Evolution of Digital Advertising: Happy 25th Digital Advertising And Many More To Come

“ We have the technology, finally, that for the first time in human history allows people to really maintain rich connections with much large numbers of people.” -Pierre Omidyar

The medium which has genuinely changed the landscape of advertising is the internet. It is the single biggest event in the past two decades that has truly revolutionized the ad viewing experience. Considering the high volumes of digital advertising, it is surprising to see how young it is and far it has come. Let’s understand the exponential growth of the internet advertising market.

At the beginning of 90’s the investment in digital advertising was zero. But over the years it has increased multiple-folds and total ad spending worldwide in 2019 will rise by 17.6% to $333.25 bn. 

Even though the journey of digital advertising has been short but quite intense. In the last 25 years, a key factor in the rapid rise of digital advertising is technological innovations. From banner ads to artificial intelligence, digital advertising has made an eventful journey to deliver the right content to the right potential customer at the right time. But how much has it evolved over the years? Let’s take a trip down memory lane and explore the evolution of digital advertising.

The Advent of Digital Advertising

When computers were introduced in the 1970s, it was a simple device to exchange e-mails and digital information. Little was known, that it will have such a huge impact on digital advertising. Many marketing pioneers perceived it as a big business opportunity as the number of connected people grew. Within a few years, we witnessed different types of ads that connected with the audience.

In 1995, the total number of internet users was 16 million worldwide and subsequently reached 558 million in 2002.

• The Banner Era (1994-1996):

The first online advertisement appeared in the year 1994 marking the start of digital advertising. The oldest and first online banner ad by At&T appeared on Hotwired magazine with a run time of three months for a price of $30,000. The ad produced click-through rates of 44%. Following the success of AT&T, online display ads became popular and advertisers were looking for ways to better target ads mostly bases on consumer demographics.

From the early start, advertisers were aware that internet advertising is different from traditional advertising. The businesses began to comprehend that messages through email are cost-effective than traditional advertising. The internet became a playing field and investors enjoyed the novelty factor of it.  It was a lucrative business so many entrepreneurs, investors, and advertisers started investing in this money-making machine.

Meanwhile, in 1995, Yahoo was launched and became the primary search engine. In its heyday, it charged up to $30 to $100 to run the banner ads. Back then, advertisers were required to provide the standard 468 x 60px banner ad for online campaigns. (see below)

In the same year, one of the first ad-serving technologies ‘Double Click’ was launched with an intent to track the performance of the ads and ROI on it. In 1997, Pop-up ads were invented to gain the attention of ad-blind users but soon it became a bane of online advertising that led to pop-up ad blockers.

• Channel Era (1999-2000)

This period saw the rise and fall of online advertising. 

The web was expanding rapidly and the number of websites was increased day-by-day. The year 1998 saw the birth of the Google search engine– a player to this day dominates the digital advertising industry and revolutionized advertising forever with the launch of its ad system ‘Google Adwords’ in 2000. The main objective of Google Adwords was sponsored search experience that didn’t undermine the quality and relevance of search results through the Google Quality Score model which is still used today. 

At the same time, ‘Mobile Advertising’ made its debut.’

Online advertising was at its peak in the late 1990s and investors were investing in millions in dot-com startups. $8.2 billion were invested in online advertising between 1995 and 2000. 

In mid-2000, the first-ever code was written for Adblocker which led to the beginning of a battle between publishers and adblocking. In 2002, Google revamped Adwords, introducing the option to advertise using the Pay-Per-Click (PPC) model. The year 2003 and 2004 marked launches of two prominent platforms LinkedIn and Facebook respectively. Exactly, one month after the launch, Facebook delivers its first advertisement in the form of banner ads called ‘Facebook Flyers’.

However, mid-2000  witnessed the biggest downfall as the dotcom bubble bursts. The huge influx of money that created the online advertising bubble began to dry up and the value of internet-based companies was decreasing. The stock market collapsed leading to recession. Many companies’ stock prices fell sharply and others shut down. 

The only company that survived the dotcom bust was Google who took the opportunities that it had to offer in their stride and filled in the space left by the players.

• Social Era (2005-2008)

After the bubble burst, internet advertising saw a decline except for search engine technology. The highly efficient and dependable search engine technology market grew to USD 2.3 billion in 2003.

Meanwhile, in 2005 YouTube- the world’s largest video advertising platform made its debut and in the following year, Google purchases YouTube for $1.65 billion. The social network brought a new form of customer participation. It gives you the freedom to like, share or rate information. YouTube offered companies to promote their product and services on the most valued media platform by consumers ‘Video’ without any big investments.

In 2006, Facebook introduces sponsored links and smaller display ads that concentrate on user demographics and interest. Around the same time, a major advertising platform Twitter was launched with a concept of communication-based in 140 characters and making hashtag a household word. The introduction of the iPhone in 2007 was a major tipping point in mobile advertising. Social networks offer many opportunities to reach potential and existing customers. 

• The Native Era (2009-2011)

As the number of companies advertising through the internet increased, advertisers began to look for less conspicuous ways to promote products. Due to this, the use of native advertising gained momentum and was on a rise as a result of higher CTR and engagement.

The year 2010 gave birth to Instagram exclusively for iOS devices. In a matter of time, it became popular marketing and advertising platform which later was purchased by Facebook. In the following year, Snapchat was created and it supported the widespread use of video with augmented-reality enabled filters that have created a stir amongst millennials.

Twitter introduced promoted tweets and paid advertisements to celebrities. Promoted tweets allowed users to reach a larger audience and generate more engagement from the existing and new followers whereas paid advertisement means sponsored tweets. Businesses recruit celebrities to promote their brands and services to their followers. For instance, Charlie Sheen made a record as he became the first person to reach 1 million followers in 25 hours after his account was created. A  few days later, he started to sponsor tweets through ad.ly

• The Modern Era (2012- present)

Since 2004, digital advertising has recovered from the downfall and advertisers have accepted the importance of online advertising. Digital advertising is more sophisticated with innovative technologies and branding tools.it more interactive and uses Flash and Java for graphics. 

In 2012, the Internet of Things(IoT) came into picture influencing marketing and advertising. In the next few years, there were many interesting developments. Instagram introduced sponsored posts allowing users to run ads by promoting old or new posts. In 2014, Pinterest made its debut with social media advertising growing bigger.

The growing adoption of smartphones hinted advertisers to focus on in-app mobile advertising and leave the mobile web browser. For instance, voice technology ‘Alexa’ allows users to do voice searches. The year 2015 witnessed mobile ad traffic surpass Web traffic- IAB UK reported for the first time mobile overtakes desktop with total spend hitting £4.8bn mark. Video consumption proved to be the strongest area.

Real-Time marketing became a buzzword. In 2016, Pokemon Go became a sensation. A classic example of augmented-reality on mobile devices attracted more than 45 million users. In 2017, two technological development came happened. Firstly, Ad.txts  that were introduced by IAB Tech to improve transparency in the programmatic advertising ecosystem. Secondly, Apple announced AR Kit and Google followed with AR core for mobile AR apps and advertising.

The growing use of voice technology, artificial intelligence, and other digital technologies introduces new areas of advertising. A key point to include is an in-depth understanding of consumer behavior and delivering personalized and relevant advertisements.

The European Union’s General Data Protection Regulation (GDPR) was implemented in May imposing restrictions on companies to change the way of collecting data, protecting the privacy and personal information of the users. Even California passed a strict privacy law that changes the data collection method. Conforming to the recent changes, digital advertising Industry plans to replace Cookies with First-Party Data.

Wrapping up

In this phase of digital transformation, the top priority of companies is to provide a personalized end-to-end customer experience in real-time.  Millions of advertisers, marketers, companies, or businesses are relying on digital advertising.