Digital Advertising Overview

In 2018, digital advertising became the dominant advertising medium, accounting for more than half of global advertising spending. The Digital Advertising market is growing because people’s behavior has shifted from the offline to the online world. Within 10 years, the number of internet users has grown to twice its size from 2.3 billion in 2012 to 5.1 billion in 2022.

A variety of large tech companies lead the Digital Advertising market. Key players in the market include Alphabet, Meta Platforms, Microsoft, Amazon, Tencent, Baidu, ByteDance, and others. Growth in the Video, Banner, Social Media, and Search Advertising segments is comparably higher than in the Classifieds segment due to the rapid increase in social media consumption and online shopping.

What is digital advertising?

Digital advertising is the practice of promoting products, services, or brands using digital technologies and channels, such as the internet, social media, search engines, mobile devices, and other digital media platforms. It involves creating and delivering digital ads to reach and engage with specific target audiences.

Digital advertising includes a wide range of formats, such as banner ads, native ads, video ads, social media ads, search engine ads, email marketing, and content marketing. These formats can be delivered across various digital platforms, including websites, mobile apps, social media networks, search engines, and more.

Digital advertising offers several advantages over traditional advertising, including the ability to reach highly targeted audiences, track and measure performance in real-time, and adjust ad campaigns to optimize for better results. It also allows for greater personalization and interactivity, making it a powerful tool for engaging with consumers and building brand awareness and loyalty.

Digital advertising purpose and goals

The purpose of digital advertising is to promote products, services, or brands to target audiences using digital technologies and channels. The primary goals of digital advertising can vary depending on the specific business and campaign objectives, but here are some common ones:

1. Increase brand awareness: Digital advertising can be used to build brand recognition and increase awareness of a product or service among target audiences.
2. Drive website traffic: Digital advertising can be used to drive traffic to a website, landing page, or other digital properties, such as a social media page or app.
3. Generate leads and sales: Digital advertising can be used to generate leads, such as email sign-ups, or to drive sales of a product or service.
4. Increase engagement: Digital advertising can be used to engage with target audiences, such as by encouraging social media interactions, app usage, or other forms of engagement.
5. Build brand loyalty: Digital advertising can be used to build loyalty and retention among existing customers, such as by promoting loyalty programs or other retention strategies.
6. Increase ROI: Digital advertising can be used to increase return on investment by improving targeting, reducing costs, and optimizing ad campaigns for better performance.

Types of digital advertising

Digital advertising is a constantly evolving field, and new types of digital advertising are emerging all the time. There are various types of digital advertising formats and channels that businesses can use to reach and engage with their target audiences:

1. Search engine advertising: This includes text-based ads that appear on search engine results pages, such as Google Ads or Bing Ads. These ads are targeted based on search terms and can be displayed in various formats, such as text ads, shopping ads, or display ads.
2. Social media advertising: This includes ads that appear on social media platforms, such as Facebook, Instagram, Twitter, or LinkedIn. These ads can be targeted based on demographics, interests, behaviors, or other factors, and can be displayed in various formats, such as image ads, video ads, carousel ads, or sponsored posts.
3. Display advertising: This includes ads that appear on websites, apps, or other digital properties, such as banner ads, pop-up ads, or native ads. These ads can be targeted based on audience demographics, interests, or behavior, and can be displayed in various formats, such as static or animated images, videos, or interactive ads.
4. Video advertising: This includes ads that appear on video platforms, such as YouTube, or in video content on websites or social media. These ads can be targeted based on audience demographics, interests, or behavior, and can be displayed in various formats, such as pre-roll, mid-roll, or post-roll ads, or sponsored video content.
5. Email marketing: This includes ads that are delivered to target audiences via email, such as newsletters, promotional emails, or transactional emails. These ads can be targeted based on audience demographics or behavior, and can be displayed in various formats, such as text, images, or interactive content and include sponsored content, product placement, or advertorials.
6. Native advertising: This includes ads that blend into the content and design of the website or app where they appear, such as sponsored content or advertorials. These ads can be targeted based on audience demographics, interests, or behavior, and can be displayed in various formats, such as articles, videos, or interactive content.
7. Affiliate marketing: This includes ads that are placed on websites or other digital properties by affiliates or partners, who receive a commission for any sales or leads generated by these ads. These ads can be targeted based on audience demographics, interests, or behavior, and can be displayed in various formats, such as banners, text links, or product reviews.
8. Programmatic advertising: A type of digital advertising that uses automated technology to buy and sell ad inventory in real-time, using algorithms and machine learning to make buying decisions. Programmatic advertising allows advertisers to target specific audiences based on data such as demographic information, browsing behavior, and location.
9. Programmatic audio advertising: Programmatic audio advertising allows advertisers to place targeted ads on streaming audio platforms such as Spotify or Pandora. This type of advertising is becoming increasingly popular as more users turn to streaming services for their music and podcasts.
10. Connected TV advertising: Connected TV advertising allows advertisers to place ads on internet-connected TV devices, such as smart TVs or streaming devices like Roku or Apple TV. This type of advertising is becoming increasingly popular as more users cut the cord and turn to streaming services for their TV content.

Key players in digital advertising

There are several key players in digital advertising, including:

1. Google
Google is the dominant player in digital advertising, with its search and display advertising products, such as Google Ads, Google Display Network, and Google Ad Manager.

Google Ads allows businesses and individuals to create and display ads on Google’s search engine and display network, which includes millions of websites across the internet.

Google Ads uses a pay-per-click (PPC) model, meaning that advertisers only pay when a user clicks on their ad. Advertisers can create text, display, video, or shopping ads and target specific keywords, demographics, locations, devices, and more to reach their target audience.

Google Ads provides various features to help advertisers optimize their ad campaigns, including keyword research tools, ad performance tracking, ad testing, and audience targeting options. Advertisers can also set a budget for their campaigns and monitor their spending in real-time.

Google Display & Video 360 (DV360) is an integrated platform used for programmatic advertising. It is a demand-side platform (DSP) that allows advertisers and agencies to manage and execute their programmatic ad campaigns across various ad formats and channels, including display, video, audio, and native.

DV360 allows advertisers to access Google’s vast network of publishers and inventory sources, as well as other programmatic ad exchanges and supply-side platforms (SSPs). The platform provides advanced targeting options, such as demographic, geographic, and behavioral targeting, as well as access to Google’s machine learning algorithms for optimizing ad campaigns.

DV360 also offers features for audience management, creative production, and real-time reporting and analytics. It is a part of the Google Marketing Platform, which also includes Google Analytics, Tag Manager, and Optimize, among other tools.

2. Facebook
Facebook is another major player in digital advertising, with its social media platform and advertising products, including Facebook Ads, Instagram Ads, and Audience Network.

Facebook Ads Manager allows businesses and individuals to create and manage advertising campaigns on the Facebook and Instagram social media platforms.

With Facebook Ads Manager, advertisers can create various types of ads, including image, video, carousel, and collection ads, to reach their target audience. Advertisers can also specify their target audience based on demographics, interests, behaviors, and more, and set a budget for their campaigns.

Facebook Ads Manager provides various features to help advertisers optimize their ad campaigns, including ad performance tracking, split testing, and audience targeting options. Advertisers can also monitor their spending in real-time and adjust their campaigns based on their performance.

Facebook Ads Manager is a self-serve platform that allows advertisers to create and manage programmatic ad campaigns on Facebook and Instagram.

3. Amazon
Amazon has emerged as a major player in digital advertising, with its e-commerce platform and advertising products, including Amazon Advertising and Amazon DSP.

Amazon Advertising is an advertising platform that allows businesses and individuals to create and manage advertising campaigns on Amazon’s e-commerce platform.

With Amazon Advertising, advertisers can create various types of ads, including sponsored products, sponsored brands, and sponsored display ads, to promote their products and reach their target audience on Amazon. Advertisers can specify their target audience based on keywords, products, interests, and more, and set a budget for their campaigns.

Amazon Advertising provides various features to help advertisers optimize their ad campaigns, including ad performance tracking, bidding strategies, and audience targeting options. Advertisers can also monitor their spending in real-time and adjust their campaigns based on their performance.

Amazon Advertising allows advertisers to create and manage programmatic ad campaigns on Amazon’s e-commerce platform.

4. Microsoft
Microsoft has a growing presence in digital advertising with its search engine Bing Ads and LinkedIn Ads.

Microsoft Advertising is an online advertising platform that allows businesses and individuals to create and manage advertising campaigns across Microsoft’s search engine, Bing, and other Microsoft properties.

With Microsoft Advertising, advertisers can create various types of ads, including search ads, display ads, and video ads, to reach their target audience on Bing and other Microsoft properties. Advertisers can specify their target audience based on demographics, location, device type, and more, and set a budget for their campaigns.

Microsoft Advertising provides various features to help advertisers optimize their ad campaigns, including keyword research tools, ad performance tracking, ad testing, and audience targeting options. Advertisers can also monitor their spending in real-time and adjust their campaigns based on their performance.

5. Twitter
Twitter offers advertising products for promoting tweets, accounts, and trends, as well as mobile app promotion.

Twitter Ads is an advertising platform developed by Twitter that allows businesses and individuals to create and manage advertising campaigns on the Twitter social media platform.

With Twitter Ads, advertisers can create various types of ads, including promoted tweets, promoted accounts, and promoted trends, to reach their target audience on Twitter. Advertisers can specify their target audience based on demographics, interests, behaviors, and more, and set a budget for their campaigns.

Twitter Ads provides various features to help advertisers optimize their ad campaigns, including ad performance tracking, ad testing, and audience targeting options. Advertisers can also monitor their spending in real-time and adjust their campaigns based on their performance.

6. Snapchat
Snapchat is a popular social media platform among younger demographics and offers advertising products such as Snap Ads and Sponsored Lenses.

Snapchat Advertising is an advertising platform that allows businesses and individuals to create and manage advertising campaigns on the Snapchat social media platform.

With Snapchat Advertising, advertisers can create various types of ads, including snap ads, collection ads, story ads, and filters, to reach their target audience on Snapchat. Advertisers can specify their target audience based on demographics, interests, behaviors, and more, and set a budget for their campaigns.

Snapchat Advertising provides various features to help advertisers optimize their ad campaigns, including ad performance tracking, ad testing, and audience targeting options. Advertisers can also monitor their spending in real-time and adjust their campaigns based on their performance.

7. TikTok
TikTok has rapidly grown in popularity among younger audiences and offers advertising products such as In-Feed Ads, Brand Takeovers, and Branded Hashtag Challenges.

TikTok Ads is an advertising platform that allows businesses and individuals to create and manage advertising campaigns on the TikTok social media platform.

With TikTok Ads, advertisers can create various types of ads, including in-feed ads, brand takeover ads, hashtag challenge ads, and branded effects, to reach their target audience on TikTok. Advertisers can specify their target audience based on demographics, interests, behaviors, and more, and set a budget for their campaigns.

TikTok Ads provides various features to help advertisers optimize their ad campaigns, including ad performance tracking, ad testing, and audience targeting options. Advertisers can also monitor their spending in real-time and adjust their campaigns based on their performance.

8. The Trade Desk
The Trade Desk is a demand-side platform (DSP) that provides a self-service platform for buying and managing digital advertising campaigns across multiple channels, including programmatic ads, display, video, audio, and mobile.

The Trade Desk’s platform uses real-time bidding technology and machine learning algorithms to help advertisers target their desired audience and optimize their ad campaigns in real-time. The platform offers various features to help advertisers manage their campaigns effectively, including advanced targeting options, ad inventory management, and performance tracking and reporting.

The Trade Desk also provides access to a wide range of data providers, publishers, and other advertising technology partners to help advertisers reach their target audience on various platforms and channels. The company’s mission is to empower buyers of advertising with powerful tools to drive performance, transparency, and control.

9. AppNexus
AppNexus is a demand-side platform (DSP) and supply-side platform (SSP) that provides a technology platform for buying and selling digital advertising across various channels, including programmatic ads, display, video, and mobile.

AppNexus’s platform uses real-time bidding technology and machine learning algorithms to help advertisers target their desired audience and optimize their ad campaigns in real-time. The platform offers various features to help advertisers manage their campaigns effectively, including advanced targeting options, ad inventory management, and performance tracking and reporting.

In addition, AppNexus also offers a suite of publisher tools, including a supply-side platform for publishers to sell their inventory to advertisers, as well as header bidding technology, yield management tools, and ad quality management tools.

10. AdRoll
AdRoll is a growth marketing platform that provides a suite of tools and services for businesses to run digital advertising campaigns across multiple channels, including programmatic ad campaigns, display, social media, email, and mobile.

AdRoll’s platform uses real-time bidding technology and machine learning algorithms to help advertisers target their desired audience and optimize their ad campaigns in real-time. The platform offers various features to help advertisers manage their campaigns effectively, including advanced targeting options, ad inventory management, and performance tracking and reporting.

In addition, AdRoll also offers a suite of growth marketing tools, including retargeting, email marketing, and on-site engagement, to help businesses drive engagement and conversions from their audience.

11. Criteo
Criteo is a digital advertising platform that specializes in performance marketing. The company provides a self-service platform for businesses to run targeted advertising campaigns across multiple channels, including programmatic ad campaigns, display, social media, email, and mobile.

Criteo’s platform uses artificial intelligence and machine learning algorithms to help advertisers target their desired audience and optimize their ad campaigns in real-time. The platform offers various features to help advertisers manage their campaigns effectively, including advanced targeting options, ad inventory management, and performance tracking and reporting.

Criteo also offers a suite of solutions to help businesses increase engagement and conversions from their audience, including retargeting, dynamic creative optimization, and personalized product recommendations.

12. Agencies
Advertising agencies, such as WPP, Publicis, and Omnicom, provide a range of services to help brands plan, execute, and optimize their digital advertising campaigns.

What is programmatic advertising?

Programmatic advertising is a type of digital advertising that uses automated technology to buy and sell ad inventory in real-time, using algorithms and machine learning to make buying decisions. Programmatic advertising relies on real-time bidding (RTB) technology to determine the best price for ad inventory based on factors such as the target audience, ad format, and ad placement.

Programmatic advertising allows advertisers to target specific audiences based on data such as demographic information, browsing behavior, and location. Advertisers can also use programmatic advertising to retarget users who have previously interacted with their brand, creating a more personalized and effective advertising experience.

Programmatic advertising can be used across a variety of digital channels, including display, mobile, video, and social media. The use of programmatic advertising has grown rapidly in recent years, with many advertisers seeing the benefits of its real-time optimization and targeting capabilities.

Digital ad spending segments

Here is a breakdown of digital ad spending by type segment in 2021, according to eMarketer:

• Search advertising: $157.89 billion (56.3% of total digital ad spend)
• Display advertising: $98.43 billion (35.1% of total digital ad spend)
• Video advertising: $28.08 billion (10% of total digital ad spend)
• Social media advertising: $59.70 billion (21.3% of total digital ad spend)
• Other digital advertising: $13.75 billion (4.9% of total digital ad spend)

Search advertising, which includes pay-per-click (PPC) ads on search engines such as Google or Bing, remains the dominant type of digital advertising, accounting for over half of total digital ad spending. Display advertising, which includes banner ads, rich media ads, and native advertising, is the second-largest type of digital advertising.

Video advertising, which includes in-stream video ads, outstream video ads, and social media video ads, is the fastest-growing type of digital advertising, driven by the growth of streaming video and social media platforms.

Social media advertising, which includes ads on platforms such as Facebook, Instagram, and Twitter, is also a rapidly growing segment of digital advertising, as more users spend time on social media platforms and advertisers seek to reach them there.

Other types of digital advertising, such as email marketing, classifieds, and directories, account for a smaller share of total digital ad spending, but still represent a significant opportunity for advertisers to reach targeted audiences.

Some digital advertising best practices

Here are some best practices, businesses can create effective digital advertising campaigns that resonate with their target audience, drive engagement, and ultimately achieve their marketing goals:

• Clearly define your target audience: Knowing your audience is essential for creating effective digital ads. Conduct market research to identify your target audience’s demographics, interests, and behaviors to create targeted ads that resonate with them.
• Use engaging visuals: Use high-quality visuals, such as images or videos, to capture your audience’s attention and convey your message effectively.
• Create compelling ad copy: Write clear, concise, and attention-grabbing ad copy that highlights the benefits of your product or service and encourages users to take action.
• Test and optimize: Continuously test and optimize your ads to improve their performance. Experiment with different ad formats, targeting options, and messaging to identify what works best for your audience.
• Use retargeting: Retargeting allows you to reach users who have already shown interest in your product or service. Use retargeting ads to keep your brand top-of-mind and encourage users to take action.
• Ensure mobile optimization: With the majority of internet users accessing content from mobile devices, it is essential to ensure your ads are optimized for mobile. Use mobile-friendly ad formats and make sure your landing pages are mobile-responsive.
• Monitor and analyze metrics: Monitor your digital advertising metrics regularly and use the insights to make informed decisions about your ad campaigns. Identify what is working well and what needs improvement, and make necessary adjustments to optimize your campaigns.

Digital advertising analytic tools

There are various digital advertising analytic tools that businesses can use to track and measure the performance of their digital advertising campaigns. Here are some of the most common digital advertising analytic tools:

• Google Analytics: This is a free web analytics tool offered by Google that allows businesses to track and measure website traffic, user behavior, and other key metrics. It can also be used to track the performance of Google Ads campaigns and other digital advertising channels.
• Facebook Ads Manager: This is a platform offered by Facebook that allows businesses to create, manage, and analyze their Facebook and Instagram ad campaigns. It provides data on audience demographics, ad performance, and other key metrics.
• LinkedIn Ads Manager: This is a platform offered by LinkedIn that allows businesses to create, manage, and analyze their LinkedIn ad campaigns. It provides data on audience demographics, ad performance, and other key metrics.
• Adobe Analytics: This is a web analytics tool offered by Adobe that allows businesses to track and measure website traffic, user behavior, and other key metrics. It can also be used to track the performance of digital advertising campaigns across various channels.
• SEMrush: This is an all-in-one digital marketing tool that offers features such as keyword research, competitor analysis, and ad campaign tracking. It provides data on ad performance across various search engines, social media platforms, and other digital advertising channels.
• HubSpot: This is a marketing automation tool that offers features such as lead tracking, email marketing, and social media management. It provides data on ad performance across various digital advertising channels, and can be used to track the entire customer journey from lead generation to conversion.

Digital advertising metrics

Digital advertising metrics are the key performance indicators (KPIs) that businesses use to measure the success of their digital advertising campaigns. Here are some of the most common digital advertising metrics:

1. Impressions: This refers to the number of times an ad is displayed on a website, app, or other digital property.
2. Clicks: This refers to the number of times an ad is clicked on by a user, which takes them to the advertiser’s website or landing page.
3. Click-through rate (CTR): This is the percentage of clicks an ad receives out of the total number of impressions it generates. It is calculated by dividing the number of clicks by the number of impressions and multiplying by 100.
4. Cost per click (CPC): This is the amount an advertiser pays for each click on their ad. It is calculated by dividing the total cost of the ad campaign by the number of clicks generated.
5. Conversion rate: This is the percentage of users who complete a desired action, such as making a purchase or filling out a form, after clicking on an ad. It is calculated by dividing the number of conversions by the number of clicks and multiplying by 100.
6. Cost per acquisition (CPA): This is the amount an advertiser pays for each desired action, such as a purchase or a lead. It is calculated by dividing the total cost of the ad campaign by the number of conversions generated.
7. Return on investment (ROI): This is the ratio of the profit generated by an ad campaign to the cost of the campaign. It is calculated by subtracting the cost of the campaign from the revenue generated and dividing by the cost of the campaign, and then multiplying by 100 to get a percentage.

Digital advertising benchmarks

Digital advertising benchmarks can vary depending on the industry, platform, and campaign goals. Here are some commonly cited benchmarks:

• Average click-through rate (CTR) for display ads: 0.05% – 0.1% (source: Google)
• Average cost per click (CPC) for Google Ads: $1 – $2 (source: WordStream)
• Average conversion rate for ecommerce websites: 2.63% (source: Smart Insights)
• Average cost per acquisition (CPA) for Google Ads: $48.96 (source: WordStream)
• Average email open rate: 22.86% (source: Campaign Monitor)
• Average email click-through rate (CTR): 3.71% (source: Campaign Monitor)
• Average social media engagement rate: 1.60% (source: Rival IQ)

It is important to note that these benchmarks should not be taken as a one-size-fits-all approach to digital advertising. Each business and campaign is unique and may have different goals and benchmarks. Additionally, these benchmarks may vary depending on the industry, target audience, and ad format used. Therefore, it is important for businesses to regularly track and analyze their own digital advertising metrics and make adjustments accordingly.

Digital advertising latest trends and stats

Here are some of the latest trends and statistics in digital advertising:

• Programmatic advertising spending is expected to reach $147 billion globally by 2021 (source: eMarketer)
• Mobile advertising spending is expected to account for 75% of all digital advertising spending by 2025 (source: eMarketer)
• In 2021, social media advertising spending is expected to reach $105 billion globally, with Facebook accounting for over 25% of that spending (source: eMarketer)
• The adoption of artificial intelligence in digital advertising is increasing, with 64% of advertisers planning to increase their use of AI in the next 12 months (source: Adweek)
• Video advertising is becoming increasingly popular, with 81% of businesses using video as a marketing tool in 2021 (source: HubSpot)
• Influencer marketing is a growing trend, with 63% of marketers planning to increase their influencer marketing budgets in 2021 (source: Linqia)
• The use of augmented reality (AR) and virtual reality (VR) in advertising is increasing, with AR ad revenue projected to reach $1.5 billion in 2022 and VR ad revenue projected to reach $2.6 billion in 2023 (source: Business Insider)

The future of digital advertising

The future of digital advertising is exciting and constantly evolving. Here are some key trends and predictions for the future of digital advertising:

• Increased personalization: As digital advertising technology advances, we can expect to see even more personalized ads tailored to individual users’ interests and behaviors. This will require advanced data analysis and targeting capabilities.
• Augmented and virtual reality: As AR and VR technology continues to improve, we can expect to see more advertisers incorporating these technologies into their ads to provide more immersive and engaging experiences for users.
• Voice search optimization: With the increasing popularity of voice assistants like Siri, Alexa, and Google Assistant, optimizing ads for voice search will become increasingly important.
• Artificial intelligence: AI will play an increasingly important role in digital advertising, from ad creation to targeting and optimization.
• Increased use of video: With the rise of video-first platforms like TikTok and Instagram Reels, we can expect to see more businesses incorporating video into their digital advertising strategies.
• Privacy concerns: With increased awareness of data privacy issues, advertisers will need to be more transparent with users about their data collection and usage practices to maintain trust and avoid potential regulatory issues.
• Connected TV advertising: As more users cut the cord and switch to streaming services, we can expect to see more advertisers shifting their ad spend to connected TV advertising.

More Information

Statista: Digital Advertising – Worldwide 2017-2027