Even before the dot com burst, online advertising venues came to realize that click-through rates of standard banner ads were abysmal. The first effort to solve this was to make ads flashier and more intrusive. This only served to annoy consumers. Finally, the solution was found. Using the inherent benefits of a computer-based environment, advertisers began to display banner ads contextually. In other words, if you typed "airline" into Yahoo, a banner ad for a travel agent would pop up. Such contextualized ads saw a huge increase in click-through rates. The most successful online ads were ones that not only purchased "impressions," that is, a certain number of times that the ad would be displayed, but also purchased keywords. Such campaigns were much more successful than generic banner ad placements. Another way of making an online ad successful was to place the ad in a highly targeted venue, thereby ensuring that it was contextual. For example, placing an ad for bio-medical research equipment on a bio-medical research journal website would be highly contextual, and therefore more effective. Such highly targeted online media placement functioned successfully for the same reasons as keyword buying when placing ads in search engines. Unfortunately, while this technique was more effective, it was also much more expensive. Companies who did not want to spend a minimum of $5,000 for a banner ad campaign had only the option of buying general ads based a number of impressions--which was ultimately a complete waste of money.


Today there many more opportunities to place contextualized online ads with a very small budget. One of the best ways is through "bid for placement" advertising such as Google AdWords.

Google's AdWords allow anyone to run contextual advertisements. Google's AdWords are the links that get displayed in the right column of a Google search results page. Additionally, Google runs "Sponsored Links" at the very top of the page before the search results. These dominant ads are displayed in a light blue box along the top of the page.   next >