the consumer’s profile is revealed by the context of the web page visited (contextual targeting11) and/or by simple demographic criteria (e.g. zip code revealed by the IP address of the computer used). There is some consensus among market players that search targeting is more effective than non-search targeting. Non-search advertising has been used predominantly for brand awareness purposes but the increasing, and increasingly sophisticated, use of behavioural targeting (that is based on web surfing behaviour) is closing the gap between search and non-search in terms of effectiveness12.
An alternative way to categorise ads is based on their mere appearance or format. Online ads can take the form of text ads or display (graphical) ads13. Contrary to text ads (exclusively composed by text), display ads include information beyond text that can be static (a simple graphical “banner”) or in “rich media” format, such as video and other dynamic graphics. It should be stressed that ad inventory (the space provided by publishers) is rarely, if not never, restricted to a specific type of ad appearance.
There is currently some correspondence between the selection mechanism and ad format in that search ads tend to be almost exclusively text ads, whereas non- search ads can be either text ads or display ads. For instance, ads appearing next to the results of a search query usually take the form of a few words and a hyperlink that can be clicked on by the user. Within the non-search category, contextual ads can be either text or display (e.g. an ad advertising a car brand on the "motors" section of an online newspaper can be either a text ad or a graphical ad), while non-contextual ads are in general more likely to be display (e.g. banners on top of the main page of a web journal).
There are also two main pricing mechanisms for online ads. First, the "cost per click" ("CPC") is used mainly for text ads (either search ads or contextual ads),
e. the advertisers only pay the publisher when the user clicks on the text ad. This pricing mechanism reflects the fact that for search and contextual ads, the advertiser generally aims at a direct response from the user (and pays according to that response). Second, the "cost per thousand impressions" mechanism ("CPM") is mainly used for display ads, that is to say that the advertiser pays the publisher when a specific number of ads is displayed to users (each individual ad is one “ad impression”).
In the case of contextual targeting, the user's preferences or interests are revealed by the content of the Internet page he/she is accessing.
A crucial requirement for the improved sophistication and effectiveness of behavioural targeting relates to the information available on web surfing by a given user as well as any other information provided during his/her web sessions, as well as the capability to process, clean and organise that information so that it can be used in an optimal way.
The terms “display” and “graphical” can be used interchangeably. Note that the online ad terminology is not particularly precise and "display" is sometimes used as a synonym for non-search ads (e.g. a complainant uses display and non-search interchangeably).