How does Online Advertisement Work?

Well ! Ads annoy us, and we are pretty much sure that you would have never come across any person who has said ” Oh my God! I just love Advertisements”, but the truth is if ads didn’t exist, the web would just not be the same. But, did you ever wonder How online advertising works or tech giants like Google and Facebook afford to give their incredible services free of cost?


You guessed it right, through ads. Google advertisements accounted for 89% of all their profit in 2014, that is a whooping $66 billion.


Majority of that revenue comes from Adwords, the platform where websites bid money on specific search queries to stand in the top 4 search queries. (For example if you search for “cheap flight tickets”you will see cheapoair.com on top.) That makes Google the world leader when it comes to serving ads.


Meanwhile, Facebook advertisements account for 80% of all their profit. The idea behind their ads is to target specifically to you and what your personality is, what you (literally) like, what makes you happy etc.



Facebook has the worlds largest and most elaborate database of people and their information, and they use it to the best of its potential to serve you ads.



So, now you know online advertisements are extremely important. But, that being said did you ever wonder, What happens when you go to a website? . First, To begin with there’s a digital profile which your browser sends to the server automatically everytime that you visit a website. It contains valuable data about you such as your web usage, your age, gender etc. and in turn this information is sent to the ad publishers.



Next, The ad publisher tries to look for such an ad in its database.If there’s a match, the ad is sent to you in a jiffy and the process is over, otherwise the data is sent to an ad exchange. An ad exchange is an auction for third parties which is hosted by big tech companies like facebook etc. which already have information about you.



In the end, your profile is used to find ads. All third parties compete and find relevant ads. Meanwhile the highest bidder then gets to send creative content of the ads to serve and finally you see ads.

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