Do you remember when surfing the web meant navigating a minefield of unwelcome pop-up ads? Did "digital advertising" refer almost exclusively to obnoxious flashing banners and random sidebar ads?
It is important to look back at the flashy, gaudy, sometimes messy origins of internet advertising to better understand where we are heading -- and where there's still room for improvement.
Below is a condensed history of online advertising.
The History of Online Advertising
1994: The first banner ads appear
In a kitschy rainbow font, a small graphic bearing the presumptive words, "Have you ever clicked your mouse right here? You will," forever changed the world of advertising on October 27, 1994. It was officially the dawn of the banner ad era.
The enduringly ubiquitous banner ad was introduced to the world by Wired magazine's former online offshoot HotWired. Digital publications need a revenue stream to pay their writers, and HotWired needed one.
In a similar way to print magazines, the publication set aside portions of its website to sell advertising space to advertisers. Advertising spaces were called banner ads, and advertisers paid upfront to occupy the real estate for a limited time -- very different from today's pay-per-click advertising.
AT&T paid HotWired $30,000 to place the banner ad above on their website for three months. It enjoyed a click-through rate of 44%, a figure that would make most marketers gasp in disbelief today. 22 years later, the average clickthrough rate on display ads is closer to 0.06%.
When users clicked the mysterious banner, they were taken to a very early AT&T landing page. By clicking on links to view information about landmarks and museums around the world, visitors could experience a virtual trip to different places.
As one of the digital consultants hired to work on the campaign, Craig Kanarick recalls the team's goal was to create an ad that didn't feel like an ad and provided users with valuable content. "Let's not sell somebody anything," he recalled thinking, "let's reward them for clicking on this AT&T thing".
Websites started using banner ads to keep their content free for users, and soon other companies, such as Time Inc. and CMP’s Tech Web, were looking for advertisers to lease banner space.
1995: Display ads become increasingly targeted
The popularity of banner ads led advertisers to target specific consumer demographics, rather than placing their ads wherever space was available and hoping the right people would see them. A targeted ad placement was born as a result.
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An online advertising agency, WebConnect, began helping clients identify websites that their ideal consumers visited. It was now possible for companies to place ads where their target demographics were more likely to see them.
In the digital advertising space, this was nothing short of revolutionary. Aside from reaching more relevant audiences, websites hosting the ads were also able to display banners that were more relevant to their visitors.
As part of WebConnect, the CustomView tool was introduced, which capped the number of banner ads a user saw.Users who have already seen an ad a certain number of times will be shown another one.
Ad frequency capping helps early online advertisers prevent "banner fatigue" by capping the number of times a user sees an ad. It is still an important display ad tactic today.
1996: ROI tracking tools begin to improve
Advertisers didn't have a good process for determining if banner ads were actually driving tangible results for their businesses in 1996, when banner ads dominated the internet. It was necessary for marketers to report on how users interacted with their display ads across multiple websites more efficiently.
In the early days of banner advertising, Doubleclick was one of the first ROI tools available. Using D.A.R.T. (Dynamic Advertising Reporting and Targeting), advertisers could track how many times their ads were viewed and clicked across multiple websites.
One of the most impressive features of D.A.R.T. was the ability for advertisers to track how their ads performed and make changes to a live campaign. Previously, advertisers had to wait until a campaign was complete before analyzing the results and optimizing their next banner. They had to wait it out if an ad wasn't performing well.
Midway through a campaign, advertisers were able to see if an ad's performance was suffering and make changes. When a marketer notices their ad is underperforming on one website, they can remove it and redirect the resources to another website where the ad is doing well.
The success of Doubleclick also led to a new pricing model for online advertising: Cost per impression (CPM). In the past, websites were paid a flat fee for hosting banner ads for a predetermined period of time. As a result of improved ad tracking, banner pricing became ROI-based.
1997: Pop-up ads quickly rise and fall
There is no doubt that pop-up ads suffer from a poor image problem. One of the original developers even apologized for creating the underlying code that unleashed them upon unsuspecting web surfers, calling them the internet's original sin and the most hated advertising technique. The history of online advertising would not be complete without these much-maligned ads.
What was the very first pop-up created by? Please know that their intentions were good before you whip out pitchforks and torches. The code that enables pop-up ads to open up a new browser window was created by Ethan Zuckerman, then a developer for Tripod.com.
"Advertisers worried that putting an ad directly on the page would imply an association between their brand and the content on the page," Zuckerman writes in the Atlantic.
As banner ad clickthrough rates declined in the late 1990s, pop-up ads appeared as a way to capture the attention of increasingly ad-blind users. Even though pop-ups forced users to pay attention, they did not lead to a real return on investment. In the early 2000s, pop-up blocking was a standard feature of web browsers.
1999 - 2002: Advertisers turn to paid search and pay-per-click
Users needed a better way to navigate the web as it was expanding rapidly at this time. As search engines gained popularity, advertisers sought to create ads that were more targeted and less obnoxious by turning to sponsored search.
The first pay-for-placement search engine service was introduced in 1999 by GoTo.com, an emerging search engine company acquired by Yahoo. For certain keywords, advertisers were able to bid on top search engine results. The paid search model allowed GoTo.com to monetize their search engine despite initial concerns about corrupt results.
Pay-per-click evolved from pay-for-placement. Per-click bidding is used to determine search result placement: e.g., I will pay GoTo.com $1 per click if you place my company at the top of the results. This resulted in search results largely determined by how much a company was willing to pay. It was unclear to users which results were organic and which were paid, since the highest bidders were usually listed first.
One up-and-coming search engine thought it could fix the user experience of paid search. In 2000, Google introduced AdWords as a pay-per-placement advertising model. Creating sponsored search results that generate revenue without compromising quality and relevance was Google's goal.
AdWords introduced a Quality Score model, which considers an ad's clickthrough rate when determining its placement on the search results page, in contrast to previous paid search models such as GoTo.com.Due to its high clickthrough rate, an ad with a lower bid would still appear above less relevant, less expensive ads in search results. Quality Score is still used today.
2006: Digital ads become hyper-targeted
As social media platforms grew in popularity in the mid 2000s, advertisers sought ways to integrate ad content that was both effective and non-intrusive. In order to reach younger internet users who spend most of their time on social networks rather than banner ads, marketers sought a strategy.
Facebook began working with advertisers in 2006 after previously resisting ads on its site. Ads targeted to a user's demographics and interests began as small display ads and sponsored links. Facebook has established itself as a pioneer in targeted advertising, changing how companies reach their target audiences online despite some controversy.
Facebook founder Mark Zuckerberg said in 2014 that his company's strategy is less about increasing the number of ads and more about improving the quality of the content and the targeting to reach the right people.
For online advertisers, particularly on social media, targeting consumers with relevant ads has become a standard practice, rather than bombarding them with ads.In addition to Facebook's targeting efforts, other social networks, such as Twitter, YouTube, and Google+, aim to provide a non-aggressive advertising experience to their users.
2010 - present: Marketers find value in native ads
A new group of media companies emerged around this time. Sponsored content and native advertising were new ways for advertisers to reach their audiences through websites like BuzzFeed and Mashable.
Google and other media sites pay advertisers to produce articles, videos, and other content.
In spite of the content's goal to promote the business, the format looks and feels more like a regular piece of content on the host's website.
Native advertising allows marketers to create promotional content that supplements a user's online experience rather than interrupting it. According to Mimi An in a HubSpot Research study on native advertising, marketers looking for unobtrusive ways to reach consumers should consider native advertising.
In recent years, websites that traditionally generated revenue from display ads have begun to realize that native ads are a better user experience without compromising revenue.
The Future of Advertising
A look back at the history of online advertising -- but what about the future?
HubSpot Research reports that 91% of respondents say ads are more intrusive today than they were two to three years ago. Digital advertising's future depends on providing consumers with relevant content without feeling intrusive or nosy.
Read HubSpot's State of Inbound report to learn more about the current state of digital advertising and how you can keep your ad strategy relevant.