Advertising On WebpagesBy Justin Poirier
Several types of clickable ads may appear on the pages of a website, which is known as a publisher in the context of the ads it displays. The most common of these types is the banner, which occupies a fixed area on-screen. The screen spaces reserved for all types of ads on all of a publisher's pages are collectively known as the publisher's inventory. A user's click on an ad is called a click-through. The page they are taken to after clicking is called the landing page.
Ads are placed on a web page dynamically by an ad server, with the instance of the ad created for a single viewing of the page known as an impression. An ad server also has other features, such as reporting stats on the ads served and their success rates. It may be local, ie. custom-made by a sufficiently-large publisher site to handle only its own webpages; or remote, ie. a third party system that a publisher signs up for. We will henceforth refer only to remote ad servers when we say "ad servers".
Some or all of the ads may be provided by the ad server, as part of a service whereby ads for companies who have signed up wishing to advertise are kept on file and placed on publisher sites, so that the two parties need not find each other and handle placement of ads themselves. This service is called an ad network and the portion of a publisher's inventory filled by this service is called its remnant ads.
Google's ad server is called Ad Manager. The feature that actually provides ads, as described above, makes use of another Google product called AdSense. This is the only function of AdSense. It borrows the actual pool of available ads from a third Google product called AdWords, which is primarily meant for placing ads on Google search result pages.
Ads provided for display on a publisher site by an ad server's ad network are chosen such that they are relevant to the content of the page. This is called contextual targeting. If it is solely the network that ensures this, with the company wishing to advertise unaware of where their ads will be placed, then the network is a blind network. The company that placed the ad pays the operator of the ad network for the ad, and the ad network forwards some of this money to the publisher.
The payment may be on the basis of pay per click (PPC), in which case the company that placed the ad only pays when a user clicks the ad. In this case the amount paid is called the cost per click (CPC). The payment may also have several other bases, including paying for every impression of the ad, in which case the amount paid is the cost per impression (CPI); and paying for every thousand impressions, in which case the amount is the cost per thousand also known as the cost per mille (CPM).
Regardless of the frequency of payments, the ad network may attempt to maximize the amount earned by favouring certain ads, based on settings chosen by the company placing the ad. For instance, if companies that advertise using AdWords choose to make use of AdSense, which as mentioned uses the same ads as AdWords, then they specify not only the keywords that best match their ads's offering, but the maximum amount they are willing to pay, per click or per impression. Adsense takes these settings into account when choosing ads to place on publisher sites. This bid must be at least 25 cents if cost per mille is used. There is no minimum cost per click bid.
Click fraud refers to the act of clicking on an ad with the intention of having an economic effect on the parties involved. The two most basic forms of click fraud are publishers clicking their own ads so that the ad network must pay them, and companies clicking on the ads of competing companies solely to cost them money. It has been noted that there seems to be little motivation for ad networks to report click fraud. While they must pay publishers when it happens, they also get paid a significantly larger amount. This may contribute to the difficulty in detecting click fraud.
In addition to websites with regular content, ads are often placed along the sides, top, or bottom of search engine results on a pay per click basis. An example of this arrangement is AdWords. In such arrangements, it becomes a priority that a company optimize the rank of its ad among all those listed for a given set of search results. With AdWords, this rank is based on the per-click bid made, as well as a quality score assigned to the ad, which is based on the number of click-throughs the ad has had, the relevance of the ad, and other factors. An additional form of click fraud is introduced for such ads, by which companies repeatedly carry out searches known to turn up a competitor's ad, without ever clicking on it. This will lower the rate of click-throughs for the ad observed by AdWords.