How Does Internet Advertising Work?

Internet advertising allows a person or business to advertise their goods or services online. Many different options exist, allowing the advertiser to pick and choose from the options which they find most successful. While some Internet advertising options cost more than others, almost all have shown the ability to generate profits under optimum circumstances.

So how does Internet advertising work? The following explanation should provide you with a firm understanding of the subject.

History of Internet Advertising

When the Internet really took off in 1997, sites were basically divided into two types: content sites (offering words or pictures for the user) and E-commerce sites (offering goods and services for the user). At that time, banner ads were considered the industry norm for Internet advertising.

The cost of a banner ad was originally modeled on the cost of running an ad in a magazine or newspaper. Eventually, it was determined that the benefit of the banner ads did not match the cost of placing them. This eventually led sites to lower the price for banner advertisements and begin experimenting with alternate methods of online advertising.

Types of Internet Advertising


So how does Internet advertising work? To understand what makes Internet advertising as successful as it is, we need to take a look at the various forms of online ads.

Banner Ads

Banner ads traditionally serve one of two purposes: branding or direct sales. Branding means that the business just wants to get their name out there so that the consumer will remember it later. This is the same strategy as billboard advertising.

With direct sales, the banner ad is attempting to get the consumer to take an action. This might be as simple as clicking on the banner, or it might mean calling a phone number or visiting a physical sales location.

In either case, banner ads have been shown to have limited effectiveness (thus the reason for the drop in banner ad rates over the years). They are easier to ignore than a television commercial, so their impact in branding is not as great. Also, direct sales research has shown that for every 1,000 times a banner ad is viewed, only 2 to 5 people will actually click on it (and those clicks don‘t guarantee a sale).

Unicast Ads

These ads pop-up and display something akin to a miniature television commercial. The consumer can then click on the ad to learn more about the product or make a purchase. So far, Unicast ads have proven very effective, and they are currently able to charge rates approaching what banner ads used to.

Sidebar Ads

Sidebar ads are another answer to the question, “How does Internet advertising work?”. Also known as a “skyscraper ad,” these advertisements are positioned vertically on the computer screen.

Because of their vertical positioning, sidebar ads can be much larger than standard banner ads. They also have more effectiveness than a banner ad because they cannot be scrolled off the screen. As long as the consumer is on the page, he’ll have to contend with the presence of the sidebar ad. The click-through rate is around 2 to 3 times greater than with traditional banner ads.


Creating a blog is simple and free. Once your blog is “live,” you’ll be able to post content and direct readers back to your primary site. It remains to be seen whether or not blogging is a passing fad, but it’s certainly popular as of this writing.

Pop-Up Ads

When you visit a page, a pop-up ad is one which literally “pops-up” in another window. Most people hate these ads, as they immediately obscure what you were looking for. However, they have proven more successful than banner ads, usually making the advertiser 4 to 10 times more revenue.

Search Engine Submission

This is done by simply submitting your site to search engines. This works best with smaller search engines, and getting your site ranked can make a major difference in the number of visitors.

Search Engine Optimization

Essentially, the SEO strategy revolves around getting your website ranked as high as possible on search engines like Yahoo! And Google. The closer to the top you can get, the more likely that someone will visit your page. This higher ranking is usually accomplished by getting links from other sites and providing lots of unique content.

Text Links

These are simply links that a user can click on to visit another site. Often, the owners of two different sites will agree to “swap links,” meaning that both install a link to the other’s site. While the effectiveness may not be as great as paid advertising, it is a free way to gain more exposure.

Floating Ads

When investigating the question, “How does Internet advertising work?,” we must also look at floating ads. When you visit a website, these ads will appear on the screen like a pop-up and then drift or float for anywhere from 5 to 30 seconds.

Floating ads have been successful largely because they obstruct the user’s view and force him to pay attention. While it can be annoying for the consumer, the results simply can’t be denied.

On average, a floating ad will generate 30 click-throughs for every 1,000 impressions. As a result, floating ads often charge as much as $30 for every 1,000 impressions.