The Ultimate Guide to Digital Advertising

The 11 Types of Digital Ads + 22 Digital Advertising KPIs + 5 Digital Advertising Trends Changing the Industry

Digital advertising generates three times fewer leads and six times lower conversion rates than content marketing. But that doesn’t mean paid promotion’s over. Far from it. Distribution is a critical component to any content marketing strategy, and — along with organic search, social media, email/SMS marketing and PR — digital advertising remains an essential resource for reaching your target audiences. In fact, much of the digital content your marketers create is meant to be leveraged in your digital ads.

Why??

• Digital ads can increase brand awareness by 80%
• Consumers are 155% more likely to search for brand-specific terms after being served a display ad
• Pay-per-click ads produce a 200% ROI, while generating more website visitors and conversions than search engine optimization

So, before you drop your whole 2024 digital and/or marketing budget on a fancy new AI director, make sure you truly understand:?

• The digital advertising landscape
• The newest and most effective ad types, as well as how they can be used to increase brand awareness, online engagement, website traffic, sales leads, high-value customers and brand ambassadors

I. Digital Advertising Q&As

1. Question: What is digital advertising?

Answer: Also known as online advertising, internet advertising or web advertising, digital advertising is the practice of delivering promotional content to users through online and other digital channels, including websites, apps, audio and video streaming channels, and search results pages. Digital ads can be created in a variety of media formats including text, image, audio, video and even AR and VR.

2. Question: What are the primary characteristics of all digital ads?

Answer: All digital ads require the advertiser or sponsor to pay for the ad to be served, based on pay per impression (PPI), pay per click (PPC), or pay per action (PPA); all digital ads are goal-oriented (e.g., brand awareness or sales), measurable, and easily integrated with your CDP (and DXP); all digital ads are backed by data, dictating ad type, target audience, timeline and more; and all digital ads fall into one of two categories: personalized, based on user activity, behaviors and interests, or non-personalized, designed to amplify overall brand awareness.

3. Question: What are the different types of digital advertising?

Answer: There once were eight types of digital advertising. In our increasingly young, very online culture, there are 11 (and counting):?

1. Search
2. Display
3. Native
4. Mobile
5. Video, CTV and OTT
6. Audio
7. Retargeting
8. Social media
9. Influencer Marketing, Brand Sponsorships and Product Placements
10. Metaverse/In-Game
11. Chatbot

Bonus (via Keith Bendes , vice president of strategy at Linqia ):

While not every ad format is appropriate for every campaign or even every brand, every digital advertising (and digital marketing) professional needs to know the ins and outs of each.

4. Question: How do we get the right placements for our digital ads?

Answer: The most effective way to ensure you get the biggest bang for your digital advertising buck is to invest in media buying. The goal of media buying is to purchase ad space on the channels that are most relevant to your target audience, at the time they’re most likely to view your ad, for the least amount of money. For some organizations, manual bidding through an ad network, like AdWords, is sufficient; for others, media buyers engage in the following:?

• Programmatic buys, using AI-enabled real-time bidding on ad space matching consumer profiles
• Direct buys, when ad rates and run times are negotiated directly with a specific publisher

5. Question: What are the most important digital advertising KPIs?

Answer: Google “digital advertising KPIs” and you’ll find a SERP filled from top to bottom with digital marketing listicles. This is because digital advertising is often overlooked; digital advertising can be considered a type of digital marketing; and digital advertising shares many — but not all — of its most important metrics with digital marketing. To track your success, measure your digital ad performance against the following KPIs, in line with the customer journey.

Advertising/Outbound Marketing (Reach):

1. Reach
2. Impressions
3. Engagement rate

Lead Generation + Conversion (Acquisition/Conversion):

1. Web traffic sources
2. Click-through rate (CTR)
3. Bounce rate
4. Abandoned carts
5. Returning visitors
6. Goal completion rate
7. New leads generated
8. Lead conversion rate
9. Lead-to-sale conversion rate

Customer Experience (Retention/Loyalty):

1. Churn rate
2. Customer effort score
3. Customer satisfaction score (CSAT)
4. Customer lifetime value (CLV)

Expenses + Revenue:

1. Cost per click (CPC)
2. Cost per lead
3. Cost per acquisition
4. Customer retention cost
5. Return on advertising investment
6. Monthly recurring revenue

6. Question: Does digital advertising work?

Answer: Digital advertising has worked since the release of the first banner ad in 1994. As reported by Statista , the digital advertising market is projected to grow more than 7% between 2023 and 2027, resulting in a market volume nearing US$1 trillion. Digital ads can increase brand awareness by 80%; consumers are 155% more likely to search for brand-specific terms after being served a display ad; and pay-per-click ads (like the ones that appear at the top of search engine results pages) produce a 200% ROI while generating more website visitors and conversions than search engine optimization.

7. Question: How do we know if our digital advertising is working??

Answer: Not sure what equals success? Don’t listen to so-called experts who claim to know the magic number. Every brand is different, and so is every campaign. My advice:?

1. Confirm your brand story, and audit existing and past strategies and campaigns to ensure your digital advertising strategy adheres to brand guidelines and values
2. Define your audiences, develop your user personas, and map out all possible customer journeys stemming from your digital advertising campaigns
3. Use a customer data platform (CDP) and/or digital experience platform (DXP) to organize and manage all your customers and prospects, segment audiences based on your user personas, and improve the empathy and personalization exhibited in all the experiences you provide
4. Establish your digital advertising SMART goals, starting with your overall business goals, proceeding to your long-term strategic marketing goals and concluding with your platform-, device- and campaign-specific goals
5. Audit your existing and past digital advertising strategies, content, campaigns and ads, identifying what could/should be repeated, what could/should be refreshed and reused, and what failed and why
6. Conduct a competitive analysis, perform a SWOT analysis, determine the strengths, weaknesses, opportunities and threats impacting the effectiveness of your digital advertising efforts, and strategize methods for addressing any gaps, weaknesses, threats or opportunities
7. Confirm your digital advertising content development and distribution roles, responsibilities, processes and procedures — and make changes, as necessary
8. Ensure your digital advertising strategy coincides with your overarching 360-degree omnichannel digital strategy and incorporates sub-strategies for each target audience (user persona), platform, device, campaign and individual ad
9. Ensure there's an editorial plan and content calendar that incorporates your digital advertising
10. Confirm that your website and landing pages are designed for optimal user experience; this is the core of user-centered design
11. Confirm that your website and landing pages are optimized for lead generation
12. Track your digital advertising performance using my recommended KPIs
13. Measure your ROI against your costs, and stay in the black
14. Continue to monitor all your campaigns, iterating and optimizing over time
15. Report on ongoing progress, with data visualizations

II. The 11 Types of Digital Advertising You Can't Ignore

1. Search Advertising

Also known as search engine marketing (SEM) or pay-per-click (PPC) advertising, search advertising is designed to leverage search engine results to promote the brand or campaign. These ads are intent oriented, and divided into subcategories like search ads, shopping ads and maps ads. Advertisers target keywords and user personas, pay a pre-established amount per click, and can expect to see their ads appear above organic search results.

2. Display Advertising

Display ads are the most common type of digital advertising, typically found on banners, websites and blogs, and consisting of some combination of images, text and animation. Display ads can either be traditional, in fixed sizes, displayed in a fixed space irrespective of the device being used, or responsive, adapting to the size of the viewing screen. They can also be personalized based on user activity, behaviors and interests, or released without personalization to increase brand exposure.?

3. Native Advertising

Native ads are sponsored articles or branded content, displayed on websites and blogs to match the look and feel of each individual site and its non-branded content.

4. Mobile Advertising

Mobile ads are digital ads delivered on mobile devices, either via mobile web, arranged to fit mobile screen sizes, or in app, designed to create specialized customer-brand experiences.?

5. Video, CTV and OTT Advertising

Video ads use video or motion graphics to promote a brand or campaign; they play before, during or after streaming content, or appear as standalone banners or native ads on streaming platforms. While also leveraged on websites and blogs as ‘outstream’ ads to gain user attention, video advertising is typically employed on platforms like YouTube, Instagram, TikTok and Twitch, as well as the free (ads included) versions of Netflix, Hulu and other similar services. Increasingly, video ads are served via CTV (connected TV advertising), on smart TVs and OTT devices.

6. Audio Advertising

Like video advertising, audio ads are used primarily on streaming services, with audio messaging served before, during and after songs, podcasts and other audio. Popular platforms include Spotify, Pandora, Apple Music and SiriusXM.

7. Retargeting Advertising

Designed to nurture leads through the customer lifecycle, retargeting ads leverage user information (gathered from zero-, first- and third-party data) to deliver followup ads to users who have interacted with your site but not made a purchase (or completed another desired action). Retargeting ads can target based on a product the user interacted with but didn’t buy, how the user found your site, and even how they interact on social media. Retargeting ads are placed by third parties, such as the Google Display Network or Meta (Facebook/Instagram).?

8. Social Media Advertising

Social media ads are highly targeted, based on demographics, interests, buying intent, and psychographic and behavioral characteristics, and served on social media platforms as display, native, video, audio, mobile or retargeting ads.

9. Influencer Marketing, Brand Sponsorships and Product Placements

Influencer marketing leverages endorsements, reviews and product/service mentions from celebrities, trendsetters and social media stars as social proof to increase sales, brand awareness and trust, and online engagement. Companies that rely on influencers believe they can piggyback on the trust built by the influencer to build trust for their brand. While not every influencer relationship is paid, many are. Influencer ads can appear on social media or a website or blog, in any format; influencer marketing platforms have been created to help organizations find influencers and manage their influencer relationships.

Meanwhile, brand sponsorships and ad placements are everywhere, online and off, from website and social media account takeovers to corporate names on sports arenas and logos on uniforms. And then there are the still-somewhat-unexpected ad placements we’re starting to see everywhere, like:?

• On screens at government agencies (e.g., the DMV); in elevators (e.g., in hospitals and office buildings) and taxis; and on gas pumps
• In apps you already use, including for work (e.g., Zoom and Outlook)?
• In mobile push notifications (e.g., Uber pushing ads for other companies)
• On the packaging of products you’ve already purchased (e.g., a Honda ad on an Amazon box)
• In the background of your favorite TV shows and movies — even after they’ve been released (e.g., in Tom Clancy’s Jack Ryan)
• As popup banner ads over live TV?
• All over Apple devices, like in the App Store
• All over shopping sites, including Amazon, overwhelming non-sponsored search results
• Wherever you scroll on a webpage, via ‘sticky’ Google Side Rail Ads that stick to the page and follow you around

10. Metaverse and In-Game Advertising

Like the metaverse itself, anything is possible in metaverse advertising — including AR and VR. During Metaverse Fashion Week, for instance, German fashion designer Philipp Plein displayed his latest NFT collection inside his $1.4-million “Plein Plaza,” a plot of metaverse ‘real estate’ in Decentraland, a virtual world on the Ethereum blockchain. Plein wasn’t worried about boosting sales of a single product; he created an immersive, branded experience targeted to the fastest growing segment of our population. Meanwhile, Fortnite, a player-versus-player game (and virtual world within the metaverse), collaborated with Nike on an Air Jordan sneaker launch and with Hip Hop artist Travis Scott for a virtual performance in front of 10-million people. And this was just the beginning.

11. Chatbot Advertising (and Sales)

Chatbot advertising is exactly as it sounds: advertising via chatbot. A newer strategy, brands using their chatbot for promotion or sales must strike a delicate balance between providing support on existing products/services and offering new paid solutions, ensuring their AI is truly meeting user, lead and customer needs. When trained correctly, the more advanced chatbots can expertly serve this dual purpose, not only solving problems and collecting data but also increasing leads and upselling existing customers.

III. The Top 5 Digital Advertising Trends for 2023 and 2024

1. Social media advertising will continue expansion, but won’t overtake search advertising (SEM)

Ad spend on social media exceeded $173 billion in 2022, accounting for a third of all digital advertising expenditures. Nevertheless, it didn’t surpass search — and won’t, nor should it.?

Search ad spend is at nearly $300 billion, and continues to expand more than 10% per year. Why do I like it this way??

• Search engines remain the starting point for 93% of online experiences ( Forrester )
• There are nine-billion queries a day on Google alone
• 75% of users don’t click past the first page of search results — where your keyword-based ads (would) appear
• Search advertising is automated and near immediate, whereas organic content can take months to impact search — if at all

When it comes to social media advertising, video is the most effective format — as it is for organic content. But of course there are also in-stream and in-message content options, text and dynamic display ads, and more, with some divergence across platforms. I also highly recommend researching any and all social media commerce (social eCommerce) or marketplace advertising solutions.

Comparing social media platforms, YouTube (Shorts) and Instagram (Reels) continue to rule, as less saturated markets led by TikTok, Snapchat and Pinterest see increasingly larger audiences and ad spends.

To identify and optimize the best opportunities for your organization:

1. Read The Ultimate Guide to Social Media Marketing (and Advertising), parts one and two
2. Go back to the proverbial drawing board to optimize your overarching social media advertising strategy, as well as your strategy for each social media app
3. Run ongoing split tests
4. Iterate until you’re reaching the right audience, at the right time, in the right way, on the right device

2. Short-form and vertical videos will corner the market

Consumers retain 95% of a video message, compared to 10% of the same information presented in conventional text form. This is why more than nine in 10 brands are already using video as a marketing tool — "a significant jump from previous years" and an all-time high since HubSpot started tracking the data.

Plus, as early as 2009, brands were already experimenting with 'nontraditional' video ad lengths; Miller High Life ran one-second “blinks” during the Super Bowl, avoiding a $3-million price tag, and achieved a nearly 9% increase in sales.?

Today is no different, as our attention spans continue to shrink (below the level of a goldfish!). Hubspot dubbed short-form video (between 15 and 60 seconds) the most effective social media content format in 2022; in 2023, 33% of marketers planned to invest most in short-form video, while 90% of marketers worldwide intended to maintain or increase their short-form video spending. Why??

• Short-form videos are preferred over long-form video content by 96% of consumers (half of TikTok users find videos longer than one minute “stressful”)
• Short-form videos are easier and less expensive to create
• Short-form videos are easily digestible and actionable
• Short-form videos are significantly more likely to be watched to completion
• Short-form videos are easier to share and more likely to go viral
• Short-form videos produce higher engagement
• Short-form videos have higher click-through rates
• Short-form videos produce higher ROI

The best-performing platforms for short-form videos are:

• YouTube Shorts
• Instagram Reels
• TikTok

As for the layout and dimensions of your video, adhering to film industry best practices isn’t the answer; replace a high-cost wide-angle cinematic video ad with a user-generated vertical promo short and see what happens.

One of the biggest reasons for prioritizing vertical video is simply because almost every mobile user holds their phone upright (more than 94%!), and many won’t flip them for videos in landscape. But that’s not all:?

• Vertical videos are made for mobile, where 99% of social media users access their favorite platforms
• Vertical videos enhance brand reputation, with 65% of consumers considering brands who advertise with vertical video “more innovative”
• Vertical videos have significantly more visibility (1,400% more on Facebook!) and better engagement (250% better on Twitter)
• Vertical videos have a 90% higher completion rate
• Vertical video ads are now available in Google Ads, where approximately 92% of searches are conducted

3. AI and automation will continue to streamline creative ad development, distribution, performance monitoring, analytics and reporting

Facts are facts: AI tech can enhance business productivity by 40% — and businesses that employ AI are expected to?double their cash flow?by 2030 while brands that don’t are expected to see a 20% reduction.?

Already, more than three quarters of businesses are using or exploring AI and nearly three quarters of executives believe AI will be their greatest future business advantage. Fortunately for consumers and workers:?

• The increase in the number of AI startups?(1,400% since 2000) should increase the likelihood of thoughtfulness, empathy, diversity and inclusion in machine learning
• AI will automate only 16% of American jobs
• Only about one third of the C-suite sees AI primarily as its tool for optimizing internal operations
• 52% of experts believe that, overall, AI will?increase?the total number of employment opportunities
• 77% of the tools we’re already using leverage AI in one form or another

So, even if more than half the AI startups never turn a profit or even advance beyond funding, and even with all the poorly built AI products flooding the market, the advancements enabled by the best AI tech will change everything. In fact, from?revolutionizing Photoshop design?to automating task management, and from touch-free accounts payable and receivable to chatbots that listen, learn and empathize, it already is.

AI and automation in digital advertising can assist in:

• Idea generation
• Content creation and iteration
• Cross-departmental collaboration, including project management and document version control?
• Productivity and process streamlining, allowing marketing/advertising staff to focus more on strategic initiatives
• Platform integrations and cross-platform distribution
• Data inputting and management
• Targeting and personalization
• Real-time monitoring and advanced analytics
• Performance and customer data visualizations

?? The Top 5 AI Tools for Every Important Function (90 in All!) >>>

4. Digital ad personalization will improve and increase

More than 70% of consumers prefer digital ads tailored to their pain points, needs, goals, values and shopping interests and behaviors; the other 30% would probably prefer them too if they’d experienced empathic, predictive personalization and/or weren’t worried about their privacy online.?

To deliver personalized ads that don’t offend but attract, you need to leverage the user, lead and customer data you collect and they want you to have.?

1. Invest in a CDP, or a DXP with a CDP built in, to ensure the proper collection, cleaning, management and use of data
2. Collect zero- and first-party data now, using giveaways like ebooks and discounts for lead generation, as well as surveys and interactive experiences to expand and enhance customer data for better personalization
3. Obtain authentication as soon as possible, across sources
4. Redesign your website to focus on user experience and collecting zero- and first-party data
5. Leverage existing and new, authenticated zero- and first-party data to build audience lists for direct communications as well as retargeting across ad platforms
6. Leverage contextual targeting via AI to target ads to specific audiences based on the content consumed and original search terms
7. Reduce and then eliminate the use of all cross-app site tracking
8. Acquire new customers through lookalike audiences
9. Develop stronger relationships with high-value customers by using zero- and first-party data to deliver more targeted, individualized experiences
10. Measure performance via server-side conversion tracking
11. Actively work toward better data sharing and collaboration among your marketing, sales and CX departments

5. Brands will stop advertising on platforms that can’t guarantee protected brand reputation

Shortly after the swearing in of 46th US president Donald Trump and mere months before the deadly Unite the Rally in Charlottesville that Trump would refuse to condemn, media buying agency Havas pulled its ads from YouTube and the Google Display Network after ads for high-profile brands and charities ran next to neo-Nazi and jihadist content on Google-owned platforms. This was 2017, Google wasn’t alone then, and — in case you missed it — it’s worse today.

In 2023, two reports emerged within one week proving Elon Musk’s Twitter is profiting from ads placed aside toxic, hateful content — like tweets from Holocaust deniers. It didn’t take long for the Twitter advertiser exodus, either; more than half of Twitter's top 1,000 advertisers in September 2022 were no longer advertising on the platform by January 2023.

Meanwhile, nearly nine in 10 millennials say it’s crucial for brands they support to be aligned with their values.

So What Does All This Mean for Us?

It means you need to waste no time doing your due diligence on:

• Every digital advertising option available, based on your budget
• How to measure all the digital advertising KPIs
• Your competitors, and how/where they've found — and not found — success in digital advertising
• Your strengths, weakness, opportunities and threats, based on the performance of your past digital advertising campaigns, your current digital advertising capabilities, and the level of success achieved by your competitors

Then, subscribe to the Market Your Self newsletter for more tips and tricks nearly every single week!