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Online Advertising Networks

Online Advertising Networks

An online advertising network or ad network (also called affiliate network or advertising affiliate network) is a company that connects advertisers to websites that want to host advertisements. The key function of an ad network is the aggregation of ad space supply from publishers (e.g. websites) and matching it with advertiser demand. Note that before joining an advertising network, publishers will need to choose between programs that offer different mechanisms for triggering a payment (see the Online Advertising Terminology section below): CPM (Cost-per-mille), CPC (Cost-per-click) or CPA (Cost-per-action).

The Online Advertising Market

The advertising network market is large and growing. This growth has resulted in many new players entering the market, and has encouraged acquisitions of ad networks by large companies wishing to expand in this market. 

Ad networks are primarily involved in selling space for online ads. This online advertising inventory comes in many different forms, including space on websites, in RSS feeds, on blogs, in social media applications, in adware, in e-mails, and on other sources. The dominant form of this inventory is third-party websites, who work with advertising networks for either a fee or a share of the ad revenues.

The Role of Contextual Advertising

Contextual advertising is a form of targeted advertising that appears on websites or other media, such as content displayed in mobile browsers. The advertisements themselves are selected and served by automated systems based on the content displayed to the user.

A contextual advertising system scans the text of a website for keywords and returns advertisements to the webpage based on what the user is viewing. For example, if the user is viewing a website pertaining to sports and that website uses contextual advertising, the user may see advertisements for sports-related companies, such as memorabilia dealers or ticket sellers. 

Contextual advertising has made a major impact on earnings for many websites. Because the advertisements are more targeted, they are more likely to be clicked, thus generating revenue for the owner of the website (and the server of the advertisement). A large part of Google's earnings is from its share of the contextual advertisements served on the millions of webpages running the AdSense program.

Largest U.S. (Online) Advertising Networks

February 2016 Ranking of Top Ad Networks (comScore)

 

Ad Network Total Unique Visitors (millions) 2016

Google Sites243.6Facebook206.4Yahoo Sites204.4Microsoft Sites194.8Amazon Sites171.8

 

Google AdSense (Google Ad Network)
Google AdSense is the most popular and widely used contextual advertising network. They serve CPC ads (image or text) based on the content the webpage. Since, advertisers bid on keywords, the CPC rate varies from one ad to another.

Sign up for a Google AdSense Account

Chitika Advertising Network 
Chitika is a popular substitute to Google Adsense. All Chitika Premium ads are Pay-per-click (PPC) and are fully compatible with AdSense because they are non-contextual and do not look like AdSense units.

Get Started with the Chitika Publishers' Program:
http://chitika.com/publishers/

 

 

Online Advertising Terminology:

CPM (Cost-per-mille)

Cost-per-mille is also called Cost-per-thousand (CPT) or Cost-per-impression (CPI), where advertisers pay for exposure of their message to a specific audience. Per mille means per thousand impressions, or loads of an advertisement. 

CPC (Cost-per-click)
Cost-per-click is also known as Pay-per-click (PPC). Advertisers pay each time a user clicks on their listing and is redirected to their website. They do not actually pay for the listing being displayed, but only when the listing is clicked by the user.  

CPA (Cost-per-action)
Cost-per-action or Cost-per-acquisition advertising is performance based and is common in the affiliate marketing sector of the business. In this payment scheme, the publisher takes all the risk of running the ad, and receives payment only for the number of users who complete a transaction by making a purchase (or signing-up for a newsletter, etc.). 

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Funded in part through a cooperative agreement with the U.S. Small Business Administration. All opinions, conclusions or recommendations expressed are those of the author(s) and do not necessarily reflect the views of the SBA or HSU Sponsored Programs Foundation.