Online advertising technology

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Please bear with me as I go through a brief history of basic online advertising. The evolution of targeted online advertising is interesting, because I believe the perceived harmlessness of early advertising technology and targeting tactics lulled many people into a sense of complacency or perhaps even false security.

In the beginning of targeted online advertising, there were banner ads. As many people recall, these were supposed to drive the Internet marketing industry in its infancy. Scads of publishers paid scads of money based on a CPI (cost per impression) model or simply paid huge dollars for banner ads and other targeted online advertising on well-trafficked sites.

Then something crazy happened – nothing. It turns out that the banner advertising technology on the Internet was not the magic bullet it was purported to be. The old way of making money based on providing content (the way magazines and newspapers ran advertising) just didn't seem to work in this context.

This new advertising technology was part of the reason for the collapse of the dot-bomb era. All the talk was about "eyeballs, " "stickiness, " "bleeding edge, " "cradle to grave, " and several other terms that, in retrospect, would have sounded more at home in a Wes Craven movie than in an emerging industry. Hundreds, perhaps thousands, of business models depended on a traditional marketing strategy working more or less the same as it always had when introduced into a non-traditional setting.

All the while, one company, originally called GoTo, then Overture, and finally bought by Yahoo!, actually formulated a targeted online advertising system that worked – keyword advertising. Companies could bid on a per-click basis for certain key terms, which sent valuable traffic to its website.

Obviously, the improvement in advertising technology had to do with the model itself, which was perpetuated on relevance. By only bidding on keyphrases that you wanted, you could only pay for visitors who had already shown an interest in your products or services. This targeted online advertising model was soon copied by Google, who tweaked it and made it better.

There were not many raised eyebrows at this time, in terms of privacy. After all, the user was the one entering the query, and nobody suspected at the time that search engines might one day actually create individual profiles on users. We were all just really enjoying "having the information at our fingertips" without the potential hazards of ink stains and paper cuts that traditional research required.

Google then took a similar idea a step further. Instead of just serving up targeted online advertising on its home page, the company created a content distribution network called AdSense. In this program, owners of websites could sign up to have the ads placed on their sites. Google would then use "contextual" logic to determine which ads to place where. In other words, Google would "read" the content on a page and then serve up targeted online advertising in the area provided by the site owner that was relevant to the content.