Advertising refers to marketing communication intended to attract the attention of potential consumers and convince them to buy certain products or subscribe to services. It also provides firms with ways of establishing brands through repeated advertisement (ad) presence which consumers associate with the brand in the advertising media. Traditional advertising media include radio, television, magazines, newspapers, and billboards. (Yuan et al, 2012). The advent of digital media such as the internet has had a profound impact on the advertising industry as new channels continue to supersede traditional media. The Internet has moved advertising beyond rudimental ad display methods to social media and viral videos (Mallia & Windels, 2011).
The advancement of the Internet and the World Wide Web (WWW), enables consumers to seek product information by searching for and navigating websites, requesting for product information, and performing online transactions. Search engines have also continued to improve user experience and the accuracy of search results by improving information retrieval services. The popularity of the internet has provided advertisers with a wide array of strategic choices that would help them reach potential customers among the billions of global Web users. This phenomenon has provided search engines with opportunities to become strategic platforms for ad placement on the web with the assumption that online users interested in the advertised products will click on the ads (Yuan et al, 2012).
Web advertising complements traditional advertising but is expected to dominate as a preferred advertising medium over traditional media since it is more targeted. A user querying the Web searching for a product e.g. a smartphone, is more likely to respond to an ad relevant to her query integrated with search results. On the other hand, newspaper advertisements are pre-selected for display making them uniform for all readers and consequently less targeted. Additionally, traditional media lacks an effective feedback mechanism to monitor the success of conventional media (Yuan et al, 2012).
Internet advertising has existed for more than a decade with the first search paradigm created by Bill Gross in 1998 after founding Goto.com which later became Overture. Yahoo Inc. then acquired Overture in 2003 and made it Yahoo! Search Marketing. In 2002, Google Inc. started AdWords, an online service that added quality-based bidding to web searches. Web search thus became an important part of daily activities since it reduced the time and difficulties once associated with the need for information. Sponsored search was then developed to allow advertisers buy certain keywords which would help promote their businesses when search engine users posted queries (Yuan et al, 2012).
The history of contextual adverting began probably in 1998 after a company known as Oingo developed a proprietary search algorithm that conducted searches based on word meanings and was built on an underlying framework known as WordNet. Oingo was acquired in 2003 by Google and later renamed to AdSense. Advertising.com, Microsoft adCenter and Yahoo! Publish Network among others were launched to offer similar services. Contextual internet advertising has since then evolved and comprises a rich media environment such as audio, video, and mobile networks with geo-location services. All these platforms allowed publishers to sell advertising space on their videos, applications and webpages to generate revenue. Such services are referred to as a display networks or an advertising networks and are not necessarily run by search engine. These networks can consist of a huge number of individual advertisers and publishers (Yuan et al, 2012).
New platforms began to be created around 2005, focusing on real time purchases and sales of impressions such as adBrite, Right Media and DoubleClick Advertising, which are now referred to as ad exchanges. Unlike conventional ad networks, ad exchanges combine multiple ad networks to balance market demand and supply. Advertising networks and individual publishers both benefit from participating in ad exchanges since publishers sell impressions to advertisers who are mostly interested in associated contexts and user profiles. Advertisers can also have a network of publishers to improve matching.
According to Pfeiffer and Zinnbauer, 2010, expenditure on advertising is experiencing a historical decline never before experienced in the industry. Online advertising has not been spared either since it experiences a 5.4 percent average decline per year in expenditure. However, online advertising budgets are expected grow exponentially in the coming years due to significant growth in number of internet users and devices. In the UK and Denmark, the Internet has overtaken television advertising, and now holds the largest market share in advertising expenditure.
Revenues from internet advertising however, have continued to show positive trends. In 2006, search engines realized $9.4 billion in advertising revenue realized from sponsored search. This was a $3.65 billion increase as compared to 2005 (Fulgoni & Mörn, 2009). A survey conducted by the Interactive Advertising Bureau showed that internet ad revenues in the first half of 2009 had reached over $10.9 billion in the US only. In the first quarter of the fiscal year 2011, internet revenues were $7.3 billion. The upward trend in internet ad revenues shows a promising future (Yuan et al, 2012).
Traditional media on the other hand has experienced serious declines in revenues and some publishing companies have even closed shop due to competition from the Internet as an advertising medium. However, some print media houses which previously relied on print advertisements to generate revenues have opted to explore the new media in order to keep up with the competition from modern technologies. One such company is the Saudi Research and Publishing Company (SRPC). The SRPC is a major publisher operating across the UAE. SRPC has dedicated considerable efforts towards creating online newspaper and magazine editions. The company has also ensured that it provides quality and reliable news and views to its primary audience which comprises mainly of Arab readers all over the world. In terms of quantity, the company has increased the number of publications from one publication, the Arab News launched in 1975 to a current total of 15 different publications and in different languages such as English, Arabic, and Urdu among others (Jacob, 2011).
Other observers have also realized that the information age is here, and they have decided to exploit the benefits and take up opportunities that new media brings to traditional media professions such as journalism. With respect to this, journalist, especially those writing for magazines can search for information and gather news using the internet. They can also perform inquiries, collect background information, and check facts and figures from the comfort of their offices and homes (Salman et al, 2011).
In the world of academia, the impact of the internet of advertising has sparked wide spread curiosity that has triggered research and studies focusing on the economic view of display advertisements. The studies are also targeted toward raising various implementation oriented questions ranging from the design and implementation of internet banner ads, to recall success factors. Furthermore, there is existing research supporting the effectiveness of a single medium within the context of online advertising and comparative studies on the effectiveness of traditional and internet advertising (Pfeiffer and Zinnbauer, 2010).
Internet advertising especially in the context of sponsored ads that are targeted to specific users has raised ethical and legal issues regarding information privacy and security. Some adverts such as banners are also quite annoying and intrusive.
Online advertisers do collect a lot of information from users who utilize search engines since search engine providers track what a user searches, websites visited and types of information preferred. They use this information to then deliver targeted ads based on the user’s search patterns. To collect this information, search engines identify particular IP addresses and collect information regarding the activities of that IP in the search engine. Advertising websites on the other hand store “tracking cookies” on to computers belonging to users who access their site. These cookies are small files that collect information about sites visited, sessions and even IP addresses.
Consumer privacy regulators and advocates have criticized search engine companies for capturing and storing consumer data. In response, the providers have agreed to reduce the period for which they store information with individual identifiers. An example is Google Inc. that stores data for 9 months as opposed to the previous time of two years. Behavioral targeting has also attracted various legislative inquiries and law suits regarding information privacy.