Practical Ecommerce

Understanding Online Advertising Terms

In a meeting with a national online advertising vendor the other day, I was amused when I noticed one of our top salesmen sleeping at our conference table. And, by sleeping, I don’t mean that this gentleman nodded off and required a quick nudge. I mean he was out, sawing logs.

Who could blame him? Most online advertising meetings are full of buzzwords and terms and acronyms that mean nothing to the good people trying to run an ecommerce business. These people primarily care about converting Web website visits to sales, and the advertising sales people only care about converting you.

In order to spend your advertising money wisely, you need to understand the specific language spoken by those in the online advertising industry.

This tutorial will serve as a primer, a 101 class in how to get the most out of your online advertising by understanding a few of the most-used industry terms in plain English. Take this knowledge into your next online advertising meeting, and the salesman will automatically know he or she is dealing with somebody who understands the basics.

Instruction

If you have decided to advertise on various websites, you’ll want to do some research on them. Find out a bit about the website’s demographics and psychographics. Ask for some traffic numbers, and keep those figures to visits and unique users only. Hits are irrelevant.

Once you’ve decided that a website is right for your advertising dollar, arm yourself with the following terms:

IAB

Founded in 1996, the Interactive Advertising Bureau (IAB) is the leading online global advertising industry trade association with more than 300 active member companies in the United States alone. IAB activities include evaluating and recommending standards and practices, fielding research to document the effectiveness of the online medium and educating the advertising industry about the use of online and digital advertising. Make sure that the website adheres to IAB standards, and that the vendor creating your ads also follows them. The IAB has spent lots of time studying and documenting what works and what doesn’t in advertising.

Banner

An online advertisement in the form of a graphic image on a Web page that links to a location of the advertiser’s choice. These familiar banners are usually in GIF, JPEG or SWF format. Banners can include graphic advertisements of any size, so don’t let this term even hold any importance to you. Instead, make yourself familiar with the different types of ‘interactive marketing units’ available under IAB standards. Take into account things like your logo and message to determine which sizes are best for your advertising efforts.

CPM

CPM stands for “cost per thousand” impressions. The price paid by an advertiser for a website displaying their banner a thousand times. CPM is the standard Web-advertising model.

CPC

Cost Per Click is one of the online payment models by which advertisers pays for each click through made on their advertisement. Prices typically range from 1 cent to more than 50 cents per click through. This is an ideal method of payment for advertisers who need to guarantee they only pay for those viewers of the banner that click on it and visit a page on their website. These are two cost options for advertising campaigns, but don’t write off an advertising opportunity just because they don’t offer a CPC arrangement. More important factors in making your decision should be things like whether or not:

  1. The website you’d advertise on has relevance for your product or service.
  2. The website gets plenty of traffic.
  3. The vendor or website has documented success with ad campaigns.

Unique Users

Users marked by either a Global User ID (GUID) or a cookie in the form of an ID that is attached to a user’s browser. Unique users do not include repeat users during a specified session. When it comes time to research a website for the purposes of advertising, this is the stat that should be most important to you. Only unique users – not visits or hits or anything else – can be turned into buyers.

Reach

The reach of an ad is the total number of people who will see that ad.

Rotation

A banner that is in rotation on a page or group of pages will not be the only banner shown when any of the pages is reloaded. Sometimes an advertiser will request a banner not be shown in rotation, in which case it would appear every time the page is loaded. This is also known as exclusivity. Most of the time you’re ad will be in a rotation sequence with many other ads. You’ll need to dole out more money for exclusivity, but it’s not often worth pursuing. Instead, find out if the website you’d be advertising on does things like threading, which is the practice of maintaining similar advertising throughout the website based on a user’s content choices.

Practical Ecommerce

Practical Ecommerce

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  1. Legacy User January 21, 2008 Reply

    Brand new to the industry, fantastic introduction to what they were talking about yesterday, that I had a vague idea about.

    Thank you.

    — *Lance Harris*

  2. Elizabeth Dabraccio June 26, 2016 Reply

    Thank you I learned allot with this article -written in a way I can understand.