Online advertising refers to advertising on the Internet. It is different in many ways from traditional advertising media such as TV and print. None of the existing advertising media offers the interactivity of online advertising. Customers can respond to a message, and, in a way that can be measured for its effectiveness. Advertising on the Internet also offers an unprecedented control in targeting the audience to maximize the return on marketing dollars. Compared to advertising in print and television, online advertising through contextual ads, ad panels, and display banners is much cheaper. Because of its ability to elicit action from potential customers, it certainly is more effective. Online advertising offers a unique combination of scalability, cost-effectiveness, targeted marketing and unmatched tracking capabilities. For example, an ad banner combines the benefits of broadcast, print, and direct mail making it a great tool for branding, generating new inquiries, and for driving transactions on a website. Industry-specific directories on the Internet can help businesses reach prospects in hitherto uncharted markets. By advertising online, suppliers can reach buyers when they are actively looking to buy a product or service in the market.

Here are some of the benefits of advertising on the Internet:

Targeted Medium

Unlike broadcast and print media, the Internet allows businesses to target exactly who will see their ads and in what context. Web publications on the Internet serve every conceivable audience, making it easier for advertisers to find a receptive market for their products and services. For example, retailers of consumer products can advertise on portals like Yahoo! to reach their target audience while suppliers to a niche market such as paper industry can use the services of vertical portals to spread their marketing message.

Cost-effective

Online advertising is extremely competitive with other forms of advertising. While ads in print media and on TV could cost a small fortune to businesses, ad space on the Internet search engines, online yellow pages, portals, and directories can be bought at a fraction of that cost.

Scalable

It does not cost much to increase the reach of an online ad campaign. There is no need to print additional copies of a magazine or to create and send direct mail pieces. Expanding the size of the ad campaign can be as easy as buying a text ad or banner space on search engines, directories, and portals.

Tracking and Measurement

On the Internet, advertisers can find out the details about who saw their ads, when, in what context, how many times and so on. Better yet, advertisers receive this information instantly, allowing them to adjust their ad campaign to make it even more effective. This level of unprecedented tracking is not available on any of the traditional ad media.

Ability to Extend Transaction

Traditionally, advertising has been a one-way mechanism. Businesses advertise their products and services and hope the prospects will take a notice of their ad. Apart from techniques such as mail-in coupons inserted into print publications, there was is way for customers to act on the information in the ad. On the Internet, an ad is only a beginning of the sales process. Interested prospects can click on an ad and visit the advertiser's website. Once there, they can access information about the company's products, make a decision about their purchase, and contact the supplier through an online inquiry form. Other than spreading the marketing messages and generating sales inquiries, online advertising is also effective in:

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