Online Display Advertising

  • Post last modified:10 August 2023
  • Reading time:29 mins read
  • Post category:Digital Marketing
Udacity Offer 50 OFF

Online Display Advertising

Online display advertising, in simple terms, implies advertising on the internet. In this model, an advertiser pays a publisher, when the ad is clicked or seen. Online display ads are associated with first-tier search engines such as Microsoft Bing Ads, Google Ads, etc.

Online display advertising is driven by Picture Superiority Effect (PSE) which indicates that human brain is more likely to memorise images and pictures than words. Display advertisement is the application of PSE in digital marketing.

Therefore, in display ads, creative and attractive images are used for communication for better recall. When promotional messages are created using visually rich media like images, videos, maps, etc., published on other websites or search engines, those ads are known as online display advertising.

The main aim of such advertising is brand awareness. This type of advertising is a push medium so they are a great source of creating awareness. As consumers are smart and informed, they search on the Internet about the products before purchasing.

Ads can be shown on websites with high traffic with the objective of reaching maximum users with limited budget. Display ads can be in the form of banners, images, videos, buttons, rich media and others. These ads can be placed in a specifically designated area on websites or search engines or social media platforms. These ads can be of different shapes and sizes. There can be image banners, GIF, animation, videos or other rich media elements.

These ads offer a plethora of benefits, such as wide reach with a small budget, an increase in brand awareness which leads to an increase in sales, etc. These ads provide quick results by targeting the right audience.

It is easy to track and monitor such ads with the help of metrics like Click-Through Rate (CTR). The budget of these ads can be increased or decreased by measuring the effectiveness of the advertisements.

Digital Advertising Media

Digital media offers various channels to advertise in order to reach the target audience. There are various avenues or platforms available for the display advertisement. Websites that monetise the content by selling ad space on their pages are one of the most widely adopted platforms for digital advertising.

Search engines like Yahoo, Google, Bing, etc., are also popular platforms for online advertising. There are a number of social media sites such as Instagram, Facebook, LinkedIn, and mobile applications such as Saavn music app that display the ads.

The reach in digital media is measured using metrics like unique users and page views. Unique users are distinct individual users who have visited a particular website. The number of unique users is accessed on the basis of cookie ID of the browser or the IP address of a device from which the website has been browsed.

When a website is opened by a user for the first time in a device, a cookie is stored in the browser of that device. Therefore, no matter how many ever times the user open that website from the same browser, it will not be counted as a unique user.

But, in case the user opens the website from a new browser on the same device, he will be considered as a unique user or if the user uses a different device altogether, again a cookie will be stored in the new browser of the device. Therefore, he will be counted as a unique user.

On the other hand, page views are gained whenever a user visits a new page on a website. Both first-time viewer and repeat audience are taken into consideration for assessing page views. Let us understand this with the help of an example.

Suppose, a user opens the homepage of Google on a device. Therefore, such a visit to the homepage at this stage will store a cookie in the browser of the device. Hence, unique visitors = 1 and views count = 1.

Next time, the user revisits the website, and clicks on any link on the homepage and it redirects him to another page on Google. Then, the page views count = 2 and unique visitors = 1.

Buying Models of Online Display Ads

There are four types of pricing models that can be applied to online display ads. It is important for publishers, advertisers and marketers to understand these models in detail in order to decide the most appropriate model for their campaign goals.

Let us understand these in detail.

Cost Per 1000 Impressions

Cost per 1000 impressions is also known as cost per mille (CPM). It refers to the amount the advertiser must pay for every thousand impressions on one Web page. For example If a website publisher charges dollar 2.00 CPM. Then the advertiser has to pay dollar 2.00 for every thousand impressions of its ad.

It is the most common advertising pricing model used for websites. Advertisers have to pay the amount only on the number of views, no matter if it is clicked or not. It is useful for brand-building campaigns as it takes into consideration not the traffic directed to your website, but the wide range of audience reach.

This model is beneficial for the website publishers as they get paid by the advertiser regardless of the number of clicks.

Cost Per Click (CPC)

It is an advertising pricing model in which the total amount payable by the advertisers is based on the number of clicks on their ads. The main purpose of using this pricing model is to drive traffic to the website. This is the less risky pricing model as the advertisers have to pay only when someone clicks on the ad.

Cost Per Lead (CPL)

This model charges the advertisers only on lead acquisition. The desired action, such as download of a brochure, a sign-up, subscriptions, etc., on the website that is done before the final purchase is termed as the lead. It is also known as micro conversion. The main objective of advertisers to invest in this model is to acquire genuine leads and nurture those leads for conversions.

Cost per Acquisition (CPA)

The amount paid by advertisers for acquiring a customer who purchases their products or services. It is the cost of customer acquisition that the advertisers pay only when the user buys. It is a non-risky proposition and helps in driving online transactions.

However, the bidding price is comparatively higher. It is used for products/ services which are purchased instantaneously in single click and also used in affiliate marketing.

Affiliate marketing refers to the model of advertising wherein an organisation compensates third-party publishers to generate traffic or leads to the organisation’s products and services. This advertising model offers a wide reach even without clicks and action.

Types of Online Display Advertising

An online display ad can be presented on a website through a number of ways. Be it only text, images, rich media ads, etc., every type has its features and advantages. Let us understand these types in detail.

Banners Ads

It is the most common type and standard form of online display advertising. These ads are usually placed in a designated place on the website. These ads contain static images related to the product or business. These ads are placed in various sizes and formats as per the availability of space on the website.

Pay Per View (PVP) Ads

PPV ads are delineated as those ads where the advertiser pays a certain amount for each time a viewer opens the website and is exposed to the advertisement. In such ads, the advertiser pays only if the consumer clicks on theadvertisement to readmore about the product. PPV is also known as Cost per View (CPV) ads.

Rich Media Ads

These ads involve interactive media elements such as animation that includes GIF, HTML5, Flash or any other dynamic aspects. These types of ads involve advanced features that foster engagement as these ads are highly interactive. These ads offer high conversion and interaction rates when compared to static banner ads.

Contextual Ads

These ads are targeted advertising as the content of the website is related to the ads. One good example of contextual advertising is Google AdSense. Google algorithms serve or place ads at the right place and at the right time by assessing the relevancy of the ads for the users. Behavioural advertising is a form of contextual advertising.

Concept of Display Plan

Every marketer has to plan out various aspects of display advertising in order to get the desired traffic or leads. Display plan is a roadmap or plan of action that involves the selection of placement site, section of the website, Ad size, impressions, rate and cost.

It states the budget, plan of action and metrics to be employed to evaluate display advertising. The process of creating a display advertisement starts with identifying the objectives and target audience for the campaign by a defined client.

The objectives and target audience help decide the media mix to be opted for the campaign and the potential reach that can be attained. The next step is to measure the penetration of the Internet among the target audience so as to know the availability of relevant audience on the Internet and then to identify the passion points and online behaviour of the target audience.

ComScore can be used to know the genre where the target audience spends most of the time online and the interest, age, gender, etc., of the target audience. After that, duplication in reach is assessed to arrive at the allocation of budget to sites.

Measures of Successful Online Display Advertising

A good ad has a strong call to action button, a distinct unique selling preposition (USP) creative and price. There are a number of digital metrics available to measure the performance of an online display ad. Various factors need to be assessed, like viewability, number of clicks, etc. Some of these factorsare as follows:

Ad impressions

It refers to the count or number of times when an ad is displayed on the user’s screen. The total ad impressions show the total number of times an ad has been displayed regardless of whether the visitors have seen it or not.

It does not provide a fair deal in terms of lead or conversion as you are not aware that the users are actually viewing your ad or not. Let us understand the ad impressions for a website. If a user visits a website and an ad appears on that website, it will be counted as one ad impression for that website.

In case the website showed four different ads of different organisations, then the ad impression will be counted as four for the publisher’s website and one ad impression for each advertiser.


Whenever a user clicks on an ad, it is counted as a click. Clicking on an ad redirects the user to the landing page. By assessing the number of clicks, one can measure the success of online display ads.

Click-Through Rates (CTR)

It is the total number of clicks divided by the total number of impressions. It is mathematically expressed as:

Click-Through rate (CTR) =CLICK /IMPRESSION ×100

It is the ratio of people who click on a specific ad to the number of time people are exposed to or have a view of that ad. It is an essential metric in determining the effectiveness of an ad. An ad with low CTR required modification as low CTR implies that users are ignoring the ad after seeing it. Therefore, it is important to take ad placement and aesthetics into consideration for the improvement.

Programmatic Advertisement Marketing

Programmatic advertising has changed the landscape of display advertising as it is the most updated development that has taken place in the display advertising field. With the involvement of software to buy digital advertising, it has made the buying process of digital advertising space automated.

It is also known as a Real- Time Bidding (RTB) model. Different media agencies offer programmatic digital advertising services. Computer software uses data effectively to decide which ads to buy and how much to pay for them in real time. This advertising depends on Artificial Intelligence (AI).

Zenith’s Programmatic Marketing forecasts 65% of money spent on digital advertising in 2019, and it is going to be devoted to programmatic advertising. In the US, last year about 82% of the digital ad spending is on programmatic advertising.

Programmatic advertising signifies audience targeting. Audience targeting is based on online behaviour which studies how existing customers are behaving on the Internet and then look for people who exhibit similar behaviour because such type of audience could be a potential customer in the future.

This advertising helps in targeting the right audience at the right time at the right platform at the right place in order to drive higher Return on Investment (ROI). This advertising facilitates transparency and control as real- time measurement is possible. It is the amalgamation of behavioural targeting with automated buying.

Programmatic Advertising Process

A live auction is conducted every time a user requests for a Web page where ads can be shown. The process of programmatic advertising comprises Supply Side Platform (SSP) and Demand Side Platform (DSP). The SSP, on behalf of the publisher, sends a request to the DSP.

The DSP assesses the potential impression or Web pages as per the required target audience behaviour and content match. They return to the advertiser with the bid value. Winning bid is selected by the ad exchange and hence, that ad is published on the publisher’s website. The digital marketplace where continuous buying and selling take place is known as ad exchange.

Programmatic Advertising Ecosystem

As you have studied the process of programmatic advertising, there are various players involved in this multi-channel advertising ecosystem.

Let us understand the values and roles of major players of this ecosystem in detail:


These are entities who have ad impressions through which they provide space on the website for advertisement. The ad placement is the major revenue source for publishers. Big publishers have their own dedicated sales team who sell ad inventory to the advertisers

As Web has unlimited ad space, therefore, there is an infinite supply, but demand is limited as advertisers are not willing to pay the price for ads in India. Hence, advertisers play a superior role in Indian online display advertising ecosystem and the rates are low for the advertisers in India.

Websites rely on ad networks to monetise space on the website for advertisement. Therefore, ad networks are the aggregators of publishers. Examples of ad network are Google ad network, Yahoo! Ad network, Vdopia, InMobi, etc.

These networks are specialised for the particular platforms or type of ads. For instance, Vdopia is a video ad network, InMobi is a mobile ad network, Ozone sells on CPL models, etc. Nowadays, with the emergence of agencies that help out advertisers in planning and strategising the bidding, budget and target audience, the role and importance of the ad networks have started decreasing.

Also, on the demand side, there are advertisers who take the help of agencies to know which strategy is better for them, whether bidding should be CPC, CPM or CPA model, determining the target audience, etc.

Supply Side Platform (SSP)

This is a sell-side technology platform that supports publishers to manage the ad impression inventory and increase revenue from digital media. SSP manages the yield of the publisher. It fosters the integration of multiple networks together.

This platform articulates the details of the users such as demography, device, browser, location and behaviour. It also shares the framework of the Web page, like URL, keywords, topic, etc.

By providing such content to the DSP, it requests them to bid for the ad impression. Examples of SSP are OpenX, Rubicon Project, LiveRail, PubNative, ADJudggler and Double Click for publishers.

Demand Side Platform (DSS)

This platform offers advertisers features to buy ad placements online. It is a software to buy and search videos and mobile ads from ad exchange marketplace where publishers share their list of advertising inventory.

This platform attempts to find the most efficient ad impression as per the interest of the advertiser. Examples of DSP are Rocket Fuel, DoubleClick for Advertisers, Double Click, Audience Science, Appnexus, Media math, etc. DSP receives the request from SSP for bidding. DSP offers real-time optimisation through cookie-based targeting in order to ensure higher ROI.

Ad Exchange

This is an interface that brings together buyers and sellers in order to buy and sell inventory automatically. Like a stock exchange, real- time bidding or auctioning happens for ad spaces on publisher’s websites.

There are two types of ad exchange: open exchange and private exchange. Open exchange is for everyone on the Web as there are no restrictions on the purchase of inventory present in these exchanges, for example, Google, Yahoo!, OpenX, etc.

On the other hand, private exchanges are a group of publishers that came together to sell their advertising inventory only via exclusive agencies. This is selected selling that prevents fraudulent practices and also fosters better ad placement.

Youtube Advertising

After the Google display network, YouTube is the second largest search engine in the world. YouTube has massive traffic and viewers across the world. Video advertising is a growing trend in the digital marketing arena as there are more than one billion people using YouTube.

Video media has a mass reach. YouTube provides several options to promote your content. There are two options for marketers to promote their brand or businesses on YouTube, which are as follows:

YouTube Channel

Organisations can promote their products and brands by sharing quality video content on their YouTube channel or profile. This practice can improve visibility and engagement on YouTube. Organisations share their customer testimonial videos, product demonstration videos, tutorial videos, etc., to foster brand awareness. This generates organic traffic for your content.

YouTube Ads

YouTube allows users to post ads on millions of partner videos already shared on YouTube. This is a paid option for promotions available on YouTube. It uses the CPV model in which the advertiser only pays when someone engages with the ads.

If the ad is skipped, the advertiser will not be charged for anything. These ads are targeted on the basis of topics, demographics, affinity audience, interest, etc. There are various formats of YouTube ads.

Some of these formats are as follows:

Video Discovery Ads

These ads appear on the Home page of YouTube. These ads generally appear at the top of YouTube Home page. These can be bought in both CPM and CPC formats. This type of ad is only displayed on a desktop or laptop screen.

Skippable Video Ads

These ads play within a video itself. It appears before a viewer watches a video that he has opened to watch. It is the most popular and widely adopted advertising format. Viewers have an option to skip such ads after five seconds. It can be inserted before, after or during video streaming. Skippable ads allow you to serve ads longer than 15 seconds into much more inventory. Skippable video ads allow users to skip video ads at five seconds of play.

It should be noted that the skip duration is not configurable and as per the research the five seconds duration is optimal. Ads are not truncated. A 30-second ad plays to completion, or until skipped by the viewer.

Non-skippable Ads

These ads are 15- to 20-second-long video ads that can be added before, during or after the YouTube video. The advertiser needs to pay only when the user watches the ad fully.

Mid-roll Ads

These ads are placed in between a video which is more than 15 minutes long. These ads are placed during the video just like TV commercials. Ads are placed at natural pauses between the scenes by the publisher. These ads can run even on mobile phones. These can be skippable or non-skippable ads.

Bumper Ads

These are non-skippable ads which are up to 6 seconds long. These are designed and optimised for mobile devices. Like skippable ads, advertiser only pays when the user watches the ad fully.

Overlay Ads

These are ads on a small banner which takes up the bottom twenty per cent of a video’s screen without obstructing the user’s view. Overlay ads has images or text and users can play/ interact or turn them off at will. If the user click on these ads then the ads will take the user to a landing page which is assigned by the advertiser. YouTube skippable ads and discovery ads that appear in the search results are true view ads as users view these ads willingly.

The buying model of YouTube advertising is standard auction-based, i.e., Cost per view (CPV). It is the pricing model where the advertiser pays for his true video ads. This kind of bidding allows an advertiser to pay for video views or engagement. For example, a view is recognised only when somebody watches the video for more than 30 seconds or engages with the ad, whichever occurs first.

For example, a user viewed your ad for more than 30 seconds and he performed the desired action on the ad by clicking on it. In such cases, an advertiser will be charged for either of the two options, whichever happens first. The success of YouTube videos can be assessed through watch time and audience retention for YouTube channels, while for YouTube ads, quality score and ad rank are the metrics. These factors also affect actual CPV.

Ad quality refers to a metric that tells the relevancy of your ad to the customers. It includes the click rates and view rates. It further determines the ad rank. Quality score multiplied by the maximum CPC gives the ad rank. It is expressed as:

Ad rank = Max CPC x Quality Score

Based on the ad rank, all the bidders are ranked sequentially. The bidder at the top wins. The actual CPV is calculated on the basis of the ad rank of the bidder below you and quality score. Therefore, if the quality score is low, advertiser has to bid high. Hence, advertisers should always try to have a high quality score by enabling high CTR in order to minimise the CPC.

Article Source
  • Booth, D., &Koberg, C. (2012). Display Advertising. Hoboken, NJ: John Wiley& Sons.

  • Shamsi, D., Ye, Y., Goel, S., Luenberger, R., & Van Roy, B. (2015). OnlineAllocation Rules for Display Advertising.

Leave a Reply