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Online advertising

A recent spate of acquisitions in the internet world has highlighted the growing importance of Online Advertising.

In April Google purchased online ad firm DoubleClick for $3.2 billion and Yahoo bought RightMedia for $680 million. Then in May Microsoft paid $6 billion for aQuantive.

The fact that these companies spent such extraordinary sums on Internet Advertising companies demonstrates how important the medium has become. In fact, Nielsen/NetRatings recently found that the number of online ad campaigns run during April increased by 35 per cent compared to the year before.

What is online advertising?

Online advertising allows businesses to pay minimal amounts of money in order to have a visible presence on the internet. It is about finding ways to bring your product to an audience of millions around the world.

Internet users can be targeted when they are reading news stories online, sending emails, playing video games, or doing practically anything else - including searching for something specific (which is what most people do online).

Advertising on Google, Yahoo, Microsoft and the other search engines

Effective online advertising involves having a good ranking on Google, so that when a potential customer searches for the product you are selling online, your website will be highly visible to them.

There are various methods of improving search engine optimisation (SEO), which ensures your website has a good ranking.

These include placing direct-link-ads pointing to your website that delivers visitors directly to your site as well as having a major effect on the ranking of keywords. Direct Link ads delivers of the highest returns on investment.

Featuring fresh and changing content such as a news feed would also increase the performance of a site and increasing the number of links. This shows search engines like Google, Yahoo, MSN Live and Ask.com that your site is fully operational and of interest to customers.

Search engines also offer advertising programs that allow businesses to establish a web presence by paying for placed ads.

The three leading search engines have the following online advertising programs: Google AdWords, Yahoo Search Marketing and Microsoft adCentre, which place ads on the respective search engine (on relevant keyword search pages) and on websites.

Various techniques can be employed to ensure that customers do not pay too much for their online advertising, and the web allows for superior tracking to keep costs down.

Payment methods of online advertising

Common payment methods for placed ads include cost per click (CPC - otherwise known as pay per click/PPC), whereby advertisers pay for the amount of clicks their hyperlinked ads receive, and cost per visitor, where payment is made according to how many visitors are directed to an advertiser's site.

Online advertising with Rich Media

Also popular is rich media advertising, which features images, video and other technology that draws in customers.

Flash is popularly used, and common forms include banner ads (which usually display across the top of the screen) and pop ups (which open in a new, smaller window).

The future of online advertising

However, it is search advertising that is most popular, due to its affordability and extraordinary returns on investment.

In fact, the Advertising Association revealed that online advertising in the UK increased by almost 50 per cent last year to more than £2 billion - and it is showing no sign of slowing down.