- Advertisers: "buy" ads, demand side; eventually earn money from consumers; some advertisers rely on their own marketing team for adverting, others may hire external agencies (e.g. to handle paper work).
- Publishers: "sell" inventories, supply side; earn money from advertisers
- Consumers: consume content AND ads
- Ad Exchange
- DSP: Demand-Side Platform
- SSP: Supply-Side Platform. Yield management: manage inventory, set best price will highest possible fill rate
A simplified and symmetrical overview:
Advertisers <-> DSP <-> Ad Exchange <-> SSP <-> Publishers
- AppNexus, OpenX, Rubicon are some well-known ad exchanges. Facebook has FBX (Facebook Exchange), Google has AdX (Ad Exchange, but now an internal term as part of Ad Manager instead of a public product).
- theTradeDesk (NASDAQ: TTD, https://www.thetradedesk.com/) is the largest independent demand-side platform
- Magnite is the world’s largest independent sell-side ad platform. Google Ad Manager is Google's SSP/Exchange.
- World's largest ad agency: WPP
- The Internet Advertising Bureau (IAB) is the only association dedicated to helping online, interactive broadcasting, email, wireless and Interactive television media companies increase their revenues. IAB defines ad block sizes like 300x250, 728x90.
Advertisers work directly with publishers. The downside is obvious:
- it does not scale, separate contracts are needed between every advertiser/publisher pairs
- publishers may have remnant inventory (inventory not sold, missing revenue opportunites)
And Ad Network is a company that has exclusive rights to sell inventory from a specified group of publishers to advertisers.
It is a "closed" network, essentially the ad network buys inventories from publishers in bulk (and cheap) and sell to advertisers (at a high price).
This is better than direct sales since advertisers do not need to negociate with every single publisher, and the ad network may provide targeting and optimization services to make adverting more effective.
However there are a lot of networks, and it is not always transparent to the advertisers about the publishers; and the ad networks usually take a big cut.
Example: Google Display Network is one Ad Network, though it is taking a lower cut and more transparent comparing to the traditional Ad Networks.
GDN = websites serving display ads + some google properties (Gmail, Youtube, etc)
And Ad Exchange is just like a stock exchange: it is auction-driven, support real-time bidding.
Ad exchange connects buyers (advertisers, ad networks, Trading desks, DSPs) and sellers (publishers).
Example: Google's AdX, Facebook's FBX
Trading desk: built by agencies that bypass the newtworks, talk to exchange directly, or talk to DSP which will talk to exchange.
DSP: tool to buy real-time on exchanges; manage coodie/audience data; transform data into bids (optimization)
Example: The Trading Desk (NASDAQ: TTD) is "the largest independent demand-side platform providing real-time ad pricing and placement for advertisers at agencies and brands."
Online advertising can be charged in different ways, for example:
- CPA (cost per acquisition)
- CPC (cost per click)
- CPM (cost per mille) 1000 ad impressions
- eCPM=effective CPM
- CPD (cost per download)
RTB = Real-Time Bidding
OpenRTB: open industry standards for communication between buyers of advertising and sellers of publisher inventory. https://openrtb.github.io/OpenRTB/
Priority: Guaranteed > non-guaranteed fixed inventory > non-guaranteed auction > open auction / RTB
- Guaranteed: traditional or Programmatic Guaranteed (PG). Contracted impressions, 1:1 deal, fixed cpm, high priority, targeting can't be changed once the deal is setup
- Non-guaranteed: no contractual obligation
- non-guaranteed fixed inventory: 1:1 deal, agreed upon price, was known first look or preferred deal (first look at this advertiser before check others or in open auction) if you bdid with XCPM and I don't have a guaranteed deal you will get the preference before anyone else, however the number of impressions is not guaranteed
- non-guaranteed auction (private auction): 1:many (publisher:advertiser) deal, floor price limit, previously known Private MarketPlace (PMP) "If you bid with X CPM or higher I will see the inventory to the highest bidder in the (private) auction"
- Open Auction / RTB
A Programmatic Guaranteed (PG) deal is a fixed number of impressions the buyer has committed to purchasing. CPM, ad sizes, and start / end date for the deal are all fixed.
- branding ads: for customers to see the ads, rather than click them; cheaper, harder to measure, for impressions, brand awareness (e.g. tv ads or Google Discovery campaigns(share brand story across Google's feeds on YouTube, Discover, Gmail)
- direct response: consumer can directly respond to the ad, like clicking the "buy" button, or "download" the game or app.
- dynamic ads: creative is dynamic based on the content and the user. E.g. you are seeing ads from Amazon but the merchandise inside the ad is different from time to time or from person to person.
- remarketing ads
- icm: Interest Category Marketing
- O&O (owned-and-operated)
- Discover: the feed in the "Google" mobile apps
- Google Ads / Google AdSense: advertisers buy from Google Ads, publishers sell from Google AdSense
- Google Ad Manager: publishers manage their own ads business (advertisers can work directly with the publisher, not going through Google Ads / Google AdSense)
- Advertisers go through non-google DSP (Demand Side Platform) + non-google Exchange to buy ads
- DSP + AB (Authorized Buyers, a.k.a. real-time bidding) + AdX (AdX is Google's exchange, but it does not sell Google owned properties like Search, Youtube, gmail, Play store)
- Google's DSP (Display & Video 360 f.k.a DoubleClick Bid Manager) + AdX or non-google exchange (Display & Video 360 can buy youtube ads)
- Google Ads can bid on Adsense traffic or AdX traffic and other big exchanges
Most bad actors are Ads Arbitrage Businesses (AABs), who live on the thin margin between the cost of user acquisition and the ads revenue per user. They are only profitable if user acquisition is very cheap, and that leads them to take drastic action.
fb: Advertisement images are generally not allowed to contain text
If you are a publisher, you can monetize your content through these ad networks:
- click-through-rate (CTR)
- ratio between positive examples and total examples.
- ctr = (#positive / (#positive + #negative)).
- conversion rates (CVR)
Some of the top paying AdSense niches:
- Internet Marketing
- Web Hosting
- Internet & Computers
Some of the lowest paying AdSense niches:
- Celebrity Gossips
- News blog
- Photo blogs
- people are spending the majority of time on digital(desktop+mobile)
- advertisers are still spending in traditional channels(print+radio+TV); shifting to digital
- Consumer journey is no longer linear(as in advertising funnel); it is now fragmented and highly personalized (seeking information and reviews before buying online or in-store)
Advertising is part of marketing.
- Public Relations
- Media Planning
- Sales Strategy + Pricing
- Customer Support
- Market Research
Globally 519B media + $322B direct marketing
Advertising Funnel: Awareness -> Demand Generation -> Acquisition -> Transaction
- Guaranteed(35%): ads are delivered as specified upfront, e.g. print ads, tv ads.
- Programmatic(65%): ads are bought and sold through automated machine processes.
Ads Agencies -> Agency Trading Desks -> Demand Side Platform -> Ad Exchanges -> Ad Networks -> Supply Side Platform -> Publisher Ad Server
The ecosystem: LUMAscape