Ads - Versus

Last Updated: 2022-02-01

First Price Auction vs Second Price Auction

• First price auction: the winner pays exactly what they bid
• Second price auction: the winner pays the second highest bid (https://en.wikipedia.org/wiki/Vickrey_auction)

For example, A bid $1 and B bid$2, in both cases B would be the winner, but in first price auction B pays $2, in second price auction B pays$1.

Second price auction can prevent overpaying for advertisers.

First price auction can reduce complexity and make it easier to evaluate the inventory value. Boosts revenue for publishers.

Google AdSense changed to use first price auction in 2021 (excluding AdSense for Search and Shopping). Ad Manager, AdMob, and many third-party ad exchanges were already switched their auctions to first-price.

Ad Network vs Ad Exchange

• Ad Network: aggregates inventories; advertisers transact with the networks; less transparency; limited reach (only the inventory within this network)
• Ad Exchange: advertisers transact with publishers (think of a stock exchange); more transparent; could be more than a single network

Display & Video 360 (DV360) vs Campaign Manager 360 (CM)

CM is an Ad Server and DV360 is a DSP

• Both can host creatives and support reporting, tracking
• DV360 can buy ads and run campaigns but CM cannot.

Why use both if they have overlapping functionalities:

• agencies use DV360 to run campaigns, advertisers use CM for assets management and reporting
• use CM to centralize creatives, A/B testing on creatives
• track conversion from multiple platform: e.g. DV360 + Search Ads 360 + Google Ads + 3rd party

Dynamic Allocation vs Static Allocation

• Static Allocation ("waterfall"): reservation first, then bidding; when it runs out of guaranteed campaigns to sell, the next step would be to turn to non-guaranteed campaigns. Only make backfill calls when all reservation ads (relevant to the given ad request) were on schedule.
• Dynamic Allocation: Make backfill calls for most reservation impressions and use the reserve price to control how often we expect backfill to fill the impression instead of the reservation ad. When a reservation ad is further behind schedule, the reserve price will be set higher. Dynamic allocation allows all non-guaranteed demand—Open Auction, Open Bidding, and remnant line items—to compete in real time with guaranteed demand.

Marketing vs Advertising

Advertising is part of marketing.

Marketing =

• Advertising
• Public Relations
• Media Planning
• Sales Strategy + Pricing
• Customer Support
• Market Research

Globally $840+B spent in 2016:$519B media + $322B direct marketing

Advertising Funnel: Awareness -> Demand Generation -> Acquisition -> Transaction