What is Digital Advertising? Your Go-To Guide (Plus Pro Tips)

Have you seen ads pop up while watching YouTube videos or reading an article online? This is digital advertising that often relates to information you have just searched for or websites you recently visited. It almost feels like the internet is reading your mind. 

Do you find these ads annoying or engaging? Ever wondered how they work? 

Modern digital advertising is sophisticated and customized to the ad viewer. Complex technologies run in the background, ensuring viewers see the ads they are most interested in. Brands can also connect with their audience in very personal ways.

This article explores digital advertising fundamentals, types, and best practices. We also include bonus tips and agency partners you can work with to get started on the right note!

What Is Digital Advertising?

Digital advertising is the umbrella term for the strategies, processes, and technologies necessary to run ads on digital channels, from search engines to software, websites, apps, social media, and the open web. 

Digital ads aim to connect with your buyers and get them to interact with your brand. The ads may have specific goals beyond making a purchase. For example, you can use digital ads to drive traffic to your website, get newsletter subscribers, or gain more followers on social media.

Digital advertising vs traditional advertising

Digital advertising differs greatly from traditional billboards, television, or print ads. 

Traditional ad campaigns target a broad audience. They are also often ‘see-and-forget’ campaigns – the audience watches and moves on. The brand can only measure marketing impact through sales that may or may not be affected by the ad campaign.

In contrast, digital advertising is ‘see-and-connect’. The ad aims to capture viewer details so you can continue building your relationship with the customer – even months or years after they first watched your ad. You can also gather meaningful data about ad impact in terms of clicks, views, and other measurable actions, and adjust your campaigns so you get the most out of your ad spend.

Only big brands with huge audiences can afford to run traditional large-scale advertising campaigns. But online advertising is for every business. You can choose your budget and customize your campaign for maximum impact.

Why Digital Advertising Matters

Digital advertising is the most effective method of growing your business today. You no longer have to run billboard advertisements and hope your buyers drive by. Instead, digital advertising takes your ad to your customer. It shows up where the customer is in ways that maximize chances of engagement. 

For example, consider a florist running digital ads for Valentine’s Day. The ad appears when a potential buyer reads an online article about “Best Gifts to Buy for Valentine’s Day.” Isn’t it much more likely that the ad will lead to a purchase than in any other setting?

Little wonder that digital ads increase brand awareness by 80% and generate a 200% return on investment. Buyers are also satisfied because they get exactly what they need when needed. 75% of people report that online ads make finding what they’re looking for easier.

Targeted reach

Digital advertising allows businesses to target exactly who gets to watch their ad. You can filter audiences by their interests, age, geographic location, gender, and many other parameters. Ads are shown to the people most likely to be interested in the product or service, maximizing their effectiveness.

Cost-effectiveness  

Digital ad campaigns don’t require large upfront payments or fixed monthly contracts. You can start with as little as $5 daily and adjust values as needed. Increase ad spend during seasons that matter to your business and turn them off during quieter times. Some platforms also let you run ads based on engagement. If a user scrolls past your ad, you pay nothing. You are only charged for actual views and clicks. 

Measurable results  

Digital advertising lets you track and measure your campaign performance in real time. You can also show two similar ads to two different customer groups and test which performs better; this is known as A/B testing. Collect metrics like:

• Impressions (ad views)
• Clicks
• Conversions (purchases made because of the ad)
• Return on Investment (ROI)

The insights gained from these performance metrics enable you to make adjustments and optimize to get the best results.

Flexibility and real-time adjustments  

One of the biggest advantages of online advertising is the ability to make adjustments and optimize quickly. Based on performance data, you can modify ad content, targeting options, budgets, and channels in real-time. Quickly adapt strategies to respond to changing customer needs. For example, if you discover more customers purchasing two related items, promote a combo discount in your ads to maximize sales.

Types of Digital Advertising

There are several different types of digital advertising, based on the platform and channel. Here are the main types:

Search engine advertising

A search engine, like Google, runs ads for you. It shows ads to people who search for the keyword you target.  You can reach people based on:

• Their interests and habits
• What they’re actively researching
• Past interactions with your ads, apps, or websites

Google shows both text-based search ads as well as image-based carousel ads for products.

Google search text-based ads

Google search carousel ads

Search engine advertising typically adopts the Pay-Per-Click (PPC) model. Instead of paying upfront for ad placement, you bid on specific keywords relevant to your target audience. You pay the bid amount when your ad is shown and if someone clicks on it. 

With many businesses vying for the same keywords, the winning ad placement is determined by Google, considering factors like:

• Bid amount you are willing to pay
• How many other businesses are bidding on the same keywords
• Relevancy to the user’s keyword search
• Ad quality – the more clicks you get, the more your ad is shown

Display advertising 

Display advertising includes visual ads that appear as banners or videos on third-party websites. These ads can be static or interactive with videos.

Websites that show ads are called publishers. They typically attract website traffic by creating quality content. Visitors come to their sites for information and are also shown ads on the side. Publishers get a share of the ad revenue for any ads clicked on their site.

Display ad networks include Google AdSense, Apple advertising, Publift, and Adsterra.

Social media advertising

All major social media platforms like Facebook, Instagram, LinkedIn, X, and others allow you to run ads on their site. You get to showcase ads in more visually engaging ways — a slide show of images(carousel), a reel (very short videos), or a post.

Ad on LinkedIn

You must set up a business account and run individual campaigns for each social media platform you want to target. Every platform has its own rules around audience engagement and advertising costs. You often have to pay a fixed daily rate and additional fees for clicks and views. You can also choose bidding ads.

Native advertising  

Native ads are digital ads that blend into the web page on which they appear, available on native ad networks such as Outbrain. Because they don’t look like ads, native advertising is non-disruptive and typically gets higher brand uplift, engagement, and click-through rates than regular display ads. Viewers tend to find ads on editorial content more trustworthy than social media ads too, so native advertising is becoming increasingly popular as a digital channel.

Retargeting is a popular strategy for native advertising. Set your campaign to serve ads to your site visitors who did not make a purchase. They see your ads as they browse the open web and can be reminded to complete actions like purchases or sign-ups.

Native digital advertising example via Forbes

Affiliate marketing

In affiliate marketing, affiliates promote products or services on behalf of other companies and receive a commission for every click or purchase. Affiliates use a variety of digital advertising channels and media – such as blogs, social ads, or email marketing – to promote affiliate products.

The brand only pays affiliates when a sale or action is completed, making it a cost-effective digital advertising strategy.

Affiliate marketers work with affiliate programs and networks, such as ClickBank, to access products to promote in their campaigns.

How to Create a Digital Advertising Strategy

With so many options available, getting started can seem overwhelming. Consider the following.

Define your goals  

Your channel, audience, and ad content choices all depend on your marketing goals. Are you trying to boost brand awareness among your target audience, or do you want to increase sales on your e-commerce site?

Initially, you may just want to get the word out, start driving traffic to your site, and then aim for conversion. Alternatively, you may want to boost sales during a specific season, launch a new product, or increase website ranking on search. Your goal will define the rest of your strategy. 

Set a reasonable timeline and budget to achieve your goals, and remember to identify metrics to measure progress.

Know your audience  

Conduct audience research so you know your potential buyers’ interests and online behavior. Build buyer personas and try to identify as many details as possible – your target audience’s age, gender, relationships, income, hobbies, and more. This allows for personalized messaging, which ultimately improves engagement and conversion rates.

Choose the right platforms  

The best platforms for your digital advertising depend on your audience and goals. For example:

• Social media advertising is useful for interacting with audiences and leveraging UGC (user-generated content). 
• Native advertising is ideal to target audiences when they are in discovery mode, browsing the internet and reading their favorite sites.
• Search engine advertising is important if you want to target customers who are searching for specific products or services.

Matching your advertising goals with the strengths of each platform ensures that your message reaches the right audience most effectively.

Budgeting and bidding strategies  

Online advertising platforms offer a variety of budget options and bidding strategies:

Set an overall budget and decide how to allocate it across platforms and campaigns based on your goals. For example, if your goal is brand awareness, you might allocate more of your budget to native or social ads.

Platforms like Google Ads and Facebook Ads offer different bidding models, such as cost-per-click (CPC), cost-per-thousand-impressions (CPM), or cost-per-acquisition (CPA). The choice depends on your goals – CPC might be better for driving traffic, while CPA is ideal for generating conversions.

Digital Advertising Metrics

Digital advertising metrics are measurable data points you can use to evaluate the effectiveness of your campaigns. You can use them to adjust your budget, tweak ad content, and maximize your returns on marketing spending.

Impressions  

Impressions indicate how many times your ad was shown to users. Ten impressions mean your ad was displayed on a browser or social media feed 10 times. It does not mean that:

• 10 different viewers saw your ad (It could have been repeatedly shown to the same 2-3 viewers.)
• 10 viewers read your ad (They could have scrolled past or ignored it.)
• 10 viewers visited your website or took other action from your ad (They could have read it, clicked on it, or ignored it.)

However, impressions are still important in identifying ad reach. The more people your ad gets shown to, the more engagement you are likely to get.

Clicks  

Clicks measure how often users interact with your ad by clicking on it. High click numbers indicate strong engagement but don’t reflect conversions or traffic quality. Search advertising especially has the challenge of bot and spam traffic. Unscrupulous elements or competitors click on ads unnecessarily to waste marketing budget.

Click-Through Rate (CTR)  

CTR measures the percentage of users who click on your ad after seeing it. It is calculated as:

Clicks/Impressions*100

CTR is a key indicator of how engaging your ad is to your target audience. A high CTR suggests that your ad is compelling and relevant. A low CTR indicates that the messaging or targeting needs adjustment.

Cost Per Click (CPC)  

CPC measures the amount you pay each time someone clicks on your ad. It gives you insight into the efficiency of your ad spend. You want to keep CPC as low as possible. Ideally, you want everyone who sees your ad to click on it. For that, you need:

• High-quality images and ad copy
• Carefully selected audience targeting
• Less competitive keywords to reduce bidding costs.

A low CPC occurs when you match keywords and audience with the right ad copy.

Conversion Rate  

The conversion rate tracks the percentage of users who complete a desired action (e.g., making a purchase or signing up for a newsletter) after clicking on your ad. It shows how well your ads are driving meaningful results beyond clicks. 

A high conversion rate requires more than good ad copy. You want your ad to lead to a website page that further convinces users to take action. Many businesses redirect visitors from digital ads to a landing page that clearly outlines the solutions their product or service provides. Landing page optimization significantly boosts conversion rates.

Cost Per Acquisition (CPA)  

How much are you paying to achieve your desired outcomes? CPA is the cost of acquiring a new customer or completing a specific action, such as a sale or sign-up. Calculate it by dividing the total campaign cost by the number of conversions.

Similar to CPC, CPA evaluates ad spend efficiency but with a focus on conversion goals. 

Return on Ad Spend (ROAS)  

ROAS calculates the revenue generated for every dollar spent on digital advertising. 

ROAS = Revenue from ads/cost of ads

Benchmark ROAS for most businesses typically falls between 4:1 and 10:1. This means that for every $1 spent on advertising, you should aim to generate $4 to $10 in revenue.

Successful Digital Advertising Tips

So how can you run digital ad campaigns that maximize your metrics – especially your ROAS? Some tips to consider:

Test and optimize

Experienced marketers run two versions of the same ad by changing images, copy, call-to-action, etc. This method, called A/B testing, helps identify which elements drive higher engagement. You should do it regularly (or at least for each new ad campaign) to make future decisions based on real data for the best possible results.

Use compelling creatives  

Select high-quality images or videos that stand out on the platform and connect with your audience. At the same time, keep your message short and to the point. Don’t talk about your product; talk about the problems you can solve for your audience. Use powerful words and a strong tone to evoke emotion. You should also have a call to action (CTA) that is clear, action-oriented, and aligned with your campaign goals.

Here are a few examples of effective digital ads:

Apple campaign for boosting gift card sales

Geico promoting a new insurance policy

Mount Sinai ad with clear messaging and CTA

These 35+ native ad examples will inspire you further!

Leverage analytics  

Tools like Google Analytics provide detailed insights into how your ads are performing. View all metrics in a single dashboard to understand which aspects of your campaign are working and where adjustments are needed. You can fine-tune your campaigns to improve ROI and meet your marketing goals by continuously monitoring data.

Stay updated with trends  

As with anything digital, new advertising technologies constantly disrupt the marketing scene. For example, the recent rise of short-form video content (YouTube Shorts, Instagram Reels, and Moments by Outbrain) has boosted brand engagement among younger generations. Similarly, AI-driven marketing is making it easier to create compelling ads and making advertising more competitive.

Adapt your strategy to take advantage of popular trends and experiment with new ad formats to keep your digital advertising efforts fresh and impactful.

Top Digital Advertising Agencies (with Examples)

Successful entrepreneurs know that the key to success is having the right team on their side. You can always outsource your digital advertising needs to experts in the field.

Outbrain Brand Studio

Outbrain Brand Studio works collaboratively with your brand to help you meet digital advertising goals faster. You get a dedicated team of creatives and access to Outbrain’s powerful display and native advertising networks. Our team will help you with everything – from analytics to training workshops so you can get the most out of your digital marketing.

Notable campaign: Increased engagement 5.5X for Doritos chips.

Wieden+Kennedy

Wieden+Kennedy is renowned for producing bold, culturally resonant campaigns that connect with audiences on an emotional level. They provide creative storytelling and branding support at a global scale.

Notable campaign: DoorDash SuperBowl Commercial that had viewers solving a puzzle.

Ogilvy

Ogilvy is a global advertising agency that emphasizes integrated marketing through digital transformation. They build brands through comprehensive marketing strategies that integrate digital and traditional advertising with public relations to drive business growth.

Notable campaign: Volkswagen’s peace of mind campaign that emphasizes car safety.

Droga5

Droga5 is known for its daring and innovative work that often pushes boundaries. They blend bold creative ideas. with meaningful messaging to help your brand stand out. 

Notable campaign: High Stakes Beer Ad campaign for Molson Coors that won several advertising awards in 2023.

Conclusion

Digital advertising brings your brand directly to your buyers at the right moment. You can connect with them at a deeper level while spending far less than traditional advertising methods. 

Promote digital ads across multiple channels while targeting audiences who align with your buyer profile. Track relevant metrics to measure progress and refine your content and strategy based on audience response. With the right strategy and a dedicated team, digital advertising accelerates brand growth and drives revenue in unprecedented ways.

FAQ

What is the difference between digital advertising and online advertising? 

Digital advertising includes all forms of digital media, including online ads, mobile apps, social media, CTV, email marketing, and even digital billboards. On the other hand, online advertising specifically refers to ads that appear on the internet, such as display ads, native ads, and search engine ads.

How much does digital advertising cost? 

Digital advertising costs vary widely based on factors like platform, targeting, ad format, and campaign goals. For instance, a small campaign on Google Ads can start at around $1-$2 per click, while a larger campaign across multiple channels can cost thousands per month, depending on audience reach.

How can I measure the success of my digital advertising campaigns?  

Success in digital advertising is typically measured through key metrics like click-through rates (CTR), conversion rates, cost per acquisition (CPA), return on ad spend (ROAS), and engagement. Tools like Google Analytics and platform-specific insights (Facebook Ads Manager, Google Ads, Outbrain analytics) help track and analyze performance.

How do digital ads work?  

Digital ads use algorithms and data to target specific audiences based on user behavior, demographics, or interests. Advertisers create campaigns on platforms like Google, Facebook, Outbrain, and programmatic networks. Ads are then displayed to relevant users on websites, apps, or social media, prompting actions like clicks, views, or purchases.