If you’re a novice in the online advertising world and ever wondered how that banner ad showed up on the website you are looking at, I have written a new eBook on how online advertising works, how to plan campaigns, how to target and retarget, how to measure and more. (see below)
For this blog, I wanted to explain as best as I can in layman’s terms how the online display landscape is currently structured from a national buy perspective. Feel free to email me if any questions at all; it’s technical.
Programmatic Advertising
Programmatic advertising buying is one of the newest buzzwords in the online display space. In its simplest form, it is the concept of using technology to automate online media buying with unprecedented efficiency. Because technology and software manages the campaigns, it eliminates a lot of the guesswork of media buying, such as human negotiation and manual insertion orders. When you use technology, you become more precise in your media placement tactics to drive effectiveness. It’s a better user experience because website visitors will only see relevant ads, and that increases click rate and awareness.
Calling Servers to Find Ads to Deliver to You
Scenario A: Serve an ad sold directly to an advertiser from the publisher
- You open up a website. Your web browser points to a Web publisher and communicates via a publisher Web server. The publisher Web server responds back to the browser with an HTML file.
- In the HTML file is a pointer back to the publisher ad server. The browser calls an ad server looking for an ad. The ad server responds with the ad’s file location. In this case, the file is sitting on a content delivery network (CDN).
- The browser calls out to the CDN requesting the specific file containing the ad’s creative content (JPG, GIF, Flash, etc.). The CDN sends the file back to the browser.
Scenario B: An ad is served not from a publisher but an Ad Network (see below) server
Instead of the publisher ad server pointing toward its own CDN, the ad server delivers a secondary ad tag, a simple piece of HTML that points toward an ad network server.
- The browser calls the ad server, which returns the final location of the creative in its own CDN.
- The browser calls to the ad network server CDN requesting the specific file with the ad’s creative content (JPG, GIF, Flash, etc.). The CDN sends the file back to the browser.
Scenario C: Serve an ad that is purchased by DSP and Ad exchanges (definitions below)
Instead of the publisher ad server pointing toward its own CDN, the ad server delivers a secondary ad tag, a simple piece of HTML that points toward an SSP. Now the concept of real time bidding (RTB) begins, featuring DSPs, DMPs, and Ad Exchanges.
DSPs are used by marketers to buy ad impressions from ad exchanges as cheaply and as efficiently as possible, SSPs are designed by publishers to do the opposite: to maximize the prices their impressions sell at. SSPs allow publishers to connect their inventory to multiple ad exchanges, DSPs, and networks at once. This in turn allows a huge range of potential buyers to purchase ad space and for publishers to get the highest possible rates. When an SSP generates impressions into ad exchanges, DSPs analyze and purchase them on behalf of marketers depending on certain attributes such as where they’re served, and which specific users they’re being served to. By opening up impressions to as many potential buyers as possible via real-time auctions, publishers can maximize the revenues they receive for their inventory.
This process takes place in milliseconds as a user’s computer loads a webpage.
Data Segments for Better Targeting
DMPs work with DSPs and exchanges to manage cookie IDs and to generate audience segments, which are subsequently used to target specific users with online ads. 3rd party data segments generally cost more as an overlay due to the increased targeting capability.
Real Time Bidding
RTB works on an auction model. Each buying source makes their bid, highest wins, pays $0.01 more than the next highest bidder. Here’s an example which illustrates this:
- Bidder 1 $0.50
- Bidder 2 $0.60
- Bidder 3 (winner) $0.80
Price Paid $0.61
The actual bidding process which takes less than 100 milliseconds looks like this:
1. The Exchange makes a call to the DSP with an available impression.
2. DSP checks to see if they want this impression – it could be someone in their retargeting pool, or in a desired audience segment according to a third party data vendor. If yes …
3. DSP makes a bid for it based on how much they think its worth or can afford to pay
4. Exchange sells the impression to the highest bidder.
5. Ad is delivered by the winning bidder.
Definitions
Ad Network: Ad networks connect advertisers to publishers. They aggregate ad inventory and offer it to advertisers
Ad Exchange¨ Display space that’s unsold by either sites or networks is usually collected by an ad exchange, where it is auctioned off to the highest bidder among advertisers, networks and agencies. Exchanges let buyers purchase very specific audiences, especially when using real-time bidding technology
DSP: A demand side platform (DSP) is a system that allows digital advertisers to manage multiple ad exchange and data exchange accounts through one interface. Real time bidding for display online ads takes place within the ad exchanges, and by utilizing a DSP, marketers can manage their bids for the banners and the pricing for the data that they are layering on to target their audiences.
DMP: A data management platform (DMP) is a centralized data management platform that allows advertisers to create target audiences based on a combination of in-depth first-party and third-party audience data. DMPs enable advertisers to consolidate online and offline customer data from various sources into a single location, then use it to create demographic and behavioral segments that can be used to target online advertising.
SSP: Allow publishers to jump into ad exchanges via DSPs to make their inventory available and optimize selling of their online media space. Through SSPs, publishers can gain the highest eCPM for their inventory rather than selling remnant space at lower costs
I know this summary is technical and hard to explain, but as an online marketer it’s interesting to understand “how that ad got there.”
My new ebook explains these concepts further as well as the following:
• Stating the case for display as a relevant advertising strategy
• Campaign planning and KPIs to measure
• Pricing and ad units to consider
• Targeting tactics and retargeting overview
• Mobile web and app campaigns
• Campaign optimization strategies
• A tour of the Google Display Network platform
• B2B topics; lead nurturing, native advertising, LinkedIn advertising
• Display measurement; View-throughs, attribution modeling
Feel free to download a copy of the Great Online Display Advertising Guide here:
