Do they generate clicks, sales, signups, social follows, return visits or other measures of success? Does the result more than pay for the cost in labor and cash?
Some types are more effective than others, but their effectiveness also depends on other factors such as the quality of the ad, the audience target, using the right distribution channel or the product or service, etc.
Defining the best starts with thinking of them in terms of categories and subcategories.
5 Major Category Types
The largest amount of online advertising expenditures each year goes to search advertising because it is the single best way to achieve efficient returns.
Search advertising uses contextual placement to place ads on the most appropriate page on a site and is becoming more able to display that ad based on individual user behavior.
The largest volume of search ads is textual rather than graphical. The largest volume of course also appears on the major search engines: Bing, Google, Yahoo and a growing number of smaller search engines.
The best use of search ads is for highly targeted campaigns with an emphasis almost entirely on response and little emphasis on branding.
Display / banner ads
The most common search ad is simply a small amount of text, but search ads can be graphical banners as well.
Banner ads are used for both branding and response. Because of their large size, they are best used for businesses that want a combination of both.
The online advertising industry is increasingly moving toward the “forced view” approach to video ads where the viewer is forced to see at least part of the ad if not the entire 15 to 30 second ad before viewing the video they want to watch.
As a result, video advertising is gaining traction among advertisers, although it is still a relatively small portion of all online advertising — about 6 percent of total expenditures.
Video advertising is a viable option for a business that already has a TV commercial that it can use online or for a business that wants to showcase a product or service that requires more than a single image. At the local level, real estate is an important category for online video ads.
A niche form of advertising that also is gaining traction is content marketing, where the advertiser produces actual content that appears on another site along with the advertiser’s brand and links back to the advertiser’s site.
Classifieds / directory listings
The newspaper classified advertising model has developed a huge presence online both for newspapers and their many competitors.
Classifieds and directories have the advantage of providing simple listings with varying pricing levels based on the number of features used such as graphics, photo slideshows, embedded videos, etc.
5 Major Distribution Types
Online advertising has multiple distribution channels that take advantage of reaching audiences wherever they gather.
Web sites work well with all five of the major categories above. They even work with search ads for sites that have distribution agreements with the major search engine companies — Google and Bing.
Mobile represents a small but rapidly growing distribution channel for advertising. Because many smartphone displays are so much smaller than desktop computers, they are more effective at response than branding even with display ads because those ads often represent a disproportionately large amount of screen space than desktop advertising.
It can be argued that social media is similar to Web sites as a distribution channel because the ads appear on sites such as Facebook. But they do have some key differences, especially in the presentation of ads within the newsfeeds of users.
With affiliate marketing, a company signs an agreement with an affiliate marketing company to distribute ads to other Web sites. When visitors to those Web sites click on the ads, they go through the affiliate marketing company’s tracking technology to visit its clients and occasionally make purchases.
The Web site that originates the visitor gets a commission for the sale. If there is no sale, the affiliate gets nothing. Affiliate marketing is one of the best possible opportunities for advertisers and one of the worst for publishers because of its highly unpredictable results.
Despite its age, email marketing is still a powerful tool for reaching customers and bringing them back again. It is a great frequency-building tactic.
The effectiveness is again measured by the click rates. A good email marketing newsletter can generate click rates just as high as any search engine contextual campaign and even higher — sometimes approaching 10 percent.
It is less effective as an advertising type because of the limited presentation capabilities including the fact that many email interfaces block images because of the threat of viruses.
3 Different Pricing Types
Cost per click
For an advertiser, cost per click is the best and most popular type of online advertising as a return on investment because it is so efficient and measurable.
The advertiser pays only for the click. But if there are no clicks, it means the ad campaign has been poorly managed. Search engines such as Google and Bing have means of demoting a campaign in that case.
So it behooves the advertiser to produce a well-managed CPC campaign.
Cost per impression
The oldest and most popular pricing type for publishers is cost per impression, usually measured as cost per thousand impressions.
They get paid whether people click on an ad thousands of times or not at all. All of the risk goes to the advertiser. Still, it is an effective form of online branding.
CPMs have been declining for years in large part because the growth of Web sites and content have far outpaced the growth of the online audience. In other words, the supply is far exceeding the demand.
Cost per acquisition
Again, the CPA model used mainly by affiliate marketers is extremely efficient for advertisers but has such a poor track record with publishers — and requires publishers to trust their clients reporting — that it is used sparingly.
3 Display Types
A static banner ad is usually just an image with some text such as a catchy slogan, name of the company, etc. Static ads are the simplest to produce and easiest on a budget.
They are worth considering as well when testing concepts that might require creating multiple versions of an ad.
Flash / Animation
The next step up is using Flash or some other form of animation to create movement to catch the attention of the people who are viewing the page.
Like most forms of online advertising, animation is best used in a simple form that loads fast and displays creative much like a billboard on a highway. After all, the viewer may stay on the page only a few seconds.
Flash can be used on a banner ad or multiple variations such as expandable and floating.
Popup / Popunder
Popups are windows that pop up in front of the page the visitor is viewing. Popunders appear behind that page. They are highly intrusive forms of advertising that usually get higher click-through rates and annoy site visitors as well.
Pops are best used selectively with a CPM pricing model. They should have a short lifespan and appear only a limited number of times for each user.
3 Targeting Types
Learning how to target is essential in improving effectiveness, efficiency and return on investment.
Despite its massive audience, the brilliance of Internet advertising is the ability to use digital technology to identify audiences at the smallest possible level.
The simplest type of targeting is with devices. At this point in time, the three main devices are desktop computers, smartphones and tablets.
Desktops and smartphones have dramatic differences in screen resolution, so they are the two devices that matter the most. Tablets are more like hybrids in terms of their screen resolutions.
If in doubt, try all three, look at the results and adjust accordingly.
Businesses with a national reach won’t just advertise to the entire nation. They will advertise in specific markets even down to the zip code level wherever they think they need to improve results, get more customers, identify an opportunity or simply see the best return on investment.
Likewise, local or regional businesses will target specific states, cities, counties or zip codes for the same reason.
Companies like Google, Bing and Facebook that generate a huge amount of online ad revenue are doing more to capture demographic information such as age and gender.
They know that advertisers also like to reach those traits to increase ROI, but at the same time many people resist revealing that kind of information or in many cases provide inaccurate data.
For those reasons, demographic targeting may be less effective than geographic targeting.