ABSTRACT

It takes a tremendous amount of effort in the form of manhours and money for advertisers to promote their product or service through the traditional advertising mediums, such as the press, billboards, and television. With the advent of the Internet, marketing through the Internet opened new frontiers for advertisers as well as publishers. For advertisers to reach out to more people, it is important to utilize popular platforms such as Google Search and social media like Facebook and MySpace. For publishers, it is important to get as many ads so as to generate maximum revenue. In order to reach out to a large audience, an advertiser ends up advertising the same ads on different ad servers. Many times, an advertiser also plays the role of publisher. For such users, keeping track of the advertising campaigns across all ad servers and publishing channels is challenging. The solution will consist of creating a consolidated system that allows advertisers to place an ad on all major ad servers and allows publishers to take an ad from an ad server to display on their websites. This thesis provides a common platform to advertisers and publishers by creating a prototype that combines advertising and publishing through Google AdWords and Google AdSense, respectively.

CHAPTER ONE

1.0 INTRODUCTION

Advertising is a form of promotional activity that is used to encourage an audience viewers, readers, or listeners to continue or take some new action. The desired result is to drive consumer behavior with respect to a commercial offering. To reach an audience, these promotions must be published. The process of making information available to the general public is called publishing. An advertiser is essentially the one who creates a product or offers services and wants to publicize the product or services with the help of popular platforms like websites, press, and radio owned by publishers. Publishers either own or manage platforms, like television channels, radio stations, and websites, which are available to the general public.

With the Internet becoming a powerful medium for reaching people, it has become popular among advertisers and publishers. Promoting a product or a service on the Internet is called online advertising, and publishing that information on websites, forums, and blogs is called online publishing. As more people turn to the Internet as a source for socialization, communication, and daily news, more advertising is done to reach a larger audience. Online advertising is giving tough competition to other types of advertising media. Newspapers and magazines all over the world are facing a great challenge in the form of lost ad revenue. The Internet is not only taking a share of the advertising, but a share of the audience as well.

Online ads can look like television commercials or print ads. With cost per click CPC advertising, the advertiser only pays if a user clicks on the ad. This type of strategy can make advertising very cost effective, especially for those who do not have large advertising budgets. Marketers need to find what their major target market is. They also need to understand the timing of the ad. The mechanism of online advertising is comprised of: a methodbased on a users characteristics and content visited in the past, b timingreal time or nonreal time, and c targetindividual or group.

1.1 BACKGROUND OF THE STUDY

The growing importance of the Internet for advertising nowadays is resulting in the transition of traditional onesizefitsall advertising to personalized online advertising.

Online advertising spending has been increasing at an unprecedented pace over the past decade. Advertising on the Internet differs from advertising in traditional outlets such as television and print in various ways. First, web ads are more relevant to consumers compared to traditional ads. Traditional ads published on television or in print media are made available to all irrespective of whether one wants the information or not. On the other hand, web ads are displayed to users on the basis of their past online behavior and interests, making the ads more relevant to consumers. Advertisers can target a particular group of customers based on their location, gender, age, and language. Online users tend to perceive ads as selfrelated or instrumental in achieving their needs or goals. The behavioral ads also make campaigns more costeffective for advertisers. For example, according to the Wall Street Journal, Pepsi worked with the ad network Tacoda in early 2007 to serve behaviorally targeted ads for the launch of Aquafina Alive, Pepsis vitaminenhanced water. The campaign targeted healthconscious consumers and then served them ads wherever they traveled within Tacodas network of 4,000 sites. Compared to other kinds of Pepsi webbased campaigns, Aquafina Alive attracted three times the number of consumers who clicked on the targeted ads. 1

With traditional advertising, an advertiser can place ads on TV shows, radio programs, and magazines, but with web ads, there is no limit to how finely an advertiser can target the audience. Due to the rise in popularity of social media, Facebook and MySpace have become hot spots for advertising. An advertiser can target these platforms using almost any criteria e.g., age, gender, location, education, place of employment, favorite music, and marital status. Advertising companies, such as Google, which targets ads based on users search history, have been taking into account users information needs related to their interests for targeted advertising. An effective interpretation of users information needs is necessary for targeted advertising. However, problems with the accumulated data that describe users information needs are huge volume, high dimensionality, and continuous change.

Second, web ads can be presented in various formats, such as text, graphics, sound, video, or their combinations. These formats may attract users attention much easier due to heir sensory effects. So web ads, such as animation plus sound, may increase the opportunity for consumers to process the ads. For example, when users are reading news on the Internet, an animated banner with flashing text may easily attract their attention. However, in the web medium, consumers are highly active and selective. Whether a type of advertising is acceptable or not depends on the consumers perception of whether the ad could fulfill his or her goals. The different formats of traditional advertising are: billboards, television commercials, radio ads, and posters. On the other hand, various online advertising formats are: banner ads, popup and popunder ads, floating ads, streaming sidebar ads, pull down banner ads, and text ads.

Third, compared to general advertising, web advertising is considered less irritating and more acceptable because online users can control what they want to access as well as when and how to view certain information and tailor the information to their particular needs and preferences by various pointandclick actions. Traditional media ads, especially television and radio commercials, often forcefully interrupt consumers attention from the media context. Fourth, web advertising enjoys the benefit of a larger audience as the Internet has become a very popular medium for gaining knowledge, whereas, in the case of traditional advertising, the audience is limited to the users of that particular medium of advertising e.g., advertisements published in a newspaper of a particular language are limited to the people who read that newspaper. Fifth, web ads are not limited to any geographical location or time as the content gets published immediately, which is not possible in the case of traditional advertising. With online advertising, a small manufacturer in one part of the world can find customers in the other part. Online advertising has broken all geographical barriers that existed with other mediums.

Sixth, when people click on an advertisers ad, they go right to his or her website where the advertiser can convert them to a reader or to a buyer. With traditional advertising, people need to see the advertisement, remember it, and then take action on it later. Online advertising eliminates the time in between clients viewing an advertisers ads and visiting the advertising site, making the whole sales process far more streamlined and efficient. 2

The final benefit of online advertising over traditional advertising is the fact that tracking ads has become very easy with Internet advertising compared to traditional advertising. With online advertising, each and every advertising campaign is tracked by the ad server, saving a lot of time and money. Ad servers monitor all of the visitors who come to an advertisers website through the advertising campaigns and track any actions they take or orders they make. Ad servers also keep track of the budget, clicks, impressions, the conversion rate, and other statistics. This further helps with budget optimization, business decisions, and managing advertising campaigns. With traditional mediums of advertising, an advertiser cannot say for sure whether the customer who is watching or reading the advertisement is actually going to buy the product. Through pay per click PPC advertising, the advertiser is actually paying only when the potential customer visits his or her website or looks through the product that is being sold. As said by John Wanamaker, The Father of Modern Advertising: Half the money I spend on advertising is wasted; the trouble is I dont know which half 3. This is absolutely true with traditional advertising. Also, there are hardly any means of doing conversion tracking with traditional advertising, which makes it difficult to analyze what groups of customers are showing interest in the product or services offered by the advertiser.

Advertising online has some negative attributes as well, such as invasion of property and consumer privacy concerns. Many people feel that online advertising constitutes a violation of privacy as well as personal rights. Users do not want to think that a corporation or business that wants to sell them a product is monitoring their every move online. Also, some people have started using unethical methods of advertising by creating advertising viruses that can pose a serious threat to Internet users.

With online publishing, in late 90s, website owners were struggling with the tedious task of managing and selling their ad space. Online publishing has shown tremendous growth since then in the form of more reliable ad server vendors and increased number of customers due to the fast growth rate of the Internet in the last decade. Online publishing is an easy way to earn money from ones online content. Publishers can simply display relevant and engaging ads on websites, mobile sites, videos, site search results, or even webbased games to earn revenue. Google AdSense, one of the top ad server vendors, provides the means to implement Google Search to site owners while earning money by displaying Google ads on the search results pages.

Online publishing takes a minimum amount of time to include advertising on websites. A publisher can earn advertising revenue from each page of his or her site. Ads relevant to the sites content are delivered to the site as text or images. In the case of Google AdSense, a publisher can implement Google Search on his or her website that then delivers related ads based upon search criteria. Developing banner ads or any other types of site advertisements can be time consuming. Online publishing provides a solution for sites, both big and small, to place ads and search options easily on a site with minimal effort.

There are generally two cost structures for advertisersCPC or cost per 1,000 impressions CPM. This means that advertisers pay either when users click on ads or when the advertisers ad is shown on a site. Using this model, a publisher receives a portion of the amount paid for either activity on his or her site. In the case of online publishing, a publisher can:

Choose the type and placement of ad units to be displayed

Specify where he or she wants ads to appear

Modify the ad so that it blends with the look of his or her site

Choose what types of ads can compete for those slots

Display highestpaying ads

Advertisers bid on the publishers inventory in a realtime auction

Always show the highestpaying ad

Get paid

Advertisers are billed through an ad network

Get paid through reliable payment options

For publishing advertisements that are relevant to topics discussed on a website, website owners place a brief HTML code on the websites pages. Websites that are contentrich are very successful with online publishing. Since publishers are ultimately responsible for the traffic to their ads, they tend to build valuable content on their websites that attracts advertisements so as to generate the maximum possible revenue. They use content on their websites that encourages customers to click on advertisements. Ad servers automatically deliver ads that are targeted to the publishers content or audience. This is done in several ways:

Contextual targeting: The algorithm uses such factors as keyword analysis, word frequency, font size, and the overall link structure of the web in order to determine what a webpage is about and precisely match ads to each page.

Placement targeting: With placement targeting, advertisers choose specific ad placements, or subsections of publisher websites, on which to run their ads. Ads that are placement targeted may not be precisely related to the content of a page, they but are handpicked by advertisers who have determined a match between what users are interested in and what they have to offer.

Interestbased advertising: Interestbased advertising enables advertisers to reach users based on their interests e.g., sports enthusiasts and allows them to show ads based on a users previous interactions with them, such as visits to advertisers websites.

Publishers can track their earnings from the ads being published by them. Publishers can easily analyze what works and what does not work using reports. Online publishing helps businesses achieve the following goals: a agile decision making and improved optimization, b increased productivity through integrated interfaces, c reduction in time to manage ad campaigns, and d increase in operational efficiencies.

HOW IT WORKS

Advertisers upload the ad on ad servers, which perform the task of placing the ads on websites. An ad server is basically a web server that stores advertisements from online advertisers and delivers them to website visitors 4. The various popular ad servers are Google AdWords, MySpace, Facebook, Yahoo, and Microsoft. Google has controlled an estimated 69 of the online advertising market since 2008 5. Table 1.1 shows the top ad server vendors in 2008.