How an online advertising agency makes money

How An Online Advertising Agency Makes Money

The online advertising industry functions pretty much like advertising using other mediums where clients pay an advertising agency or publisher for space on web pages to promote products and services. The only thing that is different is that the advertising agency or publisher has the right to negotiate the rate of advertising, which is based on the revenue generated for the clients. This leads to lucrative and profitable deals for popular and widely visited websites that yield millions in terms of digital traffic.

In the industry of online advertising, ultimately almost every website has the potential to carry promotional materials to advertise a product, service, or goods, in the form of banner advertisements and / or popup windows. Many clients yearn for prime promotional space on websites that generates high numbers of unique visitor traffic on their web page each and every day. Unique visitor traffic refers to the number of individual web browsers who visit web pages over certain or given period of time. Web pages with a great number of unique visitor traffic are considered prime advertising space compared to a web page that simply has high traffic numbers.

You might be asking how web pages are able to generate revenue through advertisements.

Well, it depends on the computation method utilized to track users that were able to view and click on the ads. A client can use several available tracking systems. These include but are not limited to:

Cost per Thousand method (CPM) - requires the client to pay the website publisher a negotiated amount per 1,000 impressions or ad views by users. This method does not require the user to actually visit the client’s own web page for the website publisher to get the necessary fees.

Cost per Click (CPC) and Pay per Click systems (PPC) - requires the client to pay the website publisher a negotiated amount for each time a user clicks on the client’s advertisement materials and visits the client’s own web page.

A hit rate or conversion rate is the percentage of web page visitors who take on the desired action upon seeing the advertisements. The desired action is usually clicking on the advertisement and visiting the client’s web page to check and browse the client’s goods and /or services. The client monitors the traffic as well as the click rates on their web page and advertisement material to determine and compute the conversion rates for both publisher websites and individual materials as a whole

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