Internet Advertising industry

Digital Advertising Is The Future, But Why? (ZNGA, GOOG)

Advertising has come a long way from the days immortalized in "Mad Men." We now have virtual product placement, scent marketing, social media marketing and a host of other innovations that allow this old industry to learn new tricks. In this article, we’ll focus on the digital advertising industry and look at the landscape now and some important changes on the horizon.

The Mainstays of Digital Advertising

Before we get into the innovations, it is worth looking at the original digital marketing tools that have stuck around. Some have been upgraded to work with new platforms like social media, but the core functions remain unchanged.

Banners and Sidebars

Traditional ad placement, meaning the banners and boxes embedded in a page of content, is the granddaddy of digital advertising. Despite occasionally showing its age, ad placement isn’t going away. If you look to the right of this text, you’ll likely see an ad placed there because it is one of the sweet spots that still generate a view. However, browsing habits have evolved to the point where many of us our ad blind. This is why some online media has gone back to the pop-up (timed or untimed) or the background placement ad to disrupt the usual viewing pattern.

Ad Serve Market

In addition to shaking up the display slots, the way that these ads are served today is different than it was a decade ago. Many online publishers offer ad inventory through exchanges that allow advertisers to pay per click rather than per view. This price model has hurt some, but it benefits the advertiser by ensuring at least some interaction with the ad beyond an impression.

The technology underlying these ad servers has been upgraded to incorporate more user data to increase the accuracy of the advertising by location and demographic. Real time buying of pinpoint, targeted ads built off demographic data is becoming a reality. It will come as no surprise that Google (GOOG) is a leader in this field and also continues to own search advertising, another mainstay of online advertising.

Email advertising and digital coupons round out the original tools still being used in digital marketing today. Ad space on an email blast to a proprietary database has maintained value as emails are a level of contact beyond a passive view as well as a distribution point for promotions and trackable coupons. Digital coupons, however, have added social media as a distribution channel, as the rise of Groupon (GRPN) has shown. With the social media coupon, the delivery agent is no longer a publisher, but a platform where word of mouth rules.

Content Marketing

Content marketing is getting a bit of a rebrand of its own, now often referred to as "native advertising." At the end of the day, it still involves building the marketing message into the content itself and making that content compelling or useful enough for the audience to seek it out. Instead of placing an ad on relevant content, content marketing encourages a company to create relevant content that supports its business. For many industries, content marketing is now table stakes. For example, every realtor site will have content on how to buy a home or what to expect, with the implicit message that a realtor will make it all easier.

Areas of Innovation

When the internet was primarily text and images on a computer, the previous tools ruled. With the advent of mobile devices, online video, and social media, new approaches have emerged.

Social Media Marketing

You can now be friends with iconic brands like Coca-Cola (COKE) and GE (GE). Social media has given brands a new platform to engage with their customers, attaching a human face to a corporate image. Add to this the ability to sponsor and boost posts across platforms with millions of users, as on Twitter (TWTR) and Facebook (FB), and you have the brands-as-publishers idea used in content marketing supported by immediate feedback on the content being shared.

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