The History of Online Advertising

July 2019

Happy 26th Birthday Digital Advertising

The digital advertising industry has evolved exponentially since 1994, the year that the first online banner ad appeared. In this timeline, we will explore the origins of the digital advertising industry and its developments over the past two and a half decades.

- 1994
  
  The world’s first Banner Ad
  
  Although the previous year law firm ‘Heller Ehrman White & McAuliffe’ purchased the first online clickable web ad, the first banner ad was in fact purchased by AT&T in 1994.
  
  The commercial web magazine, HotWired, sold the ad to AT&T for a price of $30,000 with a run time of three months. From then, the term ‘Banner Advertising’ was coined. The ad produced click-through rates of 44% and to put that into perspective, the average click-through rate of a display ad in 2019 is 0.35%.It was around this time that the concept of online advertising really blew up for publishers who were looking for a way to keep their content free.
  
  The launch of Yahoo!
  
  Yahoo! was founded by students of Stanford University, Jerry Yang and David Filo, and was developed as a directory of websites organised in a hierarchy.

- 1995
  
  Online Display Ads became targeted
  
  Following the success of AT&T, online display ads became increasingly popular. Advertisers were looking for ways to better target ads, specifically targeting consumer demographics. Ad agency WebConnect, which was the first ad network, began to work with their clients to pinpoint the websites that their ideal consumers visit. Ads were then placed on these websites where by they were more likely to be seen by the most relevant audience. WebConnect also produced a tool to prevent ‘ad fatigue,’ which occurs when users are repeatedly shown the same ad. These developments were revolutionary in the digital advertising space.

- 1996
  
  The rise in Ad Servers
  
  The rise in online display ads meant that advertisers were now looking for ways in which they could measure the results of their efforts. Advertisers needed a system that enabled them to display ads and track their performance to better target internet users. That’s where DoubleClick came in – one of the world’s first ad servers. At this point, it was not owned by Google; the concept had been developed by Kevin O’Connor and Dwight Merriman. DoubleClick was one of the first on the scene to offer ROI tools for ad campaigns, enabling businesses to see if their money was being spent well. The emergence of DoubleClick meant that a new pricing model was introduced by Netscape and Infoseek (search engines) – cost per thousand impressions (CPM).
  
  IAB was founded
  
  The Interactive Advertising Bureau (IAB) was also founded in 1996. The IAB was organised as a solution to streamline industry standards, conduct research and provide legal support for the online advertising industry.

- 1997
  
  Pop-up Ads & Blockers were developed
  
  The year that Tripod employee Ethan Zuckerman invented pop-up ads as a way to capture the attention of ad-blind users. Fortunately, they were quickly considered as intrusive and annoying. This then led to pop-up ad blockers being developed and installed, reducing their effectiveness.

- 1998
  
  Introduction of the Google search engine
  
  The web was rapidly expanding and the number of websites was rising by the day. Users needed a way to easily navigate the web and as a result, search engines began to steadily gain popularity. Although other search engines existed, such as AltaVista, Lycos and Infoseek, this year saw the birth of the Google search engine – a player that, to this day, leads the digital advertising industry.
  
  GoTo.com paved the way for search advertising
  
  By this time, the click-through rates had begun to drop on display ads. As a result, advertisers began to turn to paid search and Pay-per-click advertising. The Search Engine Goto.com pioneered the keyword auction model with a search engine where the results were determined solely by which listing had the highest bid on a term. Goto.com would later become Overture before morphing into Yahoo search marketing.
  
  The very first adtech acquisition
  
  Microsoft pays $265million for LinkExchange, an early form of online advertising network based off the concept of a webring.

- 1999
  
  DoubleClick buys NetGravity and Abacus Direct
  
  In two separate acquisitions, DoubleClick swallows up adserver company NetGravity and market research firm Abacus Direct. The resulting combination of technology, reach and data puts DoubleClick in a strong position to establish dominance in the growing online advertising sector.

- 2000
  
  The Dot Com Bubble booms
  
  The Dot Com Bubble peaked in 2000 as a result of colossal speculative investment in the industry. Many investors were eager to invest after seeing the exponential progress of the internet. Paid search engines, such as Yahoo, paved the way for other powerful online advertising models.
  
  Birth of Google AdWords
  
  This year saw the birth of Google AdWords (Now Google Ads), which was developed as a solution to the user experience of paid search that was suffering due to corrupt results. The intent of AdWords was to develop a sponsored search experience that didn’t compromise the quality and relevance of search results. This was achieved through Google’s Quality Score model which is still used today.

- 2001
  
  The Dot Com Bubble bursts
  
  The value of internet-based companies had already began to rapidly decrease towards the end of 2000. This meant that in 2001, the Dot Com Bubble was bursting. Many online shopping companies, such as Amazon, saw an astronomical drop in share prices, whilst others simply failed and shut down. One company that survived and prospered the Dot Com bust was Google. Google took the opportunities that the Dot Com bust had to offer and flourished from it, filling the space that the existing players had left behind.

- 2002
  
  The invention of first ever Ad Blocker
  
  The code was written for Adblock – the first widely available adblocker. The battle between publishers and ad blocking begins.
  
  Yahoo! tries to acquire Google
  
  The former CEO of Yahoo! Terry Semel put in a bid of $3 billion to acquire the digital giant, which Google consequently rejected.
  
  Google AdWords adds PPC option
  
  In 2002, Google revamped their AdWords program, introducing the option to advertise with them through the use of a pay-per-click (PPC) model. Google’s PPC model differed from others in that users could not buy their way to the top, as Google focused their model around ad relevancy and a better user experience.

- 2003
  
  Google acquired AdSense
  
  Google AdSense came along in 2003, initially operating under the name “Content-Targeted Advertising” – but Google wasn’t alone in this arena. ‘Applied Semantics’ was also competing in the contextual ads sector operating under the AdSense name, until April when Google acquired the company.

- 2004
  
  Google’s first Initial Public Offering
  
  In an attempt to raise $2.7 million, Google held their first Initial Public Offering.
  
  The launch of Facebook
  
  Mark Zuckerberg and fellow Havard students launched Facebook – initially known as “TheFacebook.” In March, Mark Zuckerberg told his college newspaper, The Harvard Crimson, that “It might be nice in the future to get some ads going to offset the cost of the servers.” Around one month later, ads were launched promoting companies that sold products to college students.
  
  AOL purchases Advertising.com
  
  Formerly known as America Online, AOL purchased Advertising.com for $435 million, which highlighted the company’s new focus on advertising-driven business models.

- 2005
  
  The launch of YouTube
  
  This year marked the launch of what was set to become the world’s largest video advertising platform – YouTube.

- 2006
  
  YouTube launches Video Ads
  
  YouTube dips their toe into advertising by launching two models: Participatory Video Ads (PVA) & Brand Channels.
  
  Google purchases YouTube
  
  Google saw the opportunity and purchased YouTube for $1.65 billion. This was also the year that Twitter was publicly introduced. Social media gained real prominence as advertisers experienced specific targeting to internet users from certain demographics or with certain interests, who were considered to have genuine potential as consumers.
  
  Content-Recommendation Ads are born
  
  This year saw the launch of Outbrain’s content discovery platform, which uses algorithm-based technology to target relevant content to certain users.

- 2007
  
  Google acquired DoubleClick
  
  Google acquired DoubleClick for $3.1 billion, software that would indefinitely transform the online advertising industry.
  
  Facebook offers targeted ads
  
  This year also saw Facebook founder and CEO Mark Zuckerberg introduce Facebook Ads to enable businesses to connect with users and target their ads.

- 2008
  
  Facebook introduces Engagement Ads
  
  Facebook introduces Engagement Ads to capture users attention. This allowed users to make comments on the ads, share with friends or become a fan of the business being advertised.
  
  YouTube features more ways to advertise
  
  In 2008, YouTube launched their first pre-roll and promoted Video Ads.
  
  Microsoft attempts to acquire Yahoo!
  
  In an attempt to take on the digital giants, Microsoft puts in a bid of $44.6 billion to acquire Yahoo!, who consequently rejected their offer.

- 2009
  
  Google launches DoubleClick Ad Exchange
  
  Google’s new display advertising marketplace, DoubleClick Ad Exchange, was launched.

- 2010
  
  The birth of Instagram
  
  Photo and video-sharing social networking service, Instagram, was launched.
  
  Twitter introduces promoted tweets
  
  Promoted tweets are launched by Twitter to allow users to reach a wider audience and spark greater engagement from existing followers.

- 2011
  
  Celebrities are paid to advertise through Twitter
  
  Businesses began to see the value in recruiting celebrities to promote their brands and services to their huge followings. Sponsored Tweets really began to take off with celebrities such as Charlie Sheen, who was the first person to reach one million followers on Twitter. Shortly after, he began to engage in promoted tweets through Ad.ly.

- 2012
  
  Native advertising is on the rise
  
  As the advertising market grew and the number of companies advertising through the internet multiplied, advertisers began to look for less conspicuous ways to promote their products that actually augmented the user experience. Because of this, the use of native advertising was on the rise due to their ability to obtain higher CTRs and better engagement. This was also the year that Facebook filed for their first Initial Public Offering.

- 2013
  
  Facebook acquires an advertising platform
  
  Facebook acquires the advertising platform Atlas Solutions from Microsoft for an estimated $100 million.
  
  Instagram releases promoted posts
  
  Instagram introduced their sponsored post feature, allowing users to run ads by promoting posts that have been previously shared on Instagram.

- 2014
  
  Pinterest begins offering advertising services
  
  Social media advertising continues to grow as platforms, such as Pinterest, become players through the introduction of offering promoted services to businesses.

- 2015
  
  AppNexus introduce Prebid.js
  
  AppNexus introduced the open source header bidding platform Prebid.js to enable publishers to seamlessly implement header bidding.

- 2016
  
  Mobile ad spend overtakes desktop
  
  The IAB announced that for the first time mobile ad spend had overtaken desktop ad spend – with total spend hitting £4.8 billion.
  
  Verizon agrees to purchase Yahoo!
  
  Yahoo!, which was once announced to have a market value of $125 billion, agreed to sell their core internet business to Verizon for $5 billion. The technology was merged with AOL to create a new division of Verizon called Oath.
  
  The Coalition for Better Ads is launched
  
  The Coalition for Better Ads, formed by leading trade associations and companies involved in online media, was launched as a solution to implementing new global standards for online advertising that address consumer expectations.

- 2017
  
  Ads.txt is introduced by the IAB
  
  Ads.txt was introduced by the IAB Tech Lab to improve the transparency of the programmatic ecosystem for buyers.

- 2018
  
  GDPR regulations are implemented in the EU
  
  The European Union’s General Data Protection Regulation (GDPR) was implemented in May, imposing a number of restrictions and requirements on how personal data can be collected and handled – something that was expected to greatly impact the advertising ecosystem.
  
  DFP becomes Ad Manager
  
  In July 2018, Google decided to rebrand and merge together DoubleClick for Publishers and Google Ad Exchange to form Google Ad Manager.

- 2019
  
  The ICO prepares to clamp down on adtech
  
  The Information Commissioner’s Office (ICO) issued a report to adtech companies, following an off-the-record investigation into how the programmatic advertising industry handles personal data through RTB. The report outlines how adtech companies should be handling data to comply with the law, as the ICO prepares to clamp down on non-compliant adtech companies.