Alex Cox

Digital advertising is seriously complicated. I mean, just take a quick look at this famous chart, known as the LUMAscape for the display ad ecosystem:

Via LUMA Partners.

The upshot: Every digital ad that anyone sees while browsing the web or thumbing through a social media platform’s mobile app has gone through a long process of design, creative optimization, audience targeting and/or automated ad exchange bidding, simply to get in front of their eyeballs.

Is all of the complexity worth it, though?

Yes – assuming a carefully targeted digital marketing campaign with prudent allocation of ad spend and effective ROI tracking of key metrics, such as click-through rate.

According to a 2017 Clutch survey of more than 1,000 consumers, 90% of respondents had been influenced by advertising when making purchasing decisions. At the same time, they trusted online digital ads less than TV or print media advertising, an attitude that has fueled the widespread use of ad and content blockers.

In this way, digital advertising is a double-edged sword.

Its complexity is both what makes it so effective at reaching particular demographics and the very thing that can sometimes alienate them.

Some ads are so well-targeted they seem creepy. Online collective Coding Rights once called out and satirized Facebook’s granular targeting practices in particular with the following ad:

Via Fast Company.

Meanwhile, the entire rigamarole of delivering an ad from a marketer to a consumer via a publisher site/app is a technically demanding, resource-intensive process, which can be a major drag on the experience of using a site or app, especially within a web browser.

From a marketer’s perspective, ideally no tell-tale sign of this underlying complexity of the admaking process ever comes through to the viewer.

Instead, an alphabet soup of technical tools – DSPs, PMPs and others we’ll discuss later – helps sustains the intricate sequence from start to finish, ensuring the real-time completion of multiple automated actions that match ad impressions with marketers and their desired audiences.

If all goes well, the viewer sees something like this mere moments after loading a page or app:

Think of digital advertising and marketing as akin to a savvier, more circumspect Wizard of Oz: It makes a huge impression, seems like magic and captivates its audience, yet it doesn’t give any glimpse behind the curtain at its inner workings.


That’s not to say it can’t fail.

In addition to seeming creepy or hogging all of a device’s RAM, advertising can come off as intrusive or irrelevant, with pop-ups and loud autoplaying video among the leading culprits in these respects. But ultimately, the various complications of creating and delivering a digital ad pays off in the form of increased brand awareness and influence among consumers.

Better yet, digital ads are versatile. Beyond the types of banner/display ads we showed above.

Paid search, native advertising and email marketing allow for multichannel marketing campaigns that reach audiences on virtually any platform.

Let’s look at each of them in more detail, starting with the most recognizable form of digital advertising, the display ad, and then working our way up to the subtler options.

What is a display ad?

A display ad is any ad that is seen on a website, social media platform or app.

We offered a relatively simple example earlier, but here is another look at a more complicated one, in this case a banner ad (so named because it looks like an unrolled banner) running on the high-traffic website

This ad includes four major components:

  1. An image with text.
  2. An autoplaying video in a mini window (upper-right).
  3. An actionable “Shop Now” button.
  4. An “Advertisement” disclaimer (upper-right).

Display ads can be static images, videos or text ads. They can appear alongside non-ad content or as interstitial ads that take up the full screen, typically for a moment while a page loads or until the viewer takes some action.

This simple ad for a Google Nexus 7 is at the other end of the spectrum from the intricate “Call of Duty: Black Ops” one, showing the vast possible range with display ad designs:

Via Search Engine Land.

Display ads originated on desktop websites, but they have since made a seamless transition onto mobile and across every major social media platform.

Mobile display ads generally follow the same script as desktop ones, albeit on a reduced scale necessitating more compact design, as with this minimalistic one for the newsletter service Morning Brew, running on a popular Apple-focused blog, Daring Fireball (annotation added to point out location):

On social media platforms, display ads can look very different depending on the service in question as well as how the user is accessing it.

For example, Facebook’s desktop sites supports right-column ads that look a lot like other websites’ digital ads:

In contrast, Instagram’s standard ads – like in-stream Facebook ads and boosted posts – are formatted to look almost identical to organic posts, nearly toeing the line between display and native advertising:

Regardless of the format, the purpose of all display ads is fundamentally the same: to raise brand awareness, cultivate interested audiences and help drive conversions.

Reaching those goals requires navigating the generally intricate process we outlined earlier, starting with creative tasks such as the production of images and text, and ending with the ad actually being served to a specific impression. Many partners, from ad networks to demand side platforms, will be involved along the way.

How to create a display ad

The specific steps you take will vary depending on which audiences you wish to reach and where exactly you want the ads to appear.

Accordingly, it is difficult to generalize too much about the digital ad creation process.

So for simplicity, let’s look at what might be required for creating what Google calls a responsive display ad for distribution through its Display Network, which spans 2 million websites and reaches 90% of internet users. You’ll need a Google Ads account before doing any of the below.

1. Creative production

First, you will need to create text and/or image content that meets the specs for the ad format. Quality and compliance with restrictions absolutely influence an ad’s ultimate performance.

Google recommends images with “a physical setting, with a real background, and organic shadows and lighting.” A brand logo should also be included in the specified aspect ratio. Text should be clear and compelling, to fit into the 80-character limit.

2. Landing page setup

You will also need to link the ad to a relevant landing page.

For example, many display ads tout limited-time offers and promotions. Anyone who clicks on one should be taken to the right part of your site where you can take advantage of it.

EBay has mastered this technique with its Google display ads showing individual panels for items of interest, any of which can be clicked to take the viewer to the corresponding listing and some of which feature “Price Drop” or “New” labels:

3. Budget-setting

How much it costs to actually run your display ad campaign through Google’s Display Network will depend on how much you want to pay and how you choose to measure ROI. Google provides several options:

1. Cost per click (CPC)

Pay only when someone clicks on your ad. You can even get automated assistance from Google for placing your ads so that they generate the most clicks possible within the constraints of your budget. CPC is ideal if your goal is to realize ROI by boosting website traffic through a high click-through rate for your ads.

2. Cost per acquisition (CPA)

Pay when an ads leads to a sale, signup or other acquisition. Based on the price you set per conversion for your CPA strategy, Google’s Conversion Optimizer can place your ads into the particular online auctions that will maximize their chances of reaching and converting a viewer. You can also do this manually.

3. Cost per thousand impressions

Pay every time your ad appears. This option is good if you care more about building general brand awareness at the top of the funnel than pursuing bottom-of-the-funnel ROI metrics such as conversions.

You can set all of these parameters within Google Ads and take many other actions while there. Here’s a quick look at its interface:

Via WordStream.

4. Bidding and auctioning

This is where things get a little more complicated.

The bulk of digital advertising exchanged between marketers (ad creators) and publishers (ad displayers) is done so programmatically, meaning via an automated process involving the various pieces of ad exchange tech outlined in our first image from LUMAscape.

Basically, as an advertiser, you place bids for how much you’re willing to pay to have your ad appear in an available spot. As the intermediary/network, Google then compares these bids in real time within an auction format and displays the winner’s ad in the impression in question.

Let’s say you made it through all of these steps. For a responsive ad (i.e., one that can be automatically adjusted into different sizes depending on the impression it targets), the end result might look something like this:

Via WordStream.

Google Display Network isn’t the only option for placing ads.

Some advertisers use purpose-built solutions like private marketplaces (PMPs) and demand-side platforms (DSPs) as alternatives or complements to GDN. A PMP sets up a direct relationship between an advertiser and publisher, foregoing the chaos and highly variable impression quality of an open auction format.


A DSP connects to ad networks beyond just Google’s, allowing for more diversity in audience targeting as captured in the chart below showing the networks incorporated into one vendor’s DSP solution.


So at the end of the day, how well do display ads work?

ROI varies considerably based on the industries they target and the quality of their design, targeting and placement.

The average click-through rate for GDN ads across all industries is 0.32%. That sounds miniscule, and in absolute terms it is. But it has to be considered in the context of a multi-pronged advertising strategy, and in light of the fact that an ad can still serve a purpose without being clicked on.

Google itself recognizes this reality with its payment options beyond just CPC, and its executives have also advised less fixation on click-through rate in evaluating campaign success.

Pay attention to website traffic and social media mentions, too.

Display ads aren’t working in a vacuum, either. HubSpot found that more than half of its customers combined these digital ads with inbound marketing efforts in order to reach audiences at different parts of the funnel.

Tips for display ad success:

  1. Always use high-quality images and legible typefaces while also complying with the network’s specs.
  2. Use specific text (e.g. “New shoes, available Jun. 22”), not generic slogans or clickbait headlines (“You won’t believe what’s coming!”).
  3. Maintain brand consistency between ads and other aspects of your marketing strategy, such as content marketing assets.
  4. Learn the ins and outs of campaign management tools like Google Ads.
  5. Take advantage of GDN optimizers that automatically help you stay within your campaign budget.
  6. Try a variety of ad formats and products; look beyond GDN to DSPs once you’re familiar with display advertising.

Paid search and SEO

Search engines are the go-to resources for finding many types of information online, so it’s no surprise that the real estate on their results page is highly valuable to advertisers.

Compared with display ads, paid search or search engine advertising consistently yield higher click-through rates, averaging up to 2% for Google Ads. That’s not surprising since many web searches are made with purchasing intent, something that’s not true of every or even most website or app visits.

Take this DuckDuckGo search ad; it shows a very straightforward placement that matches the original query:

Search ads can also be more complex, such as this collection of thumbnails on Google, each leading to a product page on a retailer site:

Search engine advertising often follows a model of pay-per-click (PPC), and indeed PPC is frequently used as a synonym for paid search.

As an advertiser, you pay the search engine for each click your ad generates. This isn’t the only possible payment model for search-based digital ads, though, as Google for instance recommends CPA as well for some campaigns.

As with display advertising, the networks that distribute the ads provide the necessary tools for initiating and managing a search/PPC campaign. Running the first search ad above on DuckDuckGo would require a Bing Ads account, for instance.

How to create a search ad

While some parts of the search ad creation process – such as writing text, setting a budget and bidding for space – are mostly similar to the one for making display ads, there are some key differences, predominantly in the areas of keyword research and search engine optimization (SEO).


A keyword is the term or phrase you want your ads to be served up in response to.

For example, the “Marvel Ultimate Alliance 3” ad above appeared in response to an exact match of its title, but also for the queries “Marvel Ultimate Alliance” and just “Marvel Alliance.” All of these are likely keywords that the advertiser targeted.

Using a tool like Google Ads’ Keyword Planner, you can align your paid search campaign with categories such as exact match, phrase match, broad match and modified broad. Between them, these types capture varying levels of precision in searches – e.g., a broad match might run an ad for Microsoft Azure even in response to a search for “Windows Server,” but an exact match would need “Microsoft Azure,” specifically.

Here’s a look at Keyword Planner in action:

Via Keyword Tool.

Evaluating keywords is an essential part of measuring ROI on search ads.

Although some industries have very obvious keywords that correlate with buying intent, others do not, necessitating extensive research.

Choosing overly broad keywords can quickly drain your budget, as the ads will run too often and not get clicked since they won’t always be relevant and have far too much competition.


Search ads don’t succeed or fail on their own merits.

Even the best-designed Google or Bing ad might not generate the expected ROI, in terms of website visits and sales, if the advertiser hasn’t optimized its site beforehand.

Imagine clicking an ad only to go to a cluttered, confusing site that didn’t make it easy to buy the advertised product.

A lot of this preparatory work doubles as SEO, the group of practices for making a website more likely to appear higher in a search results page.

Putting more info at the top of the page, simplifying site navigation, optimizing for smaller screens and content marketing all help with SEO as well as with ensuring that an ad that gets clicked/viewed doesn’t go to waste.

Poor optimization can compromise the ROI of a PPC campaign by failing to generate enough sales to offset your budget.

Tips for paid search success:

  1. Include calls to actions that lead to a relevant landing page.
  2. Have a negative keyword strategy to exclude irrelevant traffic.
  3. Track ROI, e.g. through conversions like purchases or newsletter signups.
  4. Avoid overly broad keyword matching in your PPC campaigns.
  5. Develop and deploy an SEO strategy to make the most of organic traffic and ease conversions from ad clicks.

Native advertising

Where’s the line between an ad and a piece of organic content? Native ads are meant to skirt this distinction altogether.

They look as similar as possible to the other content on the sites/apps on which they appear, often with only a small disclaimer to distinguish their presence.

This example from Lifehacker shows a Mailchimp post slotted almost inconspicuously between noncommercial items:

Gmail ads arguably fit into this category too.

They look similar to regular emails and appear directly in your inbox, by default near other promotions to further lessen the sense that they’re actually ads, despite the disclaimers.

Native digital ads are highly effective for several reasons.

For starters, they seem less intrusive than display ads in particular, which aren’t particularly well-regarded by many website visitors.

Their content, which is often long-form and well-researched, is also sophisticated enough to stand out not only from the simple sales pitches of display/search ads, but even from a lot of other organic content.

This piece from oil conglomerate Eni that ran on CNN told a compelling story within an intricately designed page:

Via CNN.

But most importantly, native ads can shore up weaknesses in an advertising strategy by circumventing the effects of ad blockers.

Ad blocking is ubiquitous. Eight in 10 adults in North America use at least one form of ad blocking, according to Deloitte, and usage is especially high among younger demographics.

As of 2019, popular web browser Mozilla Firefox, which comes preinstalled on many Linux-based operating systems, also enables content blocking by default.

Content blockers remove most display and search ads, but leave native ads unscathed.

While ad blockers face headwinds from changes in Google Chrome in particular that might break their core functionality, the lost revenue from widespread use is currently substantial. Accordingly, native ads might deserve a place in our marketing strategy as a hedge.

Unlike the highly programmatic processes by which display and search ads are sold, native ads are often pitched and placed on sites as a result of a direct relationship between the advertiser and publisher. That said, there are native ad platforms like Outbrain and Taboola that allow these ads to be shown on numerous sites, a la a display ad.

Tips for native ad success:

  1. Perform due diligence on the publisher’s audience and where else the post might appear besides their websites, e.g. on their social media platforms or in a newsletter.
  2. Track metrics such as views per post, social shares and leads generated; determine your cost per lead and compare it to the price of running the ad in the first place.
  3. A/B test headlines and content to see what gets better results. Reoptimize these details as needed.
  4. Build strong relationships with multiple publishers to keep your native ad placement options open.

Digital advertising is a means, not an end

Digital ads support the other parts of your marketing strategy. Combining them with practices such as email marketing, affiliate programs and influencer campaigns will yield the best results in terms of increased conversions and heightened brand awareness.

Don’t simply run digital ads because you feel you have to; coordinate them with your other marketing efforts so that your audiences gain a clear and consistent perspective on what you’re offering.

With the tips and best practices we’ve outlined here in mind, you have a blueprint for how to approach your next digital ad campaign. It can seem complex at first – and there are a lot of moving parts, no doubt – but the benefits are worth the effort of mastering ad creation and placement.