How to Start an Online Advertising Business?

How to start Online Advertising business
April 26, 2021

When you decide to start an online advertising business, your main objective is to persuade your targeted audience to engage in a specific action like making a purchase or simply filling a subscription form.

Online advertising, also known as online marketing, Internet advertising, web advertising or digital advertising, is one of the most effective ways for businesses of all sizes to expand their reach, find new customers, and diversify their revenue streams.

Since the early 1990s, there has been an exponential increase in the growth of online advertising, which has evolved into a standard for small and large organizations.

Digital advertising spending worldwide from 2018 to 2024 (US$ billion)

Digital advertising market worldwide 2018-2024

This exponential growth can be attributed to the low and flexible cost of online advertising compared to traditional offline advertising and the increasing digital adaptability of consumers.

Another advantage of digital marketing is its measurability through the number of impressions, views, clicks, conversions and the like compared to conventional mediums such as print and TV ads, where it is difficult to evaluate the exact impact of the ads.

Also, online advertising has evolved extraordinarily in recent years with the facility for advertisers to reach their target audience effectively. This became possible by leveraging a smart combination of multiple criteria including geographical location, age, gender, education, family composition, salary, nationality, origin, browsing history, etc.). These capabilities offer a higher potential of converting leads into actual customers.

In this post, we’ll go through different opportunities offered by the internet to the publisher who wishes to start or grow their online advertising business.

When you’re young, you look at television and think, there’s a conspiracy. The networks have conspired to dumb us down. But when you get a little older, you realize that’s not true. The networks are in business to give people exactly what they want. That’s a far more depressing thought. Conspiracy is optimistic! You can shoot the bastards!
— Steve Jobs

    What is an Online Advertising business?

    An advertising business model means a business or site that offers free content or services to customers and sells advertising to make money.

    The strength of an advertising business model resides in the gratuity of content or services you offer to attract users. If you can attract a significant and well-targeted amount of users, then your customer base will be interesting for advertisers who want to pay you to reach that amount of people or a specific type of audience.

    In a new report this week, eMarketer said that, in 2020, the online advertising top players shared the US digital Ad market as follows:

    • Amazon’s share was more than  10% for the first time in 2020,
    • Google’s share was 28.9%
    • Facebook’s was 25.2%

    Other important key players include

    • Alibaba
    • Apple
    • Microsoft Corporation
    • Pinterest
    • LinkedIn

    It’s obvious that the weight of each player is in direct proportion to the number of users of its platform. This is illustrated by the graphic below.

    The most-used social platforms

    Starting Online Advertising business - The World's most-used social platforms

    Parties involved in online advertising

    The advertiser 

    The person or company that who have a product or service to sell and needs ad space in order to achieve this. So, an advertiser pays money to have their advertisements shown.

    The publisher

    A publisher is a person or even a company that displays ads on their digital space (media content, literature, newsletter, ebooks, music, radio, etc). They connect the user (potential consumer) with the ad and they make revenue by displaying these ads on their website.

    A publisher displays ads, text links, or product links on its website, in e-mail campaigns, or in search listings. Then they are paid a commission by the respective advertiser when a visitor takes a specific action such as filling out a form, making a purchase or subscribing to a service.

    Blogging is one of the most popular things to do online! Sharing your knowledge and experience with others, creating and engaging with the community gives you the power to make money on the internet.

    Ad network

    When an advertiser decides it wants to run an advertising campaign, it has to work with publishers that are willing to display the app’s message to the public.

    However, advertisers typically don’t head straight to the publisher with their video ads and banners. Instead, an ad network steps in and connects the advertiser with the publisher. The publisher signs up to a network and allows that network to use their ‘inventory’ to advertise.

    For instance, when a website owner wants to sell space on their site to publishers, they get an agreement with Google Adsense and advertisers buy this space with Google Ads.

    Types of online advertising

    1. Paid Search Advertising aka Pay-per-click (PPC) advertising

    This model is designed to increase the visibility of your website on the search engine results pages (SERP) by paying to appear on search engines, such as Google.

    PPC can be used on Google Ads or Microsoft Advertising for example.

    PPC works on a bidding system in which you select target keywords, then compete with other advertisers to place ads in the search results for those keywords. If the advertiser’s bid is among the highest, they’ll earn placement above organic search results — and if someone clicks, they’ll pay your bid amount.

    One of the biggest advantages of PPC is that (as the name implies), the advertiser only pays when users click on their ad.

    PPC shall not be confused with SEO (search engine optimisation), which is the art of appearing as high as possible within the search engines without having to pay for it.

    Example of Paid Search Advertising

    Starting an Online Advertising - example of Paid Search Advertising

    2. Social Media Advertising

    It’s about advertising on socials like Facebook, Instagram, Twitter, Pinterest,  LinkedIn, etc.

    Social media is a great place to advertise because there are so many consumers on these platforms. In fact, 81% of American adults have a social media profile — meaning the chances are high that at least part of your audience is active on social media.

    Number of social network users worldwide 2017-2025 (billion)

    Staring Online Advertising business - Number of social network users worldwide from 2017 to 2025

    Advertisers set up their promotional campaigns to the target audience in two ways:

    Free Organic Ads. If you produce bamboo utensils, you can post valuable content like bamboo cultivation, harvesting and processing, exciting ways of using your products to encourage shares and build an attractive brand image.

    Paid Ads. The advertiser leverages the social media functionalities to show promotional ads targeted to their audience based on various demographic criteria including age, gender, geographical location, education, income, etc.

    If you’re interested in this topic, I’ve written a detailed article on Paid Traffic vs Organic Traffic: How to make the right choice?

    Example of Facebook Paid Ad

    Starting Online Advertising business - Facebook Paid Ad

    3. Content Marketing

    Content Marketing is based on continuously creating valuable, relevant and attractive content to reach your target audience. This way, the publisher builds trust, credibility and authority through a long-term relationship with the consumer. 

    It’s about getting in front of the right audience and nurturing that relationship so they come to like and trust your business, eventually becoming dedicated buyers.

    Content marketing utilizes methods like websites, blogs, social media, videos and online articles.

    Content marketing is a way to show consumers that you’re knowledgeable in your industry and that they can count on you for helpful information.

    With content marketing, you’re not instantly pushing a product, but you are consistently getting in front of your target customer with your content. Content is a great way to get seen and heard without pushing for a product or service.

    4. Native advertising

    If you have a popular website and publish valuable content to your audience, advertisers interested in your audience will pay you for placing, on your website, promotional material that blends smoothly with the rest of the site’s content.

    To be considered a true native advertisement, the content should align with the publication or site’s established editorial style and tone and provide the kind of information that the publication’s audience typically expects.

    In a nutshell, native advertising is paid content.

    Advertisers love native ads, mainly because the click-through rates tend to be much higher than typical advertisements, and engagement is usually much stronger. 

    Example of Native Ad

    Starting Online Advertising business - Example of Native Ad

    This is an excellent example of a native ad because, while the message placed by Fidelity Investments, an American financial institution,  is very clearly marked and has an undeniable angle, the message itself contains real substance.

    Although the branded content is obvious and Fidelity makes no secret of its services,  this native ad provides real value to the reader, done in a way that Forbes’ audience would expect, and aligns with the publication’s editorial and stylistic guidelines.

    5. Display Advertising

    Display ads can be text ads, digital banners or videos, and they appear in distinct sections on a site that are typically reserved for paid advertisements. The main publisher’s focus of these ads is to sell the consumer and generate a quick conversion.

    As the owner of a website with a lot of traffic, you may be interested in making money by selling some of your space with Google AdSense, while the advertisers buy it with Google Ads. Google shows relevant ads based on two pricing approaches: CPC (cost per click) and CPM (cost per thousand views), and allows companies to retarget their promotions.

    The display ads shown in the top right corner of the image below is from a newspaper based in California.

    Starting Online Advertising business - Display Ad

    6. Email marketing

    This is a marketing approach based on communication via email.

    Email marketing is one of the oldest forms of digital marketing but still one of the most effective advertising strategies and marketing techniques. When you use email, you can reach individual members of your target audience directly in their inboxes.

    As per the graphic below, Email marketing is mostly used for lead generation (85%), sales (84%), lead nurturing (78%), and customer retention (74%).

    Email Marketing Goals – 2021

    Source: Content Marketing Institute

    Email marketing is the least intrusive platform for advertising because subscribers willingly opt-in to receive email newsletters and promotions; plus, they can unsubscribe anytime using an opt-out link always available at the bottom of each mail.

    The main idea of email marketing is to drive warm marketing leads to the website, mixing promotions with valuable non-sales content in a ratio highly favourable to value messages. By sending more value messages than commercial mails, you bring value to your audience, build trust and keep the audience eager to open your emails.

    A publisher who has an important email listing can make money by including ads in their emails.

    Guide on how to build your email list

    For more on building your email list, I’ve written the following article: How To Build An Email List For Small Businesses: 7 Proven Steps

    7. Video Advertising

    As the name suggests, these ads are in a video format and placed on services like YouTube, Vimeo, DailyMotion, and Vine. This is an expensive type of advertising and an effective one since high-quality videos may be very efficient.

    Marketers can benefit from numerous perks associated with video advertising. Video content catches users’ attention, and when people tune in, brand awareness goes up.

    Plus, video ads are shareable, increasing reach. People share videos they love, and most streaming platforms have built-in sharing buttons. Videos convey lots of information in a short time, too. That perk makes video advertising ideal for telling a story. You can experiment with background music, camera angles and dialogue to connect with your audiences. Then, they’re more likely to remember what they see, and better yet, remember your brand.

    Hereafter important Video Marketing Stats for 2021:

    1. Marketers saying that video is an effective way to get attention online: 85%   (Animoto)
    2. Viewers claim they retain 95% of a message when obtained via video. (Social Media Week)
    3. Video ads were the #1 way consumers discovered a brand they later purchased from. (Animoto)
    4. Video marketers saying the video has helped increase user understanding of their product or service: 94%  (Wyzowl)
    5.  Viewers saying YouTube makes them aware of new brands: over 70% (YouTube)
    6. Brands that got a new customer because of a video on social media: 93% (Animoto)
    7. People saying that they’ve been convinced to buy a product or service by watching a brand’s video: 84% (Wyzowl)
    8. Marketers say the video has helped them increase traffic to their website: 86%  (Wyzowl)
    9. Marketers saying the video has helped them generate leads.:84% (Wyzowl)
    10. Marketers saying the video has increased dwell time on their website:83% (Wyzowl)

    8. Mobile Advertising

    With so many of us spending such a big part of our day using our smartphones, it’s no wonder advertisers are using mobile advertising to reach their customers.

    Time spent on TV & Mobile Devices 2014-2021

    Starting an Online Advertising business - Time spent on Mobile Devices

    Different types of mobile-specific marketing include advertising via mobile apps, push notifications, SMS/text messaging and MMS.

    After the user opts-in, the advertiser can advertise with SMS or display ads optimized for mobile devices. Mobile ads are perfect for advertising to local audiences with time-sensitive offers. You can create SMS campaigns in no time with SendPulse, and their open rate is extremely high: up to 98%.

     SMS Marketing Response Rates

    Starting an Online Advertising business - SMS Marketing Response Rates

    Pros and Cons of Online Advertising business

    Pros of Online Advertising business

    The main advantage of digital advertising is that a targeted audience can be reached in a cost-effective and measurable way. 

    The benefits of digital advertising include:

    Huge audience

    With more than 4 billion people using the internet, you have ample opportunities to put your products or services in front of the right audience.

    Cost-Effective

    With traditional advertising, you show an advert to thousands of people whether they’re qualified or not.

    With online advertising, you only show ads to people who have expressed interest in what you’re offering in some way.

    Targeted

    Traditional media such as flyers, television, billboards offer no way to hone in on your target market. Your budget is spent on showering your ad over as many people as possible, in the hope a few will see your message and act.

    Online advertising gives us much more control. Platforms such as Google Ads, Microsoft Ads and Facebook Ads tell us who to target, based on their profiles and search history. This allows us to target key messages specifically to those people who are most likely to purchase.

    Measurable

    Online marketing is also a lot easier to measure and quantify. Online analytics tools can help show what’s working for you and what’s not, allowing further targeting of your marketing spend. It can also provide priceless data on what your ideal customer looks like – allowing you to further target your advertising to your most lucrative audiences. The opportunities really are limitless.

    Trackable

    Digital advertising allows you to monitor and track the results of all your campaigns. You can find out when a lead converted into a sale, note the platform where it happened, and determine what kinds of ads are working best for your particular demographic.

    The internet with all its minute tracking abilities allows you to measure the return on investment of your advertising budget.

    Many Options

    You have a lot of control over who advertises on your site and what content they put there. You also know your visitors pretty well by gathering their personal info, including but not limited to their demographics (like age, gender, education level, job, income), their interests and hobbies, etc.

    That way, you can only show relevant offers to your audience and reduce the risk of damaging the trust you have built with your audience over years of hard work.

    Cons of Online Advertising business

    Time consuming

    Building a website with valuable content and updating it regularly with new helpful information to the target audience can be tedious work for the publisher. In addition, it requires the right knowledge and expertise covering areas like writing abilities, expertise in the field of your website’s interest and SEO technics to carry out digital marketing with success.
    It may take months and even years before driving traffic to your website significant enough to attract advertisers.

    Ad Fatigue

    Do you feel like your ads aren’t driving the results they did before? If so, you (and your target audience) may be experiencing ad fatigue.

    Ad fatigue is when your audience sees your ads so often that they lose interest and stop engaging with your ads. When ad fatigue happens, your CTR (click-through rate) drops as your frequency increases. As a result, your campaign becomes less effective, and you don’t see a great return on investment (ROI).

    If you’re worried that your advertising campaign is suffering from digital advertising fatigue, do your research to ensure that you reap all the benefits and avoid the pitfalls.

    Can be costly

    Because online advertising is complicated, it’s not uncommon for businesses to make mistakes. Choose the wrong keywords, neglect a bidding cap, target ineffectively, or leave a campaign running when you thought it was off, and you can spend a fortune without turning a single lead into a sale. For example, if you run a campaign on Facebook but your customers are more likely to be LinkedIn users, you’re unlikely to convert a lead. If you don’t cap your bids, you could blow through the money you thought would last months in a matter of days.

    Lower Returns

    Depending on who you’re showing ads to, the CPM (a way to bid where the advertiser pays per one thousand views) can be meagre, which means you need a huge amount of web traffic to get a decent profit.

    Online Advertising FAQ

    What is the difference between Marketing and Advertising?

    Although advertising and marketing have the same goal, they are two different things. That is to get your business and messaging in front of your ideal customers.

    But where does reside the difference between marketing and advertising? Advertising (which includes things like banner ads, social media ads, and so on) is a component of marketing. Marketing refers to preparing a product for the marketplace. Advertising is making your product and service known to an audience or marketplace. Advertising is a specific step of marketing.

    In other words, advertising is a form of marketing. But marketing also encompasses a ton of other strategies with the goal of getting the word out about your business (like content marketing, sales presentations, brochures, and podcasting).

    Thus, advertising is a slice of the pie, but marketing is the whole pie.

    What is CPC (Cost-Per-Click)?

    Cost-per-click (CPC) bidding means that you pay for each click on your ads. For CPC bidding campaigns, you set a maximum cost-per-click bid that’s the highest amount that you’re willing to pay for a click on your ad.

    What is CPM (Cost-Per-Thousand)?

    Google defines CPM or Cost-Per-Thousand  (or Cost-Per-Mile) as a way to bid where you pay per one thousand views (impressions) on the Google Display Network.

    What is SEO (Search Engine Optimization)?

    SEO is the art and of persuading search engines such as Google, Microsoft Bing, and Yahoo, to recommend your content to their users as the best solution to their problem.

    For this to succeed, you need to:

    • Ensure these search engines understand who you are and what you offer. Many vendors offer SEO services to help the publisher to meet the search engines’ requirements.
    • Convince them that you are the most credible option for their users.
    • Deliver valuable content

    How high in the rankings and how often you appear is merit-based; these engines will show the results they consider to be the best fit for their users.

    What Does ROI Mean in Marketing?

    Marketing ROI (Return On Investment) is the practice of attributing profit and revenue growth to the impact of marketing initiatives. By calculating marketing ROI, organizations can measure the degree to which marketing efforts, either holistically or on a campaign basis, contribute to revenue growth.

    Typically, marketing ROI is used to justify marketing spend and budget allocation for ongoing and future campaigns and initiatives.

    The bottom line

    Online Advertising now represents an increasingly big part of the overall annual marketing budget, so its importance cannot be overlooked.

    Blogging is one of the most popular things to do online if you are thinking about starting an online advertising business. Sharing your knowledge and experience with others, creating and engaging with the community gives you the power to make money on the internet.

    Among affordable online advertising business models, there are content marketing, native advertising, display ads, mobile advertising, email marketing.

    Unfortunately, some online advertising businesses types, like PPC, Social Media Marketing, require massive budgets and are only accessible to top players like Google, Facebook and the like.

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