Solid info! How to realize the monetization of the three major online advertising and its development trend

The current profit models of the Internet industry are becoming increasingly diversified, but online advertising is still the only way for many companies to make profits, such as the global social networking giant Facebook and Toutiao , which focuses on personalized news and information. Today, when we turn on our computers or mobile phones, watch a video, play a game , or browse Zhihu, we are inadvertently browsing various forms of online advertisements.

However, do you really understand online advertising, which can be regarded as the king of Internet profit realization? The author intends to talk about his own understanding based on his usual Internet experience and relevant information. The article mainly includes three aspects:

• The current situation of online advertising in China;
• Online advertising forms and cases;
• The development trend of online advertising.

1. Current Status of Online Advertising in China

The Internet is a new technology and a new way of thinking. Under the wave of new technology and thinking, a new form of advertising has emerged - online advertising. Simply put, online advertising refers to advertisements placed by advertisers based on the Internet.

Compared with traditional advertising, online advertising has the characteristics of fast dissemination, strong interactivity and good effects. Especially since 2010, with the popularization of smart phones and the coverage of 4G networks, the Internet has entered the mobile Internet from the PC era. In the era of mobile Internet , the number of Internet users is huge and users spend a long time online (especially on mobile phones). Faced with a huge number of potential users and business opportunities, a large number of companies have chosen Internet marketing , and the demand from advertisers has further stimulated the rapid development, prosperity and explosion of online advertising.

1.1 China’s online advertising market size

According to iResearch Consulting , China's Internet market size in 2016 increased by 32.9% year-on-year to 290.27 billion yuan. And it will continue to maintain rapid growth. The overall scale is expected to exceed 600 billion yuan in 2019. The market size is super large!

1.2 Proportion of online advertising media in China

According to iResearch Consulting Group’s research, China’s online advertising revenue accounted for 68% of the advertising revenue of the top five media in 2016, nearly 70%. The five major media advertising are: TV advertising, radio advertising, online advertising, newspaper advertising, and magazine advertising.

2. Online Advertising Forms and Case Studies

2.1 Search Advertising :

Search advertising refers to advertisements placed by advertisers on search engines or e-commerce platforms when users search for keywords . Through this definition, we can clearly see that search advertising is not directly equivalent to search engine advertising , it also includes advertising on e-commerce platforms. Let’s look at them one by one, starting with search engine advertising.

(1) Search engine advertising:

Search engine advertising refers to advertising in which advertisers determine relevant keywords, write advertising content, and set their own prices based on the content and characteristics of their products or services.

When users search for the keywords placed by advertisers, the corresponding ads will be displayed. When multiple users purchase a keyword, it will be displayed according to the bidding ranking principle, and after the user clicks it, the advertiser will be charged according to the bid for the keyword. There will be no charge if there is no click. Search engine advertising is one of the earlier forms of advertising on the Internet and is commonly seen on search engines around the world, such as Baidu, Sogou , Google , Bing, etc.

On the PC side, enter the keyword "front-end learning" through Baidu and Sogou search, and the first few results on the search results page are all advertisements for training structures.

Baidu and Sogou are both large search advertising service providers, among which Baidu is the No. 1 search engine in China. Search engine advertising is their main profit-making method, and they once created glory in the PC Internet era. However, with the advent of the mobile Internet era, users spend more time using smartphones than computers, and user habits have also shifted from search engines to mobile apps. The dominant position of search engine advertising has begun to decline. Baidu and other search companies have developed mobile search apps, launched news and information functions on mobile interfaces, and increased advertising revenue through information flow advertising .

(2) E-commerce search advertising:

E-commerce search ads are advertisements placed on the platform by merchants on the e-commerce platform. The principles of e-commerce search advertising are basically the same as those of search engine advertising, both of which are triggered by users searching for keywords. Since there are many merchants selling similar products on e-commerce platforms, but the pages for displaying products are limited, and users tend to only look at the first three pages based on browsing habits, advertisers spend money to purchase advertising space from the platform in order to gain good exposure and display positions. E-commerce search ads are common on large e-commerce platforms, such as Tmall , Taobao , JD.com , Amazon , etc. Ads like Taobao Through Train and JD Express belong to this category.

Taobao bottom advertisement

Jingdong bottom advertisement

Amazon Advertising

E-commerce search advertising solves the problem of traffic distribution among users on the site. E-commerce platforms gather a large number of merchants and a wide variety of similar products. Therefore, this type of advertising is a rigid demand for merchants entering the e-commerce platform, because when the platform already has a large number of users, it is possible to earn more profits if their products can reach users in a prominent position at the first time. Looking at major e-commerce websites, e-commerce search ads are generally distributed at the bottom or on both sides of the page. Although they vary in appearance, they all fall into this category, such as Taobao’s shopkeeper hot sales and JD’s product selections.

The State Administration for Industry and Commerce issued the "Interim Measures for the Administration of Internet Advertising " on July 8, 2016, one of the provisions of which is: Internet advertisements should be identifiable and clearly marked as "advertisements" so that consumers can identify them as advertisements. Major e-commerce companies have also implemented the management measures, but there are differences: Taobao and JD.com have a very small and vague "Advertisement" logo above the entire advertisement strip; Amazon has a prominent "Advertisement" logo under each advertised product.

2.2 Display Advertising

Display ads are ads that appear in fixed ad spaces on major websites or apps. The biggest difference between display ads and search ads is the difference in the triggering mechanism. Search ads are ads generated when people are looking for information. Users actively search, and the search results vary depending on the keywords. Display ads are ads where information looks for people. Websites or apps guess user preferences based on user portraits and then deliver ads . In terms of form, display ads can be roughly divided into the following types: banner ads , information flow ads, splash screen ads, interstitial ads, and icon ads.

(1) Banner advertising:

Banner ads, also known as banner ads or flag ads, are ads that usually appear in the form of bar graphics (including dynamic graphics) at the top or bottom of a website or app. This form of advertising appeared earlier than search ads, and the space it occupies is second only to splash screen and interstitial ads, and is available on both PC and mobile devices.

Sina.com banner advertisement

Tencent banner advertisement

Amazon banner ads

(2) Information flow advertising:

Information flow advertising is commercial information between content-based product information and information, and is generally common in social media and news information products, such as Facebook, Weibo, BBC and Toutiao. Its content and form are completely consistent with the information flow of the product it is in. If the words "advertisement" or " promotion " were not appearing around it, it might not even be discovered as an advertisement. Relying on massive user data and the information flow ecosystem, information flow advertising can accurately capture user intentions, effectively reduce user interference, display advertisements to target customers, and easily stimulate the audience's initiative, prompting them to actively accept and share.

The red areas in the screenshot above are the information flow ads in Facebook, Weibo, and Toutiao, which are displayed in the middle of friends’ updates or news information. These ads can also interact with netizens through likes, comments, shares or follows, which can increase the interest and secondary dissemination of the advertising content. In addition, when users see these ads, they can choose to hide the updates or unsubscribe, which provides a better user experience .

(3) Splash screen ads:

Splash screen ads are based on the advertising style of mobile apps and are displayed when users launch the app. The ad display time is generally between 3-5 seconds. Users can choose to skip the ad and enter the app directly. The ad can be in the form of static images, dynamic images or even Flash.

The above picture is a composite image of the splash screen ads of Meitu , 36Kr and Maimai. Splash screen ads are basically the form of advertising that occupies the largest space on mobile devices, among which Meitu and 36Kr are the mainstream. That is, most of the top of the screen is the advertising display area, and the bottom is the brand identification area of ​​the application itself (including the logo, application name and slogan). Similarly, users have the autonomy to skip ads and can enter the APP directly by clicking skip.

(4) Interstitial ads:

Interstitial ads are ads that are triggered when users pause, switch, or perform other actions on the APP. Commonly seen in video, tool , and game apps, this type of ad usually takes up half of the phone screen and is located in the center of the screen.

The picture above is an interstitial ad when an iQiyi video is paused. This form of advertising is directly inserted into the user's usage process, affecting user operation efficiency and providing a poor experience. However, since it occupies a large screen space, users are more likely to enter by mistake, which makes it a good choice for advertisers who are eager to promote their products and realize traffic monetization.

(5) Floating ads:

Floating ads are ads that float in a specific area and are triggered by user actions. This type of advertising is relatively rare, and the only one I know of is on Sina Weibo .

On Weibo, when users click on the eye-catching orange “+” icon, the screenshot above will appear, with a variety of functions for users to use, including text, live broadcast , and headlines. There is a graphic advertisement for OPPO mobile phones in the upper right corner of these function icons, but the advertisement does not appear alone. Instead, it is guided by the date and weather information in the upper left corner. This advertising format of Weibo is very creative. If you want to get something, you must first give it. First, provide practical date and weather information to users, and then make a display ad, which provides a better user experience.

2.3 Brand Advertising

Brand advertising refers to advertising placed by companies in order to increase market share and establish product brand image. Brand advertising is often referred to as the "attention economy". It aims to arouse consumers' attention and interest and establish the brand image of a company or product. This requires a large amount of capital investment and repeated broadcasting of advertisements to help consumers form memories. Because it is far away from the final purchasing behavior of consumers, its process control is extremely complex and the results are generally difficult to measure. Brand advertising includes online advertising and offline advertising. Since we are discussing online advertising, we will only focus on the online part.

Tencent’s positioning of Moments ads is: WeChat Moments ads are native ads based on the WeChat public account ecosystem, displayed in Moments in the form of original content similar to friends. Users can interact through likes, comments, etc., and rely on social relationship chains to spread information, bringing a bonus effect to brand promotion , and are charged according to the number of exposures. On January 21, 2015, WeChat Moments began to launch its advertising business, which targeted users with BMW, vivo mobile phone and Coca-Cola advertisements based on multi-dimensional tags determined by user portraits. Netizens posted pictures to protest why they received advertisements for Coke or mobile phones instead of BMW cars . Instead of causing users to feel disgusted, the advertisements stimulated the competitive mentality in their nature, and they actively requested to receive higher-end advertisements. When it comes to advertising, I only admire the WeChat team!

2.4 Performance Advertising

Performance advertising refers to advertising that can measure the cost and effectiveness of traffic acquisition, as opposed to brand advertising. In a performance-based advertising system, advertisers only need to pay for measurable results. This method can better protect the interests of advertisers, and the Internet platform provides a stage for performance advertising to fully display its potential. Measurable behaviors in performance advertising can be clicks, downloads, registrations, phone calls, online consultations, or purchases, etc. The general billing method is CPA or CPS. CPA is a billing method based on registration, downloading and other behaviors; CPS is a billing method based on sales.

Performance Advertising

The above picture is a screenshot of performance advertising data, and the picture comes from a certain answerer on Zhihu. As shown in the figure, the advantage of performance advertising is that you can clearly see the user data of each item, which is in the interests of advertisers.

2.5 Native Advertising

Native advertising is a new advertising concept that was proposed at the end of 2012 and became popular in the global media industry in 2013. It is a form of advertising that embeds advertisements as part of the content into the actual page design. It has three significant characteristics: first, the value of the advertising content, that is, the advertisement must provide valuable information to the users; second, the native nature of the advertising content, that is, the advertisement is highly harmonious with the web page or APP; third, the interaction between the users who receive the advertisement is strong, that is, the users like this type of advertisement very much and spread it by themselves. Native advertising, that is, original advertising, is not restricted by standards and is a form of advertising that changes with the scene. Including video native ads, information flow native ads, theme expression native ads, game level native ads, etc.

Zhihu native advertising

The 2017 NBA Finals came to an end on June 13, with the Golden State Warriors, where Curry and Durant were, defending the championship. So the Zhihu website launched the vivo advertisement in the picture on June 14. The timing of this advertisement was particularly timely and appropriate, and the content was not just about buying a mobile phone. Instead, it revolved around the game, introducing the final result and Curry's personal situation, as well as the story of vivo asking Curry to be the spokesperson. This is a typical native advertising case, as it not only advertises the product but also delivers valuable information to users!

Summarize:

The classification of search ads and display ads is based on the triggering mechanism of the ads. Search ads are triggered by users' search behavior, while display ads are actively placed by websites or apps. Performance advertising and brand advertising are divided from the perspective of advertising purposes. If the purpose of advertising is brand display and exposure, then it is brand advertising; on the contrary, if registration, conversion , clicks, etc. are used as indicators for billing, then it is performance advertising.

3. Development Trend of Online Advertising

3.1 The scale of online advertising market is growing rapidly

The decline of traditional media, the development of mobile Internet and the shift of market consumption have all led to the rapid development of online advertising. According to iResearch Consulting's "Annual Monitoring Report on China's Online Advertising Market", China's online advertising market was close to the 300 billion mark in 2016 and is expected to reach 600 billion in 2019.

3.2 Online advertising forms are more diverse

After decades of development, online advertising has shown vigorous vitality and has become more diverse in form. For example, information flow ads and icon ads are relatively new forms of advertising. Information flow advertising is currently the most popular form of advertising.

3.3 Online advertising user experience is gradually improving

As one of the most important profit models on the Internet, online advertising has been continuously developing. Overall, the user experience of online advertising is getting better and better. It manifests itself in several negative aspects:

• First, there is the innovation of advertising concepts. For example, native advertising is a form of advertising that places special emphasis on user experience.
• The second is the change in advertising placement, with personalized demand advertising represented by Toutiao, which places ads based on user characteristics.
• Third, ad viewing is controllable. The opening screen ads of the APP are generally 3 to 5 seconds long. Users can choose to skip the ads and enter the client directly.