Online Advertising: An Overview

I don’t profess to be an expert at online advertising; I’ve had very little direct experience. But I often have clients ask about putting ads on their site to make money, or how to buy advertising online. With that in mind, I’m going to offer a brief look at how Google’s AdWords / AdSense programs work, and how to get started with them.

AdWords vs. AdSense

First off, some definitions. AdWords is Google’s program for advertisers. If you want to buy advertising, you’ll want AdWords. AdSense, meanwhile, is a program for site owners who want to run other people’s ads on their own site. In exchange for hosting the ads on your site, you get some income from Google. Generally you’ll want to use one or the other; it doesn’t make much sense to pay to put your ads on the web, while hosting advertising for your competitors at the same time.

How AdWords Works

AdWords lets you pay to place text, image, or video ads on “contextually relevant” websites and in Google’s search results. “Contextually relevant” means that if your ad is for a new TV, you might show up in searches for HBO, but not at BookNook.com. How does Google decide what “contextually relevant” actually means? That’s actually all up to you. When you purchase your ads, you define the “title” of the ad (the actual clickable link), the short text message that appears below the title, and what keywords you want to associate your ad with. You can choose broad keywords (where “tennis shoes” would match “tennis”, “shoes”, “shoes for tennis”, etc.), phrase keywords (where “tennis shoes” would only match search terms with exactly “tennis shoes” in them), exact keywords (where “tennis shoes” matches only “tennis shoes” and nothing else), and negative keywords (where “tennis shoes -used” would explicitly not match a search for “used tennis shoes”). It’s a lot of options, and they allow you to tailor your ad campaign to be as broad or narrow as you like. The more specific your ad campaign, the more likely it is to appear with searches of that type, regardless of how much you spend on advertising.

Unlike running an ad in a newspaper, you don’t pay for your ad campaign up front. Instead, you choose how much you’re willing to pay every time someone clicks on your ad. Since there are only a limited number of “slots” for a given set of search results or on a particular website, the highest bidder with the most relevant content gets to place their ad. So if you’re willing to spend a dollar for every click, your ad will show up far more often than someone who only bid 10 cents per click (and you will pay accordingly for the extra exposure when your ad is clicked on more often). At the same time, your 10-cent-per-click exact match ad for “Uncle Jerry’s Famous Ice Cream” will probably beat out a rival’s $1 per click broad-match ad for “ice cream” if someone is searching for those exact words. You can also opt to pay “per thousand impressions”, meaning every 1,000 people who see your ad (regardless of whether they click on it or not) will cost you a set amount. This works very similarly to cost-per-click – higher “bids” will appear more often than lower bids.

How AdSense Works

If you’re a site owner looking to make money from advertising, you’ll want to look into AdSense. After signing up for the program, you get to pick what kind of advertising you want to host on your site (text, image, video, etc., along with what size of images you’d like to host), and Google will give you the code to plug into your website (a small JavaScript script). After that, you can pretty much sit back and wait; you’ll receive a fraction of the cost-per-click or cost-per-thousand-impressions cost paid by the advertiser, with aggregate payments sent to you on a regular basis. Since you’re only receiving a tiny amount of an already small cost, you should know that you’re not going to make much money at all unless your site receives at least hundreds of visitors per day. If you don’t know how many people are coming to your site, you can find out by installing an analytics system like Google Analytics (more on analytics in a later post). You can think of analytics programs as the modern, incredibly detailed, non-embarrassing version of the venerable old “hit counter.”

Is Google It?

No, of course not. There are plenty of other advertising systems. Google happens to be the 800-pound gorilla of online advertising, though, which makes them a great place to start. If your ads target a specific niche of users, you may be able to find an advertising network that caters to those users; for example, look to networks like The Deck or Fusion Ads if your product or service targets designers or web developers. These kinds of niche networks can generally get you more “bang for your buck” if you are only targeting a narrow audience.

To get started with Google advertising, just visit their homepage at google.com and click the link for “Advertising Programs” underneath the search box.

Any other ad networks I should be aware of? Any success stories (or total failures) in online advertising that you’d like to share? Leave a comment below, and I’ll be in touch.