How Does Online Marketing Work in 2019? (From the Bottom Up)

When Czechoslovakia officially joined the internet in 1992, it was academics who had the greatest expectations of it. Not even the greatest visionaries, however, could have imagined how completely it would change the world of business and how great a role on-line marketing would play in the modern world.

25 years of digital advertising

The magazine Wired, placed the absolutely first banner in the world on its website on 27 October 1994, to become the pioneer of the entire digital marketing sector. This was an advert for the American AT&T telecommunications company. And this was no ad hoc experiment - it was immediately followed by the banners of another 13 companies, including MCI, Volvo, Club Med, 1-800-Collect and Zima. The profits generated by these adverts enabled rapid expansion of the digital version of Wired, which soon had more employees than the print version. This was 25 years ago.

Over quarter of a century, the internet has become omnipresent together with on-line advertising. This year nearly 8 trillion crowns will be spent on on-line advertising worldwide – no, that’s not a mistake, that’s an eight with twelve zeros. This logically led to the fact that on-line marketing is much more complicated than it used to be and companies such as Google or Facebook try to outdo each other with technological innovations in the field of advertising, practically on a weekly basis. It also means that e-adverts are now used by large and small companies across all sectors, because they afford them financially affordable and logically revolutionary methods to let their customers know about their products and services.

The basic principles of on-line marketing or follow the cash flow

There are both advertisers and publishers on the internet, just as there are outside it. Advertisers want to “say” something to a selected public, ideally with the best price/performance ratio. Publishers operate news servers, e-magazines, blogs or entire website networks, on which they publish various types of articles. And these articles are then read by people around the world for free. However, publishers need to make money too, which is why they reserve some of the space on their websites for advertising. This space is purchased by advertisers, who can then send a message to readers. If the advert helped the reader find something they needed, then they will purchase a product or service from the advertiser and everyone is happy.

At least, that’s how it should work in a simpler world. In the nineties, when there was still only a few advertisers and publishers, most advertising was arranged like this directly. There are billions of readers (consumers of content) on the internet today and millions of publishers and millions of advertisers operate there now. The term “direct purchase” is now only used for orders of large volumes of advertising, and even then, it’s not usually as advantageous as other types of purchased advertising.

Year Number of active websites on the internet

January 2019 1,518,207,000

January 2014 861,379,000

January 2009 185,497,000

There are so-called advertising platforms, which centralise the whole transaction process, which means that the advertiser does not need to negotiate with thousands of publishers and the publisher does not have to do business directly with thousands of advertisers. One of the best-known of these is operated by Google. However, practically every major internet company today operates its own advertising platform - for instance Facebook, Seznam.cz, Yahoo or Microsoft.

1. Publishers register in the Google AdSense system, which allows them to display adverts on their website.
2. Advertisers register with Google Ads, complete and upload everything required to launch their advert.
3. And the wheels of the whole marketing machine can start turning.

However - although the potential of on-line advertising is enormous, there is even more competition and its complexity in terms of technology and psychology is increasing precipitously. It takes hours and hours to learn how to use just one advertising platform on a level at which the advertiser is not simply throwing money out the window. Thousands of hours of experience and practically constant education are necessary to launch and manage adverts so they’re capable of winning against the competition and earning money for the advertiser. That’s why there’s a fourth player in this “advertising orchestra” now– specialists in on-line advertising. Individuals and companies who help advertisers with their adverts.

Publishers are only limited by their technology and their own imagination

When explaining the basic principles of marketing, I was forced to simplify a lot of issues. The most blatant of these was probably limiting internet content to just articles. Publishers and their content take thousands of different forms, which are only limited by the current options afforded by available technologies and their own creativity. The average Czech spends over two hours a day on the internet watching various types of videos and webinars, listening to podcasts or other types of audio recordings, viewing photos, studying e-courses and reading blogs, reviews, e-books, presentations, interviews or discussions and entering competitions. And some form of advert can be linked to each of these types of content, or the content itself can actually be an advert.

This enormous variability of formats is one of the basic building blocks of on-line advertising. We can encounter advertising not only in written magazines, but also in videos on Youtube, among Facebook posts, among the messages in your e-mail box or the results of a search on Google or Seznam.

How is it paid for? And is it really worth it?

The crucial advantage of internet advertising is that, in the majority of cases, you pay for what it brings you. You pay according to how many times the advert was displayed, how many people click on it or how many people watched your video for example. You don’t pay anything for people who simply “pass by”. When discussing the prices of advertising or viewing reports on advertising campaigns, you may encounter these acronyms:

• CPM (cost per mille; the price for one thousand impressions): Your advert was displayed to people online, but this does not mean everyone actually registered it.
• CPC (cost per click): You pay for each person who clicks on the advert. Clicking on it usually takes a person to your website.
• CPE (cost per engagement): This depends on the type of advert, but you pay for the fact the user actually noticed your advert and interacted with it in some way - “liked” it, commented on it or simply left the cursor on it while viewing it.
• CPV (cost per view): You pay for the advert when the user views the entire video or at least most of it.
• CPI (cost per install): You pay when the user installs your mobile application.
• CPA (cost per action): In this case, you pay for a specific action. This could mean downloading your price list, or even making a purchase from your e-shop.

Several such factors are usually measured simultaneously in every well-managed advertising campaign. These give us a combination of information about how well the campaign is doing and where it needs improvement. However, in performance marketing, we always try to focus on CPA because we very often have to target the advert at wealthier users and thereby increase the cost per click (CPC), but because these users are more likely to make a purchase, we actually reduce the cost per action /purchase. This is what the advertiser is primarily interested in.

2 places where you must have an advert

Two methods rise above the other types of adverts in relation to performance and versatility. Every new and experienced advertiser should focus on these, perfect them as much as possible and only add more communication channels and types of adverts gradually.

Adverts in search engines

Whether you use Google, Seznam, Yahoo or Bing to search the internet, you usually see special links on the page of results, which have ‘Advert’ written next to them. You often don’t even notice that these are adverts because they blend in with the other results. But the important thing is that they blend in not just visually, but also by showing you exactly what you need. This is because the advertiser paid to show its advert when someone uses a phrase similar to the one you entered in the search engine. And Google has also verified that the page to which the advert should direct the user during a search is actually appropriate to the specific topic.

The power of advertising in search engines is the fact that, as an advertiser, you meet the needs that users currently have. If the user is trying to find which smartphones can be purchased for less than CZK 20,000, Google will offer them articles and lists that will provide an excellent summary of the current models on offer. This can also include your article, if you configure your advert correctly. When the user starts looking for more information about a specific model, you can use your advert in Google to show a link to your review. And when the same user searches for where to purchase this smartphone, you will appear in the search results once again with your e-shop, and they will be familiar with you and know that you already helped them several times to make a choice.

Adverts in search engines essentially fulfil the wishes of potential customers. This means that this is a good starting point for long-term internet promotion for most advertisers. You have the greatest chance of meeting users’ needs and therefore also earning money.

Adverts on Facebook

Facebook allows people to communicate with their friends, to view specialised pages and to connect in hobby and professional groups. This means that Facebook knows quite accurately what people are interested in and therefore which adverts to show to meet their tastes as accurately as possible. More than half of all Czechs in all age and income categories use Facebook on a regular basis.

The combination of detailed opportunities for targeted advertising and a large public makes Facebook a very powerful advertising channel that allows you to sell a wide range of products and services B2C and B2B. Many entrepreneurs hesitate when deciding whether to start using Facebook for their promotion, because they either don’t like it or don’t believe it has the right target group. However, we’ve seen good returns on advertising on this social network at Instinct Agency in dozens of different business verticals: art, cars and motorbikes, consultations for major companies, industrial production, luxury goods, machines sold B2B, finance, local services, health and healthcare, law, charity, retail, travel and many others.

The main reason for failure is misunderstanding Facebook and its potential:

1. The first step many companies (and unfortunately many marketing specialists) focus on is the regular creation of content (posts) on their Facebook page. This is not wrong in principle, but any return on this activity is achieved in the long-term.
2. Companies then immediately focus on paid promotion on posts from the first step. This is also fine in principle – it’s a good idea to distribute created content among more people. But the fact that more people see the posts will not accelerate the rate of return. In addition, these posts are usually not designed well from a sales perspective.
3. Often, after many months of creating posts on a Facebook page, the entrepreneur plucks up the courage to try a long-term sales campaign. This advert is not visible on your page, but is designed specifically to sell your service / product and is progressively configured in terms of text, graphics, targeting and other settings, so that it starts earning money as soon as possible.

By regularly communicating on Facebook, you let people know about you, establish a relationship with fans and attune potential customers to the right note. However, a long-term sales campaign will start selling you right away and you will see a return in a matter of weeks to a few months. Even though adverts in search engines address those who are already looking for your product/service, while Facebook does not, the complex possibilities for targeting adverts mean that our clients more often earn more money from Facebook than from search engines.

10 advertising methods you can use to link to advertising in search engines and on Facebook

1. Content marketing: You create high-quality posts (or videos) on your website and in thematic magazines. It’s easier to convince undecided users with two good posts than with ten short banners.
2. E-mail marketing: You establish your own e-mail database. Maintaining contact with people who have made a purchase from you or who have read several of your posts will be much cheaper in the future by e-mail than using paid adverts.
3. Display (banner) marketing: We live in a time of banner blindness, so very few people actually click on a banner. But this means that this type of advert has become much cheaper and it’s a good idea to use it to stay visible to a large number of people.
4. Video marketing: If you are fighting hard against the competition, then video advertising will help you quickly and distinctively set yourself apart from your competitors. The overall costs for video marketing are usually higher and are also associated with a higher risk that the advert will not fall on fertile ground. However, this is all balanced by the potentially large profits and major increase in awareness of your brand.
5. Native advertising: Native advertising works with the interest in “reading”, when users browse through an on-line magazine or news server. It basically looks like one of a number of articles on a specific website and when the user clicks on it they are taken to your website, ideally to an article that discusses exactly what the title of the advert promised.
6. Search engine optimisation (SEO): One of the most important sources of your visitor rate is the natural visitor rate from search engines (we discussed the paid version above). Google or Seznam show your website to the user when they decide that your website best corresponds to what the user is searching for. You can use various methods to encourage search engines to show your website more often and higher up in the list of results. These methods are collectively called search engine optimisation. SEO has a very good return, but because it takes a little time to convince search engines, the return on these activities takes months or even years.
7. Price comparison websites: Price comparison websites work all over the world, but Czechs are especially sensitive to prices, which is why Heureka.cz or Zboží.cz are so popular here. Price comparison websites can be a source of very high-quality visitor rates for practically any e-shop selling B2C. If you decide to promote yourself using paid advertising on a comparison website, forget about their recommended system of “launch and let be”. An advertising campaign on a price comparison website must be managed in great detail, just like a search engine campaign.
8. Communication on social networks: In the previous section titled “Advertising on Facebook” I mentioned the regular creation of content for social networks in the 1st point. Although I don’t recommend you start with this, creating posts and “talking” to fans plays a very important role in the marketing mix.
9. Chat marketing: Developing technologies have given rise to new sub-categories of on-line marketing, which utilise chats on the web and on social networks. You can now teach the tool operating a specific chat how to automatically respond to users and come up with ideas how it can help you sell. Alternatively, you can send your fans news and current posts on Facebook using chat.
10. Affiliate marketing: You can also increase your sales considerably by establishing partnerships.  There are people and companies operating websites with very high-quality, specialised content and their primary method of earning money is promoting someone else’s products and services.  You then pay them for acquired clients or give them a percentage of sales.

For on-line advertising to earn you money, you must be familiar with the latest technologies, understand the logics of individual marketing channels and be aware of the trends and psychology of internet users. If you need help with advertising, contact us at hello@instinct.ag or read the following articles:

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