The Basics of Online Advertising

I had written a comment about this on someone else’s blog so I decided to expand it out into a full article here. In this article we’ll look at some of the basic ways online advertising works and well it pays.

Pay-Per-Click

Google Adsense is the main example of this kind of ad although there are other pay-per-click providers. For a pay out to occur all that has to happen is a website visitor clicking the ad. These ads are highly variable in what they pay out, typically between a penny to $2. Although, on rare occasions, they’ll pay more.

Since these ads are subject to fraudulent clicks advertisers demand that the providers watch out for invalid clicks and remove those who try to game the system from the program. The rule is that if you run this kind of ad that you don’t click your own ads or do other things to automate clicks and so forth.

Targeting of the ads are usually done based on the context of the site so having good, applicable, content is important in order to get the best results. Untargeted or broad category targeted ads generally don’t get a good click-thru rate and thus they’re really the dregs of the online advertising world. BlogRush is an example of such an untargeted ad.

Pay-Per-Lead

These ads don’t pay out for just the click alone. The user has to do something else in order for the payout to occur although they don’t have to make an actual purchase. One common type of these ads pay out when a visitor submits a zip code or email. These usually pay out around a $1.50, give or take 30 cents. The nice thing about this type of ad is that the visitor can enter their zip or email and decide to bail out on the next page that asks for more personal information and/or reveals the restrictive nature of the offer. My “Special Offers” sidebar section contains a few of these kinds of offers.

Other lead submissions require more info be entered but pay out more, usually between $5 and $25. For example, the tax assistance program I mentioned in an earlier post requires the visitor fill out a lead form completely before the pay out occurs.

Pay-Per-Sale

Pay-per-sale ads require the person buy something or sign-up for a reoccurring purchase. These usually pay out the best, even $100+ in commissions in some cases. Since they depend on somebody making a purchase, they don’t pay out as often unless your site is specifically targeted toward selling the item. However, they can easily be the biggest money maker on a general site or blog site in the same category that gets enough traffic.

Per Time Period

The last kind of ad we will look at are ads that are sold on per time period basis. Usually the time period is 30 days or a calendar month although some sell quarterly or yearly space. These ad spaces are sold for a fixed price negotiated between the site owner and the advertiser although sometime a third party broker is involved. The ads can be banners or text links. Clicks and actions take by visitors don’t result in any further payment in most cases but if an ad doesn’t get any clicks during a time period many advertisers will simply not place their ads on that site anymore. These ads can make money for a site owner as long as they deliver the traffic and it will tend to be a more consistent, repeatable, income than the other major advertising methods.

Let me know if you have any questions or additions to this article by leaving me a comment.

 


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