Online Advertising

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Advertising has long played an important role in media. Traditional media, such as television, newspapers, magazines and radio, have historically derived a large portion of their revenue from advertising, and in some cases, all of it. Online media is no exception. While there are many possibilities for revenue generation in an interactive medium such as the World Wide Web (retail, subscription-based services, etc), advertising has been, and continues to be, a simple and well-understood method for monetizing content or services.

Why is advertising such a natural fit? To understand that, it helps to understand the basic wants and needs of the primary players involved in any web interaction. In this case, those players are the publisher (or service provider), the user, and, assuming an advertising-based model, the advertiser.

The Advertiser

Online advertisers, just like offline advertisers, are businesses that need to communicate a message. Whether the message is intended to increase general brand awareness or to simply inform potential customers that your business provides the product or service they need, the basic need is the same.

Advertising

Advertising is so widely used because it satisfies all of these needs. The publisher gets the revenue needed to cover development and maintenance costs. The user gets value (they get to view content or use applications) for a reasonable price (they simply need to view the advertisements). The advertiser is able to communicate their message to the intended audience. Assuming each party acts responsibly and holds up their side of the implied contract, the system works, and is sustainable.

The system does need all three to be successful, though. If any one falls through, the system falls apart. If advertisers don’t purchase advertisements, the publisher can’t sustain development. If publishers don’t make meaningful content available, users have no reason to visit, and there is no traffic, and thus nothing for advertisers to buy. If users refuse to view advertisements, the advertisers get no value in exchange for their purchases, and will thus not continue buying.

All of these issues apply equally to offline advertisers as well as online. In fact, in many ways, the world wide web is just a new media channel, providing many of the same services as television, radio, and printed media. Assuming the market is there on all sides (publisher, user, advertiser), the system can be just as successful as it is in traditional media.

There are, of course, many other methods that publishers can monetize their content and services, such as via paid subscriptions, retail, and so on. However, these methods are outside the scope of this paper, and thus won’t be discussed in depth.

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