Types of Online Advertising: Pros and Cons

Marketing and advertising are integral parts of the digital world today. It's hard to imagine websites and social media pages without banners promoting products and services. Online advertising works, which is why investments in this area are growing. In 2023, spending on this type of promotion reached $415.5 billion, and by 2024, it grew to $442 billion. By 2026, it's predicted that 60% of advertising expenses will go to digital advertising.

The variety of platforms and ad formats offers opportunities for brands to expand their audience, increase brand recognition, and boost sales. However, it’s crucial to choose the right platforms that fit your business.

In this article, we'll explore the different types of online advertising and discuss their features.

What is online advertising

Online advertising involves promoting a product or service on various digital platforms such as websites, video hosting platforms, social media, and messaging apps to boost sales.

Online promotion also increases brand awareness, informs the audience about products, shapes a company's image, and can even create artificial hype.

The placement of ads on the internet began with the advent of websites. The first online ad is considered to be a banner by AT&T, which was placed on October 27, 1994. At that time, ads did not cater to user interests but simply appeared on a platform without targeting a specific audience. A more “intelligent” display method was conceived in 1997 when GoTo introduced the idea of showing ads based on people's search queries.

Today, this is a common practice. Advertising has become more targeted, with personalized offers made possible through the collection of customer data (for example, via a CDP platform) and tracking their behavior on websites and purchase history.

Despite its advantages, online promotion has its drawbacks. The main concern is the cost of online advertising. There is significant competition, especially in popular niches. A single lead can cost a few cents or several thousand rubles, leading to varying advertising budgets. Large brands spend millions on online promotion.

Types of advertising by content format:

• Text ads with a link to the advertiser's website.

• Banners with design and text. These can be static, animated, or even interactive.

• Video ads, usually inserted into other videos such as those by bloggers or movie trailers.

Types of online advertising

Contextual advertising

Text and graphic ads in the browser that appear in response to search queries and sometimes "follow" the user on search engine resources. Such product or service ads are always marked with a special label and appear at the top of search results, increasing the chances of clicks and purchases.

Contextual advertising is configured based on parameters like keywords and phrases that people search for. It can also take into account previous user actions, such as targeting ads to users who visited certain websites but didn’t convert. Additionally, factors like gender, age, location, and other parameters are considered.

Example of contextual advertising

Advantages of contextual advertising

• Quick results. Contextual advertising for products and services works effectively because it targets people who are already planning to buy. It speeds up the customer journey by immediately presenting potential stores and companies that can solve their problem.

• Audience expansion. This type of online advertising reaches a large number of people. Millions of users search for information on social networks.

• Result control. Services for setting up contextual ads provide detailed analytics that show the success or failure of the advertising campaign. You know exactly how your budgets are being spent.

Disadvantages of Contextual Advertising

• Cost. To keep your ad in the top positions, you'll have to pay more. The setup of contextual advertising itself also incurs costs.

• Competition. In certain areas, you need to "fight" for the top spots in the ad block. This requires both financial and technical efforts, as proper ad setup is crucial.

• Complexity. Contextual advertising is not a campaign that can be launched with a single click. It requires expertise or a specialist to manage it, which isn’t always budget-friendly. Moreover, it’s not a set-it-and-forget-it solution; the process needs to be continuously maintained and adjusted.

Targeted advertising

Ads aimed at a specific audience on social networks and other platforms. This type of advertising is customized based on demographic and geographic criteria, interests, community memberships, and user actions. Additionally, similar audiences can be targeted.

Targeted ads not only drive sales but also increase brand awareness and expand the audience. For example, they can attract new subscribers.

Available formats include text ads and ads with media files. These can be supplemented with call-to-action buttons if needed. The setup is done through the ad managers of social networks or third-party services.

Examples of targeted advertising Examples of targeted advertising

Advantages of Targeted Advertising

• Cost. You can start advertising with a small budget, especially if you know how to set up the ads yourself. This way, you won't need to pay for a targeting specialist.

• High Reach. Social media platforms have a diverse and vast audience, making targeted ads a great way to reach potential customers.

• Personalization. Proper ad settings ensure that the advertisement directly addresses the needs of the individual, increasing the likelihood of a purchase.

To learn how to maximize the effectiveness of personalized marketing, check out our article "Personalization: What It Is and Why Personalized Marketing Matters."

Disadvantages of targeted advertising

• Competition. Many brands want to advertise on social media, so in some niches, you’ll need to invest more budget and differentiate yourself from other offers.

• Client Inaccessibility. While people actively use social media and consume content, they often develop banner blindness towards ads, leading them to simply scroll past your advertisements.

• Constant Monitoring. Targeted ads require ongoing adjustments based on audience reactions. Even if a campaign is successful, the audience can become "burned out," necessitating changes. Managing this process requires expertise or a dedicated specialist.

Banner advertising

Placement of media and text elements on online platforms. This includes static or animated banners, as well as interactive elements (e.g., quizzes) and videos. The ads are embedded into website content or placed in dedicated blocks, leading users to the advertiser's site.

They are configured in a search engine’s dedicated ad manager. For example, Yandex has its own advertising network (YAN) that covers all the company’s services. Additionally, there are independent advertising platforms that sell ad placements across various sites.

Example of banner advertising

Advantages of Banner Advertising

• Audience reach. Ad blocks are added to almost all media sites and others that millions of people visit daily.

• Simplicity. Banners are a familiar and user-friendly advertising tool that’s easy to interact with. Users know what to expect, making them more likely to click.

• Versatility. Banner advertising is suitable for almost any business in both B2C and B2B sectors.

Disadvantages of banner advertising

• Ad blockers. Some users will never see your ads because they use ad-blocking features, preventing the ads from displaying.

• Banner blindness. Due to the large number of ads, people often stop noticing them. To stand out, you need to come up with new, creative solutions.

• Cost. There is also high competition in certain sectors, which can drive up ad placement costs.

Retargeting

Showing ads to users who have already taken some action on the site, such as viewing a product, adding it to their cart but not completing the purchase, and so on. Typically, banner and text ads "follow" the user on other sites. This type of advertising brings users back to purchase or reignites their interest, increasing the chances of a sale.

Example of retargeting

Advantages of retargeting

• Precision. This type of advertising doesn’t guess the user’s interests but shows exactly what they’ve already shown interest in. It’s a personalized and more accurate approach.

• Increased sales. Reminding users of forgotten or viewed products is an excellent way to encourage a purchase.

• Loyalty. A "follow-up" ad can be perceived as a form of customer care. The ad reminds the person of what they wanted to buy but didn’t for some reason.

Disadvantages of retargeting

• Intrusiveness. People don’t always react positively to retargeting. For some, it’s a helpful reminder; for others, it’s just unwanted noise.

• Lack of universality. This type of promotion is only suitable for certain niches (often product-based) and segments with a fast buying cycle. One-time or urgent services are unlikely to be effectively advertised through retargeting.

• Ad blockers. Like other types of ads, there are tools online that prevent them from being shown.

Advertising with bloggers and other influencers

Placing information about your products and services in influencers' accounts. This can include a promotional ad, a contest, or a more native format, such as a casual mention of the product within the content, a joint project, or a review.

For YouTube bloggers, this often involves inserting your video into theirs. With the halt of ad displays for Russian users in 2022, this format has become especially popular.

Advantages of advertising with influencers

• Creative presentation. Bloggers have learned to approach their advertising in unconventional ways, often not just talking about a product or service, but integrating them into their content and making entertaining videos.

• Audience trust. Followers listen to bloggers' opinions and sometimes imitate their lifestyle. Therefore, the audience trusts the influencer's recommendations.

• Brand recognition. Collaborating with a blogger (especially a well-known one) can significantly increase brand awareness.

Disadvantages of advertising with bloggers

• Low-quality audience. It's not always clear whether the influencer's followers are the right fit for your advertising. If the blogger gained their audience through contests, these might be people who are not genuinely interested in their content. In such cases, there may be no trust or connection: just a "dead weight" that won’t make purchases.

• Unpredictability. It's impossible to accurately predict the return on investment from influencer advertising. This makes it much less reliable compared to targeted ads and contextual advertising.

• Unreasonable cost. The influencer market has only loose guidelines for pricing. Without clear outcomes, bloggers may charge inflated prices.

Native advertising

This involves placing information about a product or service within the context of other content. It typically appears in articles in media outlets or blogs where the advertisement seamlessly integrates with the topic. For example, a publication about seaside tourist spots might include a recommendation for swimwear. Or an article on urban planning principles could feature examples of projects by a specific construction company.

Native advertising also appears in video interviews, podcasts, and blogger content. This format is only limited by mandatory labeling requirements in certain countries.

Examples of native ads

Advantages of Native Advertising

• Subtlety. It offers an almost advertisement-free experience, as the user doesn’t receive a pushy sales message. Instead, it’s a gentle recommendation that doesn’t overwhelm the audience.

• Discreet format. Many users don’t recognize native ads, which are often skipped over. This feature increases a brand’s chances of reaching the audience in a soft, unobtrusive way.

• Positive reception. Native advertising is often creative and typically light-hearted, so it doesn’t irritate people and can boost audience loyalty.

Disadvantages of native advertising

• Cost of placement. Creative native ads, especially on media outlets, blogs, or influencer platforms, often come with a high price tag.

• Implementation complexity. To truly advertise your products and services in a native manner, you need to develop an unconventional scenario, and sometimes an entire project (like producing a web series), which requires significant investment.

• One-off nature. It’s unlikely that you’ll be able to reuse the idea from one campaign for another, as native projects are created uniquely.

Mailings

Sending promotional messages from your brand to users through various communication channels: SMS, Push notifications, email, and messaging apps. Companies use mailings to inform customers about new products, discounts, and promotions, hold contests and interactive activities, and invite clients to events.

First, a customer database of email addresses or phone numbers is collected, and then a marketing campaign is launched.

Advantages of mailings

• Personalized approach. By gathering information about the customer, it’s possible to offer exactly what they need, reducing the risk of wasting the advertising budget.

• Targeted reach. Ads are sent to specific individuals rather than being shown to an unknown audience, giving companies more predictability and certainty in results.

• Clear analytics. Mailing services provide statistics on delivery rates, open rates, and conversions. This data helps optimize campaigns for better outcomes.

Disadvantages of mailings

• Database collection. Mailings require collecting customer contact details, which takes time and resources. Purchasing third-party databases is not advisable, as they may contain irrelevant audiences.

• Restrictions. Mailings can only be sent to users who have given consent, or else there’s a high risk of being marked as spam or facing fines. There are also rules for mass mailings set by email clients and messaging apps that need to be followed and constantly adapted to.

• Competition for attention. People receive dozens of notifications daily, and your message may get lost unless it stands out among the others.

Summary

Online advertising remains one of the most popular methods for promoting products and services in the digital space. Placing ads on web resources enhances brand awareness and sales.

There are various types of online advertising: search engine advertising (contextual), targeted advertising for specific audiences on social media, banner advertising (placement of graphic, video, and animated elements) on websites, and retargeting (ads shown based on user actions). Additionally, there is native advertising, which promotes products subtly within the context of other content. Advertising can also be placed on the pages of bloggers and other influencers. A separate form of online promotion is mailings through email, SMS, Push notifications, and messaging apps.