Let's try a quick exercise: open Google and search for "running shoes". Before you reach the first regular result you'll scroll past three or four ads, a product carousel with prices and, if you're lucky, a map with stores near you. Everything you saw before scrolling is advertising. So, what is advertising exactly? It's the communication a brand pays to put in front of a group of people, in a space it doesn't own, with the intention of getting those people to do something: buy, request a quote, download an app or simply remember that the brand exists. All three ingredients matter. There's payment involved, there's a message the brand controls, and there's a concrete intention behind it.
That definition sounds simple, but it clears up several frequent confusions. Let's take them one by one.
How is advertising different from marketing and propaganda?
This is probably the most repeated question, so let's start there.
Marketing is the whole discipline: understanding a market, deciding what product to offer, at what price, through which channels and how to communicate it. Advertising is one tool inside that box. To put it in kitchen terms: marketing is the restaurant's entire menu and advertising is the lit-up sign you put on the street so people walk in. A great sign with a bad menu fills your tables exactly once.
Propaganda, on the other hand, spreads ideas rather than selling products. Political campaigns, social causes, government messaging. In Peru the word "propaganda" is used loosely as a synonym for advertising ("they ran a propaganda on TV"), and in everyday conversation that's fine, but technically they're different things: advertising has a commercial goal and propaganda an ideological or social one.
There's a third mix-up worth clearing: advertising is different from "appearing in the media". If a newspaper writes about your company because it found it newsworthy, that's earned press. If your store shows up first on Google because your site answers the search better, that's organic rankings. Advertising is specifically the space you bought.
What types of advertising exist?
The classic division separates traditional advertising from digital, and even though the border keeps blurring (TV is now bought programmatically too), it's still useful for getting oriented.
Traditional advertising covers television, radio, print and out-of-home: billboards, bus stops, the classic giant sign on the Panamericana highway. You buy it by estimated reach, producing it is relatively expensive and measuring it precisely is hard. It remains powerful for building mass-market brands: if you sell soft drinks or banking services, having millions of people see your brand every day has a value digital doesn't easily replace.
Digital advertising includes several formats worth separating, because they run on different logics:
- Search: ads that appear when someone types something specific into Google. You usually pay per click. It's the advertising with the hottest intent, because the person is already looking for what you sell. If you want to understand how it coexists with organic rankings, I walk through it calmly in SEO and SEM.
- Social: ads on Instagram, TikTok, Facebook, LinkedIn. Here the person isn't searching for anything, they're watching content, so the ad interrupts. It works through targeting: you show the message to a profile of person, not to a search.
- Display and video: the banners and videos that appear on websites and on YouTube. They mostly serve reach and recall.
- Retail media: ads inside marketplaces and shopping apps, like paying to appear first in an online supermarket's results. It's the fastest-growing format in the region because it catches people inches away from the purchase.
What about the influencer recommending a product? If there's payment or barter involved, it's advertising, and in Peru INDECOPI requires labeling it as such. Peruvian law penalizes covert advertising and misleading advertising, so dressing up paid content as a spontaneous recommendation can end in a fine, and it has.
How does digital advertising work under the hood?
This part tends to get left out of introductory guides and it's the one that helps you spend better, so let's give it a few paragraphs.
When you open a website or an app with ads, in the milliseconds the page takes to load, an auction happens. Several advertisers who want to reach a profile like yours (based on your location, your interests, your browsing history) bid automatically for that space, and the winner places their ad. All of that happens before you finish seeing the screen.
That explains two things that confuse a lot of people. First: digital advertising runs without a "list price". The cost per click for the same keyword can double in December because more advertisers are bidding for the same people. Second: what you pay depends on how well you compete in that auction. If your ad is weak (few people click it, the landing page disappoints), the system punishes you by charging you more for the same space, because platforms make more money showing ads people actually care about.
The practical consequence is that in digital advertising the message and the landing page weigh as much as the budget. A relevant ad with a page that delivers what it promised pays less for the same click than a generic ad. Before raising the budget, look at what the person sees after the click.
How much does advertising cost?
It depends on the format, the industry and the competition, so any general number is a reference rather than a quote. But let's build an example with round, made-up numbers so the mechanics are clear.
Imagine a pet store in Lima investing 1,000 soles a month in search ads. If the average click costs 1 sol, it gets about 1,000 paid visits. If 2% of those visits end up buying (a reasonable conversion rate for an ecommerce store), that's 20 sales. In other words, each sale cost 50 soles in advertising. If the average product leaves 40 soles of margin, the store loses money on every sale; if it leaves 80, the channel works.
That napkin math, cost per click, conversion rate and margin, is what decides whether advertising makes sense for you, and I recommend running it BEFORE investing. Most of the advertising budgets I've seen fail had enough money; what they lacked was a defined answer to how much they could pay to win a customer.
How do you know if your advertising is working?
The short answer: by defining a business metric before turning the campaign on. Platforms will show you dozens of numbers (impressions, reach, clicks, engagement) and almost all of them help you diagnose, but only a few help you decide. I go deeper into that difference in what a KPI is and how to choose the right ones.
For a campaign chasing sales, the two metrics that rule are cost per acquisition (how much each sale or new customer cost you) and return on ad spend (how many soles of revenue each sol invested generates). For a brand campaign, where the goal is becoming known, the honest approach is measuring reach and recall, and accepting that the effect on sales arrives later and through other doors: people searching for your name weeks afterwards, for example.
One detail I learned to always check: where the person stood in their buying process when they saw the ad. Showing an aggressive discount to someone who was going to buy from you anyway makes the report look spectacular while your margin shrinks for no reason. If that angle interests you, the article on the sales funnel explains it step by step.
What happens when you turn the ads off?
This is the question I most enjoy asking when a team shows me their ad spend, because it sorts the conversation immediately. The answer is almost always the same: the channel's traffic and sales drop to zero the next day. That makes sense, because advertising works like a lease: the space where you appear belongs to Google, to Meta or to the billboard's owner, and you occupy it for as long as the contract lasts.
That's why paid channels work best when, in parallel, you build owned assets that stay with you: a site that shows up in searches without paying for every click, a newsletter with readers who come back, a well-tended customer base. It's also worth resisting the urge to pick a side: advertising gives you speed and control over volume, and owned channels keep lowering your average cost of winning customers as they grow. A sensible marketing plan uses advertising to accelerate, not to carry the full weight of the business.
To wrap up: a 30-minute exercise
If you're currently spending on ads, or about to, run this exercise this week before touching any campaign. First, calculate how much margin an average sale leaves you. Second, define how much of that margin you're willing to pay to win that sale: that's your maximum cost per acquisition. Third, compare it with what your campaigns are actually costing you, looking at sales rather than clicks. With those three numbers on a napkin you'll make better advertising decisions than a good share of the advertisers you compete against, because you'll know exactly when to raise the budget and when to cut. And if the number comes out negative, the good news is you already have a short list of suspects to check first: the landing page, the product's margin and, only at the end, the ad itself.