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The following information is brought to you in part by AdMedia.org
"The Internet has emerged as a medium for marketing and advertising since 1994. The Internet is different from conventional advertising media in several respects. First, it can serve as not only a communications channel but also a transaction and distribution channel. Consumers can get information and make purchases and payments all through the Internet. No other medium can accomplish these marketing functions instantly, without resorting to other means. Second, the Internet is by nature interactive. Users can initiate a shopping process by visiting a Web site and then clicking on hyper-linked text for more information. It is a two-way communication, with the Internet serving as a provider of customized content that meets an individual's needs. Third, it has the capacity for multimedia content. It can carry not only text and graphics but also audio and video content. The multimedia nature of the Internet is suitable for high-impact advertising. The Internet has become an integral part of the media mix for many advertisers, and new forms of advertising have filled the World Wide Web landscape, including animated banner ads, sponsor logos, interstitials, “advertorials,” “advertainment,” and 3-D visualization.
Internet audiences are often measured through surveys and tracking. There are two common tracking methods—Web-centric and user-centric. The Web-centric method uses log files on a Web server to calculate the number of people who have visited the site. This method tends to underestimate the actual number of visitors because of a network practice called “caching,” by which Internet service providers store copies of popular Web pages on their own servers for quick access. The user-centric method requires the installation of proprietary metering software on a computer in a sample household or office. The software automatically tracks the computer usage and Web sites that are visited on a continuous basis. The information is combined with the user's demographics to generate audience profiles for various Web sites. Telephone surveys also are used to assess the number of Internet users. For instance, a survey conducted in 2001 by the UCLA Center for Communication Policy found that 72.3 percent of Americans had online access, up from 66.9 percent in 2000.
Advertisers use CPM (cost per thousand impressions) and CPP (cost per rating point) to compare media costs. CPM is used for both print and electronic media while CPP is more popular for electronic media. CPM is calculated by multiplying the unit cost of a media vehicle by 1,000 and dividing the result by the audience size of the vehicle. The unit cost of a media vehicle is the cost for a single ad placement in that vehicle. Fro example, if a 30-second commercial in a TV program costs $5,000 and the program has an audience of 250,000, then CMP for the commercial will be $20. CPP is calculated by dividing the unit cost of the media vehicle by the rating of the vehicle. If a 30-second commercial in a TV program costs $5,000 and the program has a rating of 10 in the market, CPP for the commercial will be $500. CPP can also be used to compare newspaper or magazine costs if the audience is described as a percentage."
