E-commerce News and Insights
Apr 8, 2020

A Beginner’s Guide to Digital Ads: How They Work, the Benefits, and More

Shippo Snippets:

  • Digital media spend surpassed $145 billion in 2019
  • For PPC advertising, companies design short ads using keywords 
  • A native ad matches the tone and feel of the site where it appears
  • With COVID-19, many advertisers have seen a decline in acquisition at different times of the day

The Story:

The year 2019 was a massive one for digital advertising. Spending for online advertising in the U.S. was over $145.3 billion, which was up more than 19% than the year prior. 2018 was also no slouch either, surpassing over $100 billion for the first time. 

When it comes down to it, businesses use digital ads because their customers are spending so much time online. If you’re new to this type of advertising, here you’ll find a 101 guide to four popular forms of digital marketing advertising that may help your business reach new customers:

  • Search engine marketing (SEM)
  • Display advertising/banner advertising
  • Native advertising
  • Social media advertising

Search Engine Marketing (SEM)

This type of digital advertising gives companies visibility on search engine results pages (SERPs) on search engines like Google and Bing. There are different types of SEM advertising, including:

  • Pay per click (PPC)
  • Pay per impression (PPI)
  • Pay per sale (PPS)

In this post, we’ll focus on the most popular: PPC ads, which can be purchased on search engines like Google or Bing.  

At a high level, with PPC advertising, companies design short advertisements using keywords (words that prospects and customers are using to find the products and services that a company sells). Rather than paying for this advertising in a traditional way (such as by ad size, where it appears, how many times it appears, and so forth), your company would pay a fee only when someone clicks on your ad—therefore, you “pay” when someone “clicks.”

You can search for the best keywords for your ads on Google’s Keyword Planner Tool. To use this tool, you need to set up a free Google Ads account and then use the Keyword Planner to discover keywords for your digital marketing advertising. You’ll likely get plenty of data and will need to strategically choose keywords that are relevant to your audience and the ads you’re creating with a reasonable amount of traffic. The more competitive a keyword that you use, the more you’ll pay with each click made.

To actually use these keywords, though, you need to first bid on them as part of creating your ad campaign. To prepare for the bidding process, you should know answers to key questions, such as:

  • What is your daily budget?
  • When do you want to schedule your ads to appear?
  • How often per day?

You then bid on keywords to win the ability to have them displayed on relevant search engine results pages. This has been compared to going to an auction, except that you and your competitors are all online. It’s important to go after keywords with commercial intent—in other words, keywords that indicate people are looking to buy products or services, not just seeking information on a subject.

Once you have secured your keywords, you strategically create ads, which typically include a headline, text, links, calls to action, image, and so forth. You should then monitor the success of your ads and tweak, as necessary, to get the most value out of your budget.

Key benefits of this type of advertising include that you can get free data from the planning tool and only pay if someone responds to your ad with a click. Plus, you can experiment with text, calls to action, timing of ads, money budgeted, and so forth in search of the optimal combination, with these ads appearing in prominent places on search engine results pages when people are using keywords you’ve selected.  

Effects of COVID-19 on PPC

COVID-19 has obviously had effects on all facets of everyday life and PPC is no exception. With much of the country working from home, sheltering in place and dealing with other restrictions, internet usage and search volume as naturally increased. Experts have seen spikes in searches of up to 15% after midnight, which is no surprise, given that many of us are home and staying up later. Also unsurprising is the surge in COVID-19 searches. Google has even set up a special portal to track COVID-19 search trends

But do these searches help or hinder advertisers? As of now, COVID-19 has had a generally negative effect on PPC, with around 30% lower conversion rates than normally seen during the evening, which go well beyond typical dips that happen at night. One theory is all of the negative news out there that can be a major distraction away from normal click activity. 

A couple thoughts on how to deal… First, monitoring your ad schedules by day and hour, you’ll be able to stay on top of any performance trends and optimize accordingly. Another thing to take into account is your focus. With everything going on, you may want to focus on driving awareness as opposed to just acquisition, to help position your business for success once the current state of circumstances passes. 

Display Advertising (aka Banner Ads)

This is a form of pay per click advertising, and these ads are managed through the Google Display Network. Rather than appearing in search engine results pages, though, these ads show up on websites, apps, and video across the internet. According to Google, advertisers can reach more than 90% of people on the internet with this form of marketing, with banner ads appearing on more than two million sites.

What’s important then, is to target your display advertising strategies in a way that best reaches your intended audience(s). You could, for example, target people who have already visited your site, or those in a certain demographic (older women, for example), or those who might specifically need your product.

Strategies to get you in front of the right audiences include targeted keyword use, as described above, or by choosing placement in certain sites where you see audience synergies.

So, how narrowly should you target your ads? Well, first consider that, the more targeted you are, the more you can be homing in on your specific audience, which can be an excellent strategy for niche products and services. Having said that, the more specific you get, the fewer people will be in that subset, which may not be the best strategy when you have lower cost items and rely upon a larger number or sales.

(When discussing the number of people who can be exposed to your banner ad, we’re talking about what’s called your “reach.”)

If your reach seems too narrow, then you can adjust your geographic targeting, for example, or your demographic specifics to broaden the banner ad’s exposure. If, on the other hand, you discover that adding a certain metropolitan area to your reach doesn’t benefit your company, you can then scale back to what gives you the most bang for your buck. This can take some experimentation (true of pretty much all digital ads!) and Google does offer something called automatic targeting to help businesses with this aspect of display advertising.

Typically, a simple, clear, and compelling display ad can be pretty effective. Be sure to include a clear call to action, so that people know how to respond. And, when directing people who see your ad to click on a page on your business site, make sure it’s the page most closely connected to what you’re advertising in that display ad—rather than, say, to your home page.

Benefits of display advertising include branding your business in a way that reaches new audiences. If, for example, your display ads appear on a popular site, this can help you reach out to people you might not otherwise connect with. And, if someone has already been on your site, you can use the technique of remarketing—in other words, having your banner ad appear on a third-party site to refresh their memories about your products and services.

You’ve almost certainly experienced remarketing yourself. If you’ve ever gone on a site (Site A); looked at a product; and then gone to a different site to see an ad for what you just reviewed on Site A, then that’s a remarketing experience. 

Why can remarketing be especially effective? Many times, people need to see information about a product or service multiple times before buying, and remarketing speeds up that process. 

Native Advertising

If you know you need to advertise your products and services, but don’t like the idea of a super hard sell, then you might like native advertising. These are paid forms of digital ads, but they match the tone and feel of the site where it appears. In other words, it looks like organic (non-paid) content—perhaps a blog post—but is in fact sponsored (paid) content.

This material is published on a third-party website that permits (sells!) native advertising, with this website chosen because a business believes that people who read material on this site might also be interested in their products and services. It extends that company’s reach by allowing that business to put their content in front of that third party website’s audience. 

This isn’t a new concept. Before digital marketing advertising even existed, companies would pay to have “advertorials” in print magazines; it would be labeled as such, but not necessarily in big bold print. Online, you might see a piece of content labeled as “sponsored” or, even, “advertisement.”

And, because many people have gotten tired of being inundated by ad after ad, native advertising can provide a real sense of relief. Plus, many people who read native advertising content don’t even realize that it’s being sponsored by another company. 

Content created for a native advertising article needs to meet quality standards of the third party site where it will appear, and must dovetail with the look and feel of that site. The majority of this content is typically much more journalistic in style than pure advertising; having said that, there can be a call to action (CTA) near the end. This CTA may be to invite people to explore the business’s site in more detail.

And, if you’re thinking that this sounds a lot like content marketing, you’re right—with one major exception. As the core element of content marketing, businesses create quality content and publish it on sites they own; with native advertising, the piece of content is placed on a site not owned by the company, with the goal being to attract targeted traffic to the business’s site.

Benefits of native advertising include that you can provide prospects with quality content that educates and informs—and, when done well, you can attract new prospects and  customers to your site. Plus, this is the type of content that, when done well, prospects can feel comfortable sharing on social media sites, which naturally extends the reach of your brand in yet another way.

Plus, businesses can promote a piece of native advertising on their own social media channels—and that leads to our last type of digital marketing advertising to consider in this post: social media advertising.

Social Media Advertising

Yes, your business can post for free on, say, Facebook—but, over the past few years, Facebook has been showing fewer business postings in their followers’ feeds, overall (although this isn’t necessarily true with brands that have plenty of engagement going on).

Often, though, businesses need to use paid ads on social media to get the reach they want. Continuing with our example using Facebook, you can create a post that’s engaging and then promote it so that more people see what you’ve created. You can choose how much to spend, and you can start with a relatively small budget if that’s helpful, and you can carefully target who sees your ad, based on demographics, geographies, and interests. The more people you want to target, more frequently, the more your ad will cost.

Plus, you can measure the success of your Facebook ad and, going forward, do more of what works and less of what didn’t. For example, it isn’t unusual for businesses to discover that Facebook ads are more effective for them when they include engaging video. You can use these ads to direct people to your website to increase targeted traffic and leads—and, ideally, sales.

Facebook isn’t the only social media channel where you can advertise, of course. You can, as another example, sponsor tweets on Twitter. As with any ad, you decide what your goals are for an ad and who the most likely audience(s) would be. You can then select whom to target, maybe because of geography or a certain hobby or interest. You can also choose to target followers of a prominent Twitter account.

Twitter ads, unlike Facebook ones, are based on an auction system. You can use their automatic bidding system or manually decide how much you’re willing to pay for each interaction; there isn’t a minimum you need to spend each day, although they recommend at least $30 daily.

You can also run ads on LinkedIn, where you set a budget, create an ad, and use their campaign manager feature to manage your digital ads. 


Explore Shippo for efficient and cost-effective shipping and logistics solutions. 


Share to:
Kelly Boyer Sagert
is a full-time freelance writer living in the Cleveland area. Her range of expertise spans business, finance, logistics, automotive, e-commerce and more.

Sign up for the Shippo newsletter


Recommended Articles

Most Popular

Get Started Today

Everything you need for professional-grade shipping + deep discounts from top carriers.

Get started