A Brief History of Online Advertising
We’ve come a long way
From the original AT&T and Zima banner ads featured on Hotwired.com in 1998 to the behavior-based targeted advertising slyly blended in with web content people digest daily, the world of Internet advertising has changed the marketing game and way businesses think about connecting with consumers. The Internet itself was established as an information database; a way of efficiently sharing messages and communicating. Advertising inside the messages was an idea that marketers laughed at originally. It is now obvious who got the last laugh. Today, marketers barely remember what it was like to do print ads, traditional press releases, and TV/radio spots. Internet advertising took stale and generic ads and turned them into dynamic, extremely targeted messages.
Before banner ads and AdWords caught on like wildfire, the Internet as an information database transitioned into a full-blown marketplace. The most notable example of an industry leader that caused a paradigm shift for businesses was eBay.com. All of a sudden, brick-and-mortar establishments seemed too involved when consumers could simply do their shopping and selling from home. People could run their businesses from the comforts of a clunky desktop computer with the help of a dial-up modem, free AOL trial, scanner, and half-decent camera (film, probably). Buying and selling merchandise across the web got the world’s attention and people began to realize the potential of the World Wide Web. Then, in walks the behemoth with a mission to catalog every piece of data in the world and make a pretty penny through search advertising: Google.
Once people became comfortable with shopping on the Internet, there was a rush of companies that wanted a piece of the market and they all began building websites and advertising online. The dot com boom got people thinking they struck gold. Marketers scrambled to adapt during the first dot com boom only to quickly be shocked with the proceeding bust. The dust settled, lessons were learned, and Google started taking over the world with their advertising model. Since they were cataloging all of the world’s information, why not charge advertisers to present relevant ads alongside that data they were providing for free?
Internet Advertising Timeline
1994 – Pay per click (PPC) was created to allow advertisers to pay only for the ads that users actually interacted with. This was the beginning of modern marketing techniques: paying only for performance rather than pushing ads out to millions of people without any guarantee.
1994/1996 – CDNow.com launched the first affiliate marketing model and later Amazon.com perfected the model and still depends on affiliates for driving revenue today.
1998 – Google had indexed 60 million pages with their search algorithm and began ranking them based on back links and keywords.
Standardization of Banner Ad sizes
1998 – Hotwire.com sold banner ad space to Zima and AT&T. The 30% click-through rate showed marketers that it was a viable new advertising channel with strong ROI.
1999 – The Internet advertising industry reached $2 billion.
2000 – Google begins selling ads related to the Internet user’s search term, enabling extremely targeted advertising for the first time.
2001 – The dot com bust wiped out almost all Internet-based companies, notably Pets.com. Amazon.com made it through barely alive and Google depended on their search algorithm and unique advertising model to continue breathing. Advertise.com is also born.
2001-2003 – Pop-up ads took over as the most effective online advertising and quickly began annoying users. Thankfully, Opera created the pop-up blocker and effectively wiped out these ads as quickly as they popped up.
2005 – Video advertising gave marketers a way to deliver extremely dynamic ads on the web. Video ads weren’t just for TV anymore.
2005 – DoubleClick was created before the dot com boom and bust, but 2005 saw them develop into the leading behavioral targeting ad inventory company. They collected data on all Internet users through browser cookies and used that information to deliver targeted ads based on actions the user previously took across the web. Now when you book that hotel in Cabo San Lucas, advertisements for flights to Mexico will fill your computer screen.
2007 – $10 billion was spent on advertising on websites, 14% of all ad spending. Web 2.0 officially took over as a solid advertising channel.
2009 – Social media became the new hot topic and advertisers quickly learned that they can put their messages in front of users while the person is chatting, sharing photos, and updating their Facebook wall with how their day is going.
Today – Now the goal of Internet advertisers is to deliver their message as discreetly as possible and make the message interesting enough that the user would actually enjoy interacting with it.
What do you see for the future of Internet advertising?