Advertising has come a long way from the days immortalized in "Mad Men." We now have virtual product placement, scent marketing, social media marketing and a host of other innovations that allow this old industry to learn new tricks. In this article, we’ll focus on the digital advertising industry and look at the landscape now and some important changes on the horizon.

The Mainstays of Digital Advertising

Before we get into the innovations, it is worth looking at the original digital marketing tools that have stuck around. Some have been upgraded to work with new platforms like social media, but the core functions remain unchanged.

Banners and Sidebars

Traditional ad placement, meaning the banners and boxes embedded in a page of content, is the granddaddy of digital advertising. Despite occasionally showing its age, ad placement isn’t going away. If you look to the right of this text, you’ll likely see an ad placed there because it is one of the sweet spots that still generate a view. However, browsing habits have evolved to the point where many of us our ad blind. This is why some online media has gone back to the pop-up (timed or untimed) or the background placement ad to disrupt the usual viewing pattern.

Ad Serve Market

In addition to shaking up the display slots, the way that these ads are served today is different than it was a decade ago. Many online publishers offer ad inventory through exchanges that allow advertisers to pay per click rather than per view. This price model has hurt some, but it benefits the advertiser by ensuring at least some interaction with the ad beyond an impression.

The technology underlying these ad servers has been upgraded to incorporate more user data to increase the accuracy of the advertising by location and demographic. Real time buying of pinpoint, targeted ads built off demographic data is becoming a reality. It will come as no surprise that Google (GOOG) is a leader in this field and also continues to own search advertising, another mainstay of online advertising.

Email

Email advertising and digital coupons round out the original tools still being used in digital marketing today. Ad space on an email blast to a proprietary database has maintained value as emails are a level of contact beyond a passive view as well as a distribution point for promotions and trackable coupons. Digital coupons, however, have added social media as a distribution channel, as the rise of Groupon (GRPN) has shown. With the social media coupon, the delivery agent is no longer a publisher, but a platform where word of mouth rules.

Content Marketing

Content marketing is getting a bit of a rebrand of its own, now often referred to as "native advertising." At the end of the day, it still involves building the marketing message into the content itself and making that content compelling or useful enough for the audience to seek it out. Instead of placing an ad on relevant content, content marketing encourages a company to create relevant content that supports its business. For many industries, content marketing is now table stakes. For example, every realtor site will have content on how to buy a home or what to expect, with the implicit message that a realtor will make it all easier.

Areas of Innovation

When the internet was primarily text and images on a computer, the previous tools ruled. With the advent of mobile devices, online video, and social media, new approaches have emerged.

Social Media Marketing

You can now be friends with iconic brands like Coca-Cola (COKE) and GE (GE). Social media has given brands a new platform to engage with their customers, attaching a human face to a corporate image. Add to this the ability to sponsor and boost posts across platforms with millions of users, as on Twitter (TWTR) and Facebook (FB), and you have the brands-as-publishers idea used in content marketing supported by immediate feedback on the content being shared.

Digital Product Placement

Smartphones running apps offer advertisers another platform to get their message out. Mobile advertising, sometimes called Appvertising, can take the form of timed video ads, in-game text ads, or even digital product placement. The latter started as a Hollywood tradition and then moved into the world of console videogames, and finally onto your phone. Already gamers have seen Mario in a Mercedes and a Pizza Hut box used as a shield in games. Mobile product placement also graced Zynga’s (ZNGA) Farmville. However, the fact is that mobile gaming needs to monetize the audience to make the model work, so they are actively looking for new ways to do that.

Digital product placement also opens up the world of retroactive advertising, where existing video can be altered to place a product. Instead of running ads pre-roll or post-roll on a music video, for example, the video can be retouched to change a bottle of Cristal to a different brand, possibly with viewers' location data helping to place a brand available nearby.

This isn’t particularly revolutionary until you consider the vast collection of movies and TV shows people are accessing through streaming services like Netflix (NFLX). Imagine if Ford (F) or Toyota (TM) could have the hero’s car in every 90s action movie replaced with their most recent Sedan. Or if Gregory Peck’s Atticus Finch gave up his horn-rimmed glasses for a pair of designer frames from Ray-Ban. These are the types of digital marketing possibilities that make some people uncomfortable, while giving advertisers and marketing firms shivers of ecstasy.

The Internet of Things

Digital marketing continues down the path of constant engagement with the internet of things. With the proliferation of network-enabled devices, there are new spaces for advertisers to salivate over. If a fridge can catalog its contents and sees you are short on drinks, would it be a stretch to have it message your phone with a coupon for a six pack of beer? What about a thermostat providing a list of approved local contractors if it senses your insulation values are lower than average? Once our homes start talking, brands are going to want to be in the conversation.

The Bottom Line

Digital advertising has outgrown the internet. It is no longer about a banner on a website, pre-roll on a YouTube video, or a text link under search, although these are still forces. Digital advertising will allow companies to reach you through a mobile game, a classic movie, and even your home’s appliances. We are increasingly connected and we are using that connectivity to inform our decisions, so it is inevitable that companies will want to be there with their marketing messages when those decisions are being made.

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