- You, the advertiser, choose keywords and phrases that will trigger your ad.
- You buy these ads in an online auction by bidding for the keywords on a cost-per-click basis. That is, you agree to pay only when your ad is clicked on, not based on how many times it is seen.
- When a search engine user types a query that includes your keywords, your ad pops up at the top or side of the results page, in a section labeled ‘ads’ or ‘sponsored listings’. If the user clicks your ad, you pay.
- You limit your spending by specifying a daily budget limit. Your bid price determines whether your ad appears, and in which position – higher bids run near the top.
While display ads run in fixed positions such as across the top of a website, they are often aimed at specific visitors using sophisticated targeting technologies.
- Contextual advertising targets visitors based on keywords. The advertising system scans the website for keywords and matches ads to relevant pages.
- Behavioral advertising targets visitors based on information that ad systems learn about internet browsing behavior such as pages visited, links clicked on, time spent on sites, and searches made. Google pioneered this technology which has controversial privacy issues associated with it.
Nineteenth century marketing pioneer John Wanamaker made a fortune in retailing but he’ll be remembered for the quote to the above.