Year 1 - UE 03 - Online Advertising

The first thing to know is that running a website, running an app cost money. As a website owner or app owner you need to pay the development, the trademark, the web hosting, the domain name... One of the best example to introduce ad network is to consider a search engine.

Search engines are very powerful and high demanded services because there are the keys which give you an easy access to many other resources. So every time that someone is processing a search on one of those tools it means that a machine behind called a server need to answer to it.

As there are many requests it needs very powerful machines and those machines have a high cost (cost of the electricity + cost of the persons in charge of the maintenance + cost of the bandwidth...).

In order for you to have an idea of how much cost a server, just look for the price on a marketplace and you will have a good idea of it.

So to say offering a service on the internet costs money, so the owner of the website/app needs to find a way to make money out of it.

In order to make money they are "renting" some spaces on the website/app  and make other companies pay in order to appear on those spaces.

There are no real differences between inserting your ads within a newspaper in comparison to inserting it on a website. You get in contact with the person who owns the website and you see what is its price in order to have your ads within her/his website.

Note though that compared to a paper newspaper, on the internet, it is kind of easy to extract data about your visitors. So when you use an ad network you can target to who your ads will be shown to.

About Ad networks

As you can imagine, receiving demands in order to host ads on your website/app can be very demanding. That's the reason why website owners/app are not doing it on their own, most of the time they are using what we call ad networks. Ad networks are program developed by big companies which allow you to outsource all the technological part + relationship parts. Probably the most popular ad network is the one of Google which offer you the possibility to insert ads on any websites/app which are using this network and/or add ads on your website/app coming from this network.

There are many other ad networks, in fact it all depends of the technologies they are providing and the network of websites they can offer you.

In this course we will mainly focus on how you can create your own ad network based on a Free software named Revive.

How do ad networks charge you for paid advertising?

If you would like to use an ad network in order to promote your company, it would be interesting to know how they will charge you?

As in any advertising system it really depend at the end of the demand and offer, if there is a high demand then the cost will be high, if the demand is low then the cost will be small. If the price the company is ready to pay is ridiculous, then in general the website won't display the ads as it will consider that showing no ads will be better in terms of brand image (in general they are not communicating that much about this technique). If the ad is not relevant and may jeopardize their brand image, they can also increase the price you should normally pay.

Note that a website owner is free to define its business model. In general they will use one well known system named CPC for Cost Per Click, you can also find the name PPC for Pay Per Click. As its name stands for it, it means that the advertiser will be charge everytime something is going to click on the ad. By something we mean a robot or an internet user. In general search engines are well done so they won't charge you when bots are clicking on your ads.

Note also that one person can click successively several times on your ads and are considered within the same visit which make your work a bit more difficult to analyze.

Another well known charging system is the CPM model for Cost Per Mille, it means that your ad need to be displayed at least 1,000 times in order for you to be charged a fixed amount you defined with the advertising platform.

You can also find in some rare cases the CPA model (Cost Per Action), mostly used on affiliate programs. It means that you will be charged only if someone is doing the action you specified (for example creating an account, make a purchase...). You will then pay of course a higher price if that happened.