Internet is an information source that is accessed by 2.45 billion people worldwide. This amounts to 35% of the world population 
of 7 billion (2011). It is a platform to search for information, connect with people, carry out business activities or just to express oneself. The million dollar homepage started a revolution in display ads and showed the immense monetization capabilities in the online medium. Advertising on this platform provides an immense opportunity to advertisers to target their offerings to people. They can showcase their products that match the information the users are looking for in the internet. This increases the chances to getting business and also increases the popularity of their brands. Website owners may use their online real estate to host these ads and earn revenue.
With several billions of unique URLs detected by search engines daily, the information source is definitely vast. If the site witness traffic and users are exposed to relevant ads, the probability of the users to be influenced by it increases. The financial dynamics of online advertising are hence greatly influenced by the site reputation, traffic witnessed, relevancy etc.
Cumulative Annual Growth Rate of online ads is about 24%. US reported an online ad spending of about $31.3 billion in 2011 up from $26 billion in 2010. Advertisers invested about 7.5% in 2008 of their budget in online ads, which is poised to increase to 15-18% in 2012 (Yankee Group Research Report).
The key players in the online advertising market are highlighted below:
- Advertisers – They have a product or service to offer and put up an advertisement to showcase it. Advertisers can be the actual producer of the good or service or they may be a third party representing the actual producer.
- Publishers – Website owners who offer online real estate to host the advertisements are the publishers. They include search engines, news sites, blogs etc. The more popular the website, the more is the demand for an ad space and hence translates into a higher cut of the ad revenue for the publisher
- Ad Agencies – Ad agencies are involved in generating the creative (the actual ad). They are hired on behalf of the advertisers or their representatives. With the advent of rich media ads, the agencies are delivering ads that are complex, visually diverse and immersive to the customers.
- Ad Networks – To bring together the advertisers and publishers into a common platform where multiple publishers offer their real estate and multiple advertisers bring forward their ads, ad networks play an important role. It increases the market size and offers variety for both these parties. Both publishers and advertisers communicate with the network using a UI that tries to make their transaction seamless and smooth.
- Ad Exchanges – Multiple ad networks are integrated using Ad exchanges. They act as a clearing house for ads. If an advertiser which belongs to ad network A wants to display an ad in an empty frame offered by a publisher in ad network B, the ad exchange facilitates it. The exchange puts up a markup on the cost to the advertiser for the service. It aids in market expansion and increasing the reach for both advertisers and publishers.
- Users – They are the target of the advertisers. Users utilize the internet for their needs and are exposed to the advertisement. They may eventually buy the product or services offered by the advertiser and hence generate revenues for them. The objective of the advertisers is to maximize the conversion of the users into buyers of their offerings.
