
  • the size of your advertising budget.

If you don't have either of these factors determined in a Marketing Plan, don't advertise until you do!

Assuming then, you have a budget and one or more specific goals for advertising on the Internet, you would select your online advertising mix based on those goals and make trade-offs between advertising opportunities based on budget.

The main billing methods for online advertising include:

  • CPI - Cost Per Impression/Insertion,
  • CPM - Cost Per 1000 (Roman Numeral M) Impression,
  • CPC - Cost Per Click,
  • CPA - Cost Per Action/Acquisition,
  • CPT - Cost Per Time.

Affordable advertising for small businesses can be delivered in various ways:

  • Search advertising: always text-based and billed at CPC or optimized for CPA.
  • Display or banner advertising: static or animated graphic's ads appearing on various website pages, traditionally billed at CPM but increasingly billed at CPC. May also be delivered as CPT for sponsorship ads.
  • Link advertising: text links to your website provided within webpage content, billed at CPC.
  • Paid listings (e.g., yellow pages).
  • Email or newsletter-delivered advertising: graphic or text ads delivered to subscriber lists of selected organizations or businesses, based on CPI.
  • Affiliate advertising: text or graphic ads paid on a CPA (per lead, sale, sign-up, etc.)
  • Paid blog postings: one time fee paid to bloggers willing to recommend your products or services, and possibly provide a link back to your website.
There are other creative ways to advertise online, but these can come with high production costs. For example opportunities exist for product placement (in games and videos), advertorials (articles written on your behalf to expound the wonders of your product or service), or engaging rich media versions of display advertising (video, special flash effects, interactive ads, etc.)

So back to discussions on your purpose for choosing online advertising options. There are three categories you need to consider:

  1. Search advertising is a more cost effective way to advertise when you are focused on getting specific, immediate results, such as generating sales or qualified leads (more detail below). The distribution channel is comprised of a few key search engines.
  2. Graphical and rich media display advertising are used primarily to re-enforce your company or product brand, with the longer range objective of affecting purchasing behavior. They can be very expensive or very affordable depending on the distribution channel chosen for delivery (discussed below). Newsletter, link advertising, paid blog postings and paid listings can likewise assist your branding efforts.
  3. Affiliate advertising is a specialized hybrid form of online advertising. The goal is to directly increase sales, but graphic links that include the product logo are often preferable to text-only links. As an affiliate advertiser, you control the distribution network and determine the commission structure for sales generated by an affiliate member's site.

In reality, the lines blur between online advertising categories, and you may implement two or all three options depending on your purpose and budget. You can also choose to be the publisher of advertisements on your website and earn commissions for doing so.

1. Search Advertising – First Choice for Online Advertsing

One of the most cost-effective online advertising options is paid search advertising, which is priced on a pay per click (ppc) basis. (Search advertisements are those little text ads you see at the top or sides of the major search engines that appear when people search on specific keywords.) If people click on your ad, that means they have read it and believe they might find what they are looking for.

Cost per click in search marketing is based on a bidding algorithm that shows your ad more or less frequently, depending on what you and the pool of advertisers for a specific keyword are willing to pay. It is all mathematically controlled by the search engine. You have access to a set of tools that help you select keywords and suggest a range of appropriate bids. You decide what you are willing to pay. You can also specify a ceiling on the amount of dollars you are willing to spend per day.

The search engine provides real-time reporting features that let you closely monitor your ad campaign and keyword performance. Because click-throughs are easily measured and the audience specifically targeted by search term – the assumption is that conversions (and therefore return on investment) will be higher.

But you can take the "assumption" out of the equation online and actually design a campaign that tracks conversion rates. To do this, set up a specific landing page on your website for each ad campaign, including an executable call to action. Your web analytics software can then track those people coming to the landing page, and whether or not they complete the call to action (e.g., buy a product or fill out lead information).

Google in fact has a Conversions Optimizer tool that optimizes online advertising bids based on completed actions. It can track acquisitions (or actions) for you, and display those results in your adwords reports.

Like any advertising campaign, relative success depends on how well you craft your offer, write the ad, design the landing page, and manage the campaign. But the reason pay per click search advertising is so effective is that you CAN easily monitor, test and change all of those factors, leading to increasing rates of return on investment (ROI). And, you can get far better rates of return than you ever could for traditional direct marketing, because the people presented with your ad are only the people who have indicated they want more information on a specific topic.

Because search advertising is so controllable, it is not very risky – providing you understand what you're doing. You can quickly increase or pull the plug on it whenever you want.

The distribution network is simple – choose the most used search sites. Currently, you will at least want to include Google. If you have a bigger budget, you might include Yahoo, MSN and Bing. Keep in mind that managing these search ad campaigns can be time consuming. The more site-related tools you have to learn, the more time-consuming it will be.

2. Online Branding – Expand Your Online Advertising Reach

Online display advertising is useful to help brand your company or products. Display ads come in all sizes and shapes (e.g., banners, square buttons, medium rectangles, leaderboards, skyscrapers) and may be static or animated.

If online display ads provide any level of engagement beyond simply banner animation, the advertising industry considers them to be "rich media" ads. Rich media ads may be include both sound and graphics – video, flash movies, or feature some type of special effect (e.g., expanding banners).

Display or rich media ads could also be pop-up ads. Although pop-ups continue to be a very controversial form of online advertising, they are still widely used, indicating response rates are high enough to risk annoying people! Pop-under ads are far less annoying, but can be overlooked, as they don't appear until the user closes the browser window.

In general the main reason for doing display advertising online is to gain brand recognition for your company or products. Advertising to gain brand recognition is a key strategy used by manufacturers to support sales through their distribution channels.

Banner-type ads do not get nearly as many of click-throughs as search ads because Internet users have become adept at ignoring ads. (Pop-ups fare better in that regard – they are difficult to ignore sometimes.) But despite lower click responses, advertising experts insist that the visual presence of your brand IS noticed (if frequently present, of course), and supports your company's longer term advertising goals.

Of course, there is no reason why you can't combine purposes in online advertising. For instance, display or banner advertising can be used to accomplish a specific goal when the user clicks through to a landing page. But the click-through rate will usually be much lower than for search adverting.

There is no doubt that small businesses can benefit from display or even rich media ads, but can they afford them? This all depends on the distribution channels selected for your ads.

If you go the "magazine model" route, buying online advertising from industry magazines, news sites or large industry associations – it can get very expensive. Ads are priced the traditional way – by size, placement position, and number of impressions (CPM). Keep in mind that "impressions" refers to the appearance of your ad on the site – whether or not the visitor even notices it. You can measure click-throughs, but you can't measure the branding component in the cost of your ad.

Going the traditional route, small businesses are faced with the same dilemma as when measuring return on investment for print display advertising: you need a very big budget to get the level of brand exposure that will make a difference to your bottom line that fiscal year. Display advertising can eat up a small online advertising budget pretty quickly, and too little exposure is likely a waste of money.

However, there is a more affordable way to place display and rich media ads by choosing a content network distribution channel. These networks get more targeted placement of your ads on various sites based on keyword association, and they offer pay per click pricing. You get more control as well as the opportunity to present a targeted campaign landing page for every click through you pay for.

There are online advertising companies that specialize in managing and placing your ads throughout their content network, but you can also use your favorite search company. Google and Yahoo now offer display and video advertising based on the same bidding model and campaign management tools as for search advertising. This makes it very convenient to include display advertising in your mix and get considerable mileage on a small budget.

If you do go this route, however, do manage your search campaigns and content display ads separately, even if you are using the same key words. Remember, users are not searching specifically to find products by keywords on content sites; rather they are engaged in exploring content and may by chance notice your ad – or not. But if you are only paying by click-through, the "nots" won't cost you any money as they would in a pay per thousand impression (CPM) model.

Facebook is also becoming a popular content network for advertisers, and they offer either CPM or PPC pricing. Test the pricing options here, as some advertisers have found the CPM rates to be a better buy, due to relatively high PPC pricing. If you have separate landing pages for each ad, this is easy to track. What you really need to look at is your conversion rate to sales versus cost of ads, and not just click-through rates.

Strategic newsletter ad placement, paid links, sponsored blog posts may be worth considering to reinforce your branding efforts, depending on your business and your budget.

Use paid listings judiciously. They don't help you directly achieve your branding goals, but indirectly they can help visibility by improving your search engine rankings if the listings you buy provide quality links back to your website. Paid links and links back from sponsored blog posts can similarly help with SEO. (You might argue that SEO can itself be a powerful form of online advertising.)

But whatever you do, don't forget to take advantage of the free local listing on Google.

3. Affiliate Advertising Programs - Online Advertising Best Suited Internet-Based Business

As mentioned previously, affiliate advertising is somewhat of a hybrid form of online advertising. Its aim is to increase revenues in the near term, while building exposure to your brand through displaying logos as links to you sales page. You control who can advertise your brand and prepare the visual ads for affiliates. You pay affiliates a commission on sales (or leads) you get as a result of click-throughs from their site.

For instance, many big online companies such as EBay and Amazon successfully use affiliate marketing programs to extend the reach of their products. When you see their logo on website you are visiting and click it, that is the link that tracks the activity of the affiliate program.

Online affiliate advertising programs do take some time to set up, require special software to track, and take considerable time to manage and support. Therefore, they make most sense for businesses that do the majority of their marketing online and sell directly to customers, rather than through a distribution chain.

In effect, the affiliate network is like a team of paid, independent sales associates that believe in and promote your brand. In addition to putting a link and ad on their page to your website, affiliates usually will provide some sort of pitch in the content of their website. Some may even be willing to publish a full advertorial article on their site – you can always ask.

You determine your online affiliate advertising strategy and decide how and what you are willing to pay for, be it a click-through, qualified lead, or direct sale. Of course, commissions on affiliate referrals will be assigned according to the benefit – more for sales than leads.

Although you can purchase standalone affiliate software packages and host the program yourself, the better option for small businesses is to use an online affiliate service. Some of these companies cater more to small businesses than others. Some may also provide different levels of service based on needs in order to accommodate small business budgets.

Affiliate service providers give you access to their tracking and reporting software, they get you started through access to their network of ad publishers, and will take care of your month-to-month commission payouts for a fee. They usually charge an initial set up fee, and thereafter a percent commission per action, with a minimum monthly requirement.

Some shopping cart software providers offer affiliate program integration as well.

Affiliate advertising has proved to be a profitable form of online advertising for many Internet-based businesses. If you intend to do e-commerce or conduct most of your marketing online, it is worth considering the costs of implementing such a program.

As always, you will want to consider the cost-benefit of other Internet marketing programs versus online advertising as you develop your Internet Marketing Plan.