When a company uses information collected from a computer’s user preferences to personalize specific advertisements for the user, this is considered online behavioral advertising.
Online advertising is an ever-evolving field to keep up with technological advances, so new terms and buzzwords are created almost daily. Some of these online advertising terms are more important than others, and there are some basic terms that any online advertiser should be familiar with. The most important online advertising terms deal with how ads are paid, such as cost per click (CPC), cost per thousand (CPM) and cost per action (CPA). Other terms address how ads are displayed on the Internet, such as the phrase “above the fold” referring to the area of a website that can be viewed without any vertical scrolling. Another very important online advertising term is reach, as it refers to the actual number of people likely to be exposed to an ad.
Cost per Thousand (CPM) is an element of online marketing that refers to how much advertising costs a business for every 1,000 impressions.
There are several basic industry-related terms that are needed to understand anything else. One such basic term is “single user,” which refers to a computer that has been identified by an Internet Protocol (IP) address, cookie, or other means, so that repeat visits from the same person are not counted multiple times. Each time a unique user visits a website and views an ad, this is commonly referred to as an impression. When a display ad is used and the ad links to an external website, this is often referred to as a banner.
The cost-per-click (CPC) ad model invites users to express interest in a product or service by clicking on an ad for more information.
Many of the most important online advertising terms deal with how ads are paid. In most cases, the cheapest type of online advertising is CPM. This type of advertising involves paying a fee based on how many unique users view a banner ad, which is similar to most types of offline advertising. The term CPC refers to a type of advertising where payments are made based on how many times an ad is actually clicked, and CPA generally requires unique users to fill out a form that provides the advertiser with a lead.
Other important online advertising terms refer to the number of people likely to see an ad. Traffic is one of the most important terms to understand in this context, as it indicates how many unique users visit a website in a given period of time. Reach is a traffic-based term as it refers to how many people are likely to see an ad. If an ad is likely to have a large reach, it will be seen by many people and can be quite expensive.
Two online advertising terms that address how ads are displayed are rotation and exclusivity. Banner rotation is a term that indicates that an advertising banner will be exchanged for other banners, so that each unique user of a website will have a slightly different advertising experience. Exclusivity means that a site will only display banners from one advertiser, although this is typically more expensive. A related term is threading, which is a technique websites can use to ensure that each unique user receives a unified advertising experience based on their own activity while browsing the website.