This handbook is here to answer that question. It also covers the topics that matter to company decision-makers, like how much online advertising costs, why it matters, and how to build a successful strategy. Keep reading to start learning more about online digital advertising!
If you already know why digital media advertising matters, but need professional help, contact WebFX. We’ve managed hundreds of successful ad campaigns and generated more than $1.5 billion in revenue for our clients in the past five years.
Don't forget, whether you're a local that needs digital advertising services, or you're looking for digital advertising services in Miami, WebFX is here for you!
Table of Contents
- What is digital advertising?
- Digital advertising vs. traditional advertising
- Types of digital advertising
- Why use digital advertising?
- How does digital advertising work?
- Digital advertising metrics
- Digital advertising bidding models
- How much does digital advertising cost?
- How to create a digital ad strategy
- The future of digital advertising
What is digital advertising?
Digital advertising is a targeted, data-driven advertising strategy for reaching consumers in every stage of the buying funnel and moving them from one stage of the buying funnel to the next. From awareness to purchase, you can use digital media advertising (and online ad channels like Google) to drive revenue.
How is digital advertising different from traditional advertising?
If you’re familiar with traditional advertising, digital advertising shares a few similarities.
Like traditional advertising, it promotes your business, products, and services to generate brand awareness, sales, and more. It leverages digital, rather than traditional channels, however. Instead of billboards and magazines, your ads appear on Google, Facebook, YouTube, and more.
Online advertising also comes with a massive amount of data. You can track the performance of your campaigns in real-time, for example. In addition, you can learn about the demographics, interests, and habits of the people viewing and interacting with your ads.
In comparison, traditional advertising delivers the bare minimum when it comes to data. You don’t have immediate insight into your campaign’s performance. A billboard, for example, may provide your team with almost zero data.
That’s why digital advertising often seems like a smart alternative to traditional advertising.
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4 types of digital advertising for your business
Advertise your business online, and your company can take advantage of four types of digital advertising:
Today, 80 percent of shoppers start their product research online. Many go to their favorite search engine, like Google, Bing, or Yahoo!, to get started. With search advertising, your company can promote your products and services on these platforms.
While your ads can appear in search results (like in the examples above), they can also display across affiliate websites. Google, for example, features a search partners network. This network consists of sites approved to display ads created for Google.
When you create ads for search, you target specific searches or keywords. For the best results, your business should target transactional keywords, which means the searcher wants to buy something, like landscaping services for their business or emergency heating and cooling services for their home.
If you’re looking to reach users in earlier stages of the buying funnel, it’s more cost-effective to use digital marketing. You can use content marketing and search engine optimization (SEO), for example, to appear at the top of relevant, informational searches related to landscaping or HVAC upkeep.
You can even use digital or pay-per-click (PPC) advertising to support your other online marketing strategies. PPC, for instance, is an excellent partner to SEO. While you’re working on increasing your organic rankings via SEO, PPC helps your business establish an immediate presence in search results.
As an example, look at the search results below.
Salesforce, a software-as-a-service (SaaS) provider, appears as an organic and paid search result. The company’s coordinated PPC and SEO effort allows it to capitalize on searches related to its products and services.
If you start a PPC and SEO campaign, this example can serve as a long-term goal for your business. At the beginning of your strategy, you won’t appear at the top of organic search results, but PPC can help your company establish an instant presence in high-value search results.
A significant percentage of users (90 percent, in fact) credit video for helping them make a purchase decision. That’s why display is becoming a core part of digital advertising. When you advertise via display channels, you can incorporate compelling images and videos into your ads.
With display advertising, your ads appear across affiliate websites, which can include YouTube. You can launch a display advertising campaign with search engines like Google, Bing, and Yahoo!. For many businesses, Google is the preferred choice because its display ads appear on YouTube.
Google’s ownership of YouTube is significant, as 80 percent of people admit to switching between search and video channels when researching a product or service. That means your company could reach users on both pivotal channels.
3. SOCIAL MEDIA
Companies can also take advantage of digital advertising on social media networks, which include:
With social media, your business can create text, image, and video ads. If you decide to use social media for promoting your company, try to build video or image ads, as these tend to perform better than text ads.
As a digital media advertising channel, social media also offers your business access to additional bidding options. For example, on Twitter, you can use cost-per-follow (CPF) if you’re looking to earn more followers. Or, you can use cost-per-send (CPS) on LinkedIn if you want to reach passive candidates.
Businesses that invest in social media advertising also partner with influencers on various social media networks. Influencers carry immense value because they have the trust and respect of your target audience, which means they can recommend products or services with success.
Compared to other digital advertising channels, influencers adopt a different pricing model. For example, an influencer may have a flat-rate fee based on their number of followers or engagement rates on posts. Or, they may charge your business on the performance of your sponsored posts.
As an example, influencers on Instagram generally follow one of two pricing models.
- $10 per post, per 1000 followers
- $250 to $750 per 1000 post engagements
Many companies prefer influencers that charge based on post engagement. That’s because post engagement tends to provide a more accurate view of that influencer’s audience. Plus, you want users to interact with your sponsored post because that moves them down the funnel.
Why use digital advertising?
Companies use digital advertising for a variety of reasons, including:
- Increasing brand awareness
- Improving product sales
- Generating qualified leads
- Driving repeat purchases
- And more
What motivates businesses to use online digital advertising, however, comes its range of advantages. When you use digital advertising, you provide your company with a measurable and cost-effective strategy that drives the kind of results you want.
A few of the most mentioned benefits of digital advertising include:
DIGITAL ADVERTISING REACHES YOUR TARGET AUDIENCE
Purchase a billboard, and you can hope that your target audience not only sees it but also acts on it. There are zero guarantees, though, especially when you’re targeting drivers inside and outside your target audience.
A digital ad campaign, however, is the exact opposite.
With digital advertising, you’re reaching (and directing your ad spend) towards the people with actual interest in your business. Using targeting options like location, interests, and behavior, you can ensure your ads focus on the people that matter most to your business.
Not to mention, with online digital advertising, you’re reaching people when they want to be reached.
Instead of trying to get their attention on the highway, you’re connecting with them when they’re searching for your business or researching products in your industry. Digital advertising pulls people to your company versus pushing them towards it.
DIGITAL ADVERTISING PROVIDES MEASURABLE RESULTS
Whether it’s offline or online, you want to track your advertising initiatives.
Otherwise, how can you prove that your strategy worked?
Luckily, it’s easy to track and monitor your online digital advertising efforts. Digital ad platforms, like Google Ads, often monitor your campaigns for you. Just log into your account and view your data. You can even export it into reporting tools like Google Data Studio for review.
Digital ad campaign data not only helps your team show the results of your strategy but also find opportunities for improvement. For example, if you have a low-performing ad, you could brainstorm new copy, images, and more to increase its performance.
DIGITAL ADVERTISING SUPPORTS EVERY AD BUDGET
Whether you’re operating a small business or massive enterprise, you can use digital advertising.
Compared to traditional advertising, online digital advertising allows your business to create a budget. You don’t have to fulfill specific budget requirements to launch a billboard or air a television commercial. Instead, you decide what you’ll spend (and what you’ll pay) for your ads.
Many online advertising platforms also prevent pay-to-win schemes.
A company, for example, can’t place a higher bid to earn the best ad placement. They also need to deliver a relevant ad and excellent user experience. This bidding model allows all businesses to achieve excellent ad placements without bidding an obscene amount.
DIGITAL ADVERTISING OFFERS OPTIONS WHEN IT COMES TO STRATEGY
No matter your business, you want options when it comes to advertising, whether offline or online.
With digital advertising, you have options. You can launch ads on Google, Facebook, or YouTube. Not to mention, you can choose between text, image, and video ads. Plus, you can customize your ads with advanced targeting options, including remarketing.
Your company can also use online digital advertising for a variety of goals, including:
- Building brand awareness
- Driving product sales
- Increasing contact requests
- And more
All these options provide your team with flexibility and versatility when it comes to advertising.
DIGITAL ADVERTISING DELIVERS INSTANT RESULTS
When your company adopts digital media advertising, you can expect results instantly.
As soon as you launch your paid campaigns, you can start receiving clicks, orders, phone calls, and more. You can also track and associate each of these actions with your campaigns. With that kind of tracking, your company can easily see the impact of digital advertising on your business and its bottom line.
In comparison, online marketing can take longer to see results.
If you use a strategy like content marketing, for example, it could take several months before you see traffic increases, new leads, or product purchases. That’s why many businesses will use digital marketing strategies in coordination with online advertising ones.
How does online digital advertising work?
Compared to traditional advertising, online digital advertising works in an unusual way.
With traditional advertising, your business generally pays a provider, like a billboard company, upfront. That’s not the case with digital advertising. When you use digital advertising, you only pay when a user completes a desired action on your ad.
This action can range from clicking on your ad to viewing your ad.
For example, you may launch an ad campaign with a cost-per-click (CPC) of $2.00. This means you’re willing to pay $2.00 for every click on your ad. You might pay less, however, due to the auction algorithms of different platforms, like Google and Facebook.
If you partner with an advertising agency, the payment process is somewhat different.
You pay an upfront management fee, for example, which covers the costs of developing and managing your strategy. Your company also sets aside a designated ad spend, which is what you pay ad platforms, like Google, to deliver or show your ads.
When you use digital advertising, you can also use advanced targeting methods to reach your target audience. These targeting features go beyond the capabilities of traditional marketing which forces your business to target people in and outside of your target market.
A few of the most common targeting options in digital advertising include:
- Keywords: With keyword targeting, you can reach people who search keywords and phrases related to your business. As an example, a flower shop may target phrases like, “florist for wedding.”
- Interests: With interest targeting, advertising platforms like Google Ads and Facebook allow your business to reach users past on their past behavior. For example, your ads can appear for shoppers with an interest in hiking and camping.
- Demographics: With demographic targeting, you can reach consumers based on their demographic information, like their age, location, and even parental status. A daycare center may target parents between the ages of 25-34, for instance.
- Remarketing: With remarketing, your business can target users that visited your site. Your ad campaign, for example, may show ads to people who not only looked at your service page but also match the demographics of your target market.
Like traditional advertising, however, digital advertising requires research and planning. Before you launch your campaign, for example, you need to determine your advertising goals, strategy, budget, and more.
In most cases, launching an online digital advertising campaign includes the following checklist:
- Create your goals
- Build your strategy
- Set your budget
- Choose your ad platforms
- Acquire your ad creatives, like copy and media
- Implement post-launch ad optimizations
This approach is significantly different from traditional advertising. With digital advertising, your team can continue to optimize and improve your campaign, even after it launches. In comparison, your company only has one chance to nail your traditional advertising campaign.
8 digital advertising metrics to know
If you’re looking to use digital advertising for your business, you’ll want to know these eight metrics:
1. Click-through rate (CTR)
Your CTR is the percentage of people that clicked on your ad, compared to the percentage of people that saw your ad. This metric helps you understand the effectiveness of your ad. A higher CTR (generally) indicates a more effective and relevant ad.
Reach describes how many people saw your ad.
Impressions is the number of times your ad got shown. This digital advertising metric includes multiple views from the same person. If someone saw your ad twice, for example, those two views would count as two impressions.
Clicks is the number of clicks on your ad.
5. Cost-per-click (CPC)
CPC is how much your business pays, on average, for someone to click on your ad. You can use a CPC calculator to estimate your CPC. In most cases, your ad platform, like Google Ads, will calculate this digital advertising metric for you.
6. Cost-per acquisition (CPA)
CPA is your average cost for acquiring a new customer. You can calculate your CPA with a calculator or manually by dividing your total ad campaign costs by the number of conversions for earning a new client.
Conversions are the number of goal completions generated from your ad. A conversion can range from receiving a quote request to an email newsletter sign-up. When you create an ad, you will set your conversion.
8. Cost-per-thousand impressions (CPM)
CPM is how much your company pays for 1000 views or impressions of your ad. While your ad platform will likely calculate this metric for you, you can also use a CPM calculator to estimate your costs and plan your digital advertising budget.
4 definitive bidding models in digital advertising
Before exploring the different types of digital advertising ads, it’s helpful to understand the different bidding models available with online digital advertising. That way, you can choose the best option for your business and its campaigns.
The four most common bidding models in digital advertising include:
1. Cost-per-click (CPC)
With CPC, your business pays every time someone clicks on your ad. For marketers, CPC is a go-to choice because you’re paying someone to interact, rather than view your ad. A click also brings users to your site (or another dedicated landing page), which can motivate them to convert.
A variety of advertising platforms use CPC, including:
- Google Ads
- Bing Ads
- And more
These platforms also offer additional bidding models, which you can learn more about below.
2. Cost-per-thousand-impressions (CPM)
With CPM, your company pays when your ad earns 1000 impressions or views. While CPM is excellent for building brand awareness for well-known brands, like Coca-Cola or Pepsi, it’s not cost-effective for small-to-midsize businesses (SMBs). A view doesn’t translate to the kind of actions you want, like purchases.
Like CPC, CPM is available on several advertising platforms, including:
- Google Ads
- Bing Ads
- And more
Whether you’re advertising on social media or search engines, you can use CPM.
3. Cost-per-lead (CPL)
With CPL, your business pays every time your ad generates a new lead. If you’re a business-to-business (B2B) company, this bidding option can work well. It’s essential, however, to develop an ad that targets high-quality users as you don’t want to pay for low-quality leads.
A few examples of advertising platforms that offer CPL include Google Ads and Facebook.
4. Cost-per-action (CPA)
With CPA, your company pays when a user completes a desired action. This action includes a variety of conversions, from signing up for an email newsletter to purchasing a specific product. Companies often use this bidding option on social media but can take advantage of it on other channels, like search.
A couple common advertising platforms for CPA include Facebook and Instagram.
How much does online digital advertising cost?
Like traditional advertising, your company can spend as much as you like on digital advertising.
On average, however, SMBs dedicate $9000 to $10,000 per month to online digital advertising. That translates to an annual investment of $100,000 to $120,000 per year. While your business may spend more or less, this amount can serve as a point of reference for your team.
If you’re pitching company decision-makers on digital advertising, create a potential budget. This hypothetical budget should include a breakdown of your costs, which can range from your monthly ad spend to your advertising tech.
How to create a successful digital advertising campaign
For your digital advertising campaign to succeed, you want to follow these industry-best practices:
MAKE YOUR OFFER COMPELLING
While your business knows what makes your product or service amazing, your target audience doesn’t. Use your ads to showcase the unique benefits of your goods. It’s also essential for your team to convey these advantages in a way that resonates with your market.
As an example, if you’re a landscaping company, you need to ask what your audience wants from a landscaper. Do they want non-intrusive service, one-of-a-kind gardens, or something else? Research your audience online to determine what they’re looking for in a landscaper.
You can also promote savings, like a free quote, to make your offer even more compelling.
WRITE SOME KILLER AD COPY
If you want users to interact with your ads, whether across search, social media, or video, write some snappy ad copy. As many ad providers, like Google, maintain character limits on ad copy, you need short, yet compelling text to hook your audience.
Even if you’re investing in display ads, it’s essential for your team to develop ad creatives that grab your audience’s attention. You can use a compelling offer or emotional appeal to get users to watch your video or click on your ad.
Appeal to your audience’s interests, needs, and pain points to create successful ad copy and creatives.
GET CUSTOM CREATIVES
A lot of businesses decide to build creatives for digital advertising in-house. If you’re a company with an in-house team of designers and videographers, this move makes sense. Otherwise, it’s a decision that can cost your business money.
While you may pay more upfront for graphics and videos from professionals, custom creatives can help the long-term performance of your ad. They show your company’s professionalism and quality, which can serve as trust signals for users in your target audience.
Invest in top-notch creatives upfront to get the most from your digital advertising strategy.
TARGET THE DREAM CLIENT
Companies often start with a broad target audience with online digital advertising. This approach can result in a ton of ad clicks and even conversions, but rarely achieve your overall goal of working with your ideal client or shopper.
That’s why your business should focus your ads on your dream customer. With digital advertising, your company can access advanced target options, which can help your team reach the consumers you want. While you may see fewer clicks and conversions, you will notice an increase in customer quality.
Plus, this approach saves your business money as you’re only paying for the users that matter.
If you're still confused on some of the marketing terminology, check out our blog post!
The future of digital advertising: What to prepare for in 2021
While digital advertising offers a proven way to build brand awareness, generate website traffic, and drive sales, there are several challenges that companies need to keep in mind. Understanding these rising trends can help your business future-proof your strategy for 2021 and beyond.
A few factors to watch include the following:
Thanks to poor targeting and spammy digital ads, many people use ad blockers now. Unfortunately, this consumer behavior makes it difficult for your company to reach your audience with digital advertising. You can, however, use other strategies to connect with your target market.
Digital marketing tactics like search engine optimization (SEO), for instance, can help your business reach users through organic search results. You can also use content marketing, in coordination with SEO, to develop content that your target market wants to read and share.
Even though some of your target audience uses ad blockers, you can work around this challenge.
The total worldwide spend on digital media advertising exceeds $200 billion. That kind of spend can result in crowded ad platforms, especially social media. As an online advertiser in 2021, you can expect more competition.
That doesn’t mean you should ignore online advertising, though.
Creating a competitive and smart digital advertising strategy can help your business make the most of this medium. If you make better, more user-focused ads than your competitors, you can earn more clicks, conversions, and sales.
User privacy is a rising concern, as demonstrated by the General Data Protection Regulation (GDPR) in the European Union (EU). Whether your company operates in or outside the EU, you need to think about this digital advertising challenge.
While seven in 10 consumers want personalized ads, you need to exert moderation.
Use what you know about users to create hyper-targeted, but not creepy ads. For example, you can limit ads to a specific area, demographic, or interest versus creating ad copy that cites your exact audience’s location and demographics.
This approach makes your digital ad feel personalized but not overly customized to the user.
Need some help with online digital advertising?
Even though digital advertising offers immense opportunity, it’s not easy to launch and maintain a successful campaign. It’s time-consuming too. That’s why businesses partner with agencies that specialize in online digital advertising, like WebFX.
If you’re looking for a custom strategy from a trusted agency with more than 550 testimonials from satisfied clients, contact WebFX. We feature some of the industry’s most advanced marketing technology and an unparalleled client recommendation score (it’s 488 percent higher than the industry average).