Ad Network: Past, Present, and Future
When publishers started moving their media assets online, they initially adopted print media practices for monetizing their ad space. They struck direct deals with advertisers for blocks of ads. However, they soon acknowledged that the existing model couldn’t scale, and a lot of inventory remained unsold.
Moreover, advancement in data collection and management made digital advertising a radically new landscape. Advertisers collect immense data on their users, track them across different environments, and are interested in buying traffic rather than bundles of ads. The industry craved a new technological solution that would optimize media buying and make it truly data drive. An ad network became this solution.
What is an ad network?
An advertising network is a company that brokers the deals between publishers and advertisers.
The introduction of ad networks resolved critical scaling problems of digital advertising. The ad network represents multiple media owners in the advertising marketplace, groups their inventory, and sells it programmatically (usually through auctions). It eliminated redundant processes of manual insertion orders and face-to-face negotiations.
Advertising networks collect ad inventory from supply sources – web publishers, apps, streaming platforms, etc. – and match them with advertisers looking for appropriate audiences.
An ad network is a commercial intermediary, in charge of monetization for the supply side, and offering the most effective ad placements for the demand side.
Creating an ad network requires sufficient labor and time. Yet, it could be simplified with the right tech solution. For instance, Admixer offers white-label Admixer.Network, an all-in-one platform for creation and management of ad networks.
How was an ad network invented?
First, ad networks emerged in the mid-90s with the maturing of digital advertising. The dot.com bubble caused a rapid increase in the number of digital publishers. The demand for digital advertising was also vast. Still, due to the fragmented nature of the supply, advertisers often couldn’t find appropriate audiences, and publishers couldn’t sell all of its inventory. The supply couldn’t meet the demand, due to the lack of proper infrastructure.
Ad networks ironed out those inefficiencies out of the market, and represented publishers and facilitated the process. Initially, ad networks collected the traffic that remained unsold after direct deals. This inventory was usually sold at a much lower price than ad space in direct sales. Ad networks were perceived as a way to sell remnant, non-premium traffic.
Difference between an ad network and ad server
The ad network is not the only prerequisite for placing and displaying digital ads. Ad serving relies on the whole array of ad tech products, and it’s crucial to tell them apart.
The main purpose of an advertising network is to assist publishers in their monetization efforts, control fill rate, optimize yield, and transact media buys. Like managing advertising campaigns and reporting on the results, all other essential functions are done through the ad server. There are two main types of ad servers:
- first-party ad server, used by publishers,
- third-party ad servers, used by advertisers.
The first-party ad server, such as Admixer.Publisher, allows publishers to deploy ad spaces on their website, sell ads via direct deals or header bidding, transfer the remnant traffic to the ad exchanges, and report on the ads’ performance.
With ad servers, publishers connect to advertisers via ad tags and sell their inventory via waterfalling. They have to set up campaigns and upload creatives manually. An ad server provides limited options for trading inventory programmatically, uploading and monetizing data, connecting own programmatic demand. To streamline most of these processes, publishers need advanced functionality of Admixer.Network.
The third-party ad server allows advertisers to run campaigns. It stores the ad creatives, helps to measure campaign performance, and reports on campaign results.
Differences between an ad network and SSP
Both SSP and ad networks collect publisher inventory to sell it to advertisers, so those adtech platforms are quite similar on the surface level.
Historically, ad networks relied on the waterfalling, also known as daisy-chaining or waterfall tags, a way of selling publishers’ assets sequentially, invoking one demand source at a time. SSP was the next step in the programmatic evolution and offered publishers to sell their inventory via open RTB auctions.
Advertisers needed audiences across various geo locations and content niches, while most networks had limited scope. Ad networks had different integration methods and issues with inventory sales to external sources, many optimization tasks were done manually.
The arrival of SSPs with openRTB auctions allowed advertisers to access global inventory, achieve an international scale, and streamline the media buying. The ad network model persisted in the niches that are not ready for programmatic adoption.
For instance, adult content is blacklisted by most SSPs, and is still monetized their inventory through old-fashioned ad networks and waterfalls.
Other ad networks concentrated on providing premium inventory, and striking deals with direct advertisers. Modern ad networks evolved and adopted programmatic technologies, most frequently header bidding. For this reason, nowadays, the distinction between SSP and ad network is blurred, and many companies use those terms interchangeably.
How do ad networks work?
- Ad network gathers a large number of publishers to offer their inventory to advertisers. Ad networks can concentrate on a particular format, like a mobile ad network or rich media ad network, focusing on premium inventory or certain geo.
- Publishers install the ad network ad tags on their site by inserting them directly into the page or using a first-party ad server.
- Ad networks connect a large number of advertisers, big brands, agencies, or small businesses, to ensure the demand of the inventory, and monetization of publishers’ assets.
- Advertisers can launch their ads and promotions through an ad network campaign-management panels. They can also deploy a pixel from the third-party ad server, in case they are running campaigns in multiple networks, to get aggregate data from all environments.
- Publishers send a bid request with information on the impression, user data, the ad placement format, and the bid floor (the minimum amount they want to get for the impression).
- The advertiser sets up the campaign parameters in their bid response (such as targeting, budget, frequency caps, etc.). Then, ad networks match the appropriate bid response with the bid request, either through the auction or daisy-chaining.
- When the ad is published, the advertiser can rotate multiple banners on the website using the ad network’s campaign-management panel without having to contact the publisher.
Evolution of ad networks
Nowadays, the supply chain of ad impressions is much more complicated, and the role of an ad network may vary significantly.
Instead of selling the remnant traffic, many ad networks took a strategic approach and concentrated on getting premium inventory and offering it to advertisers for higher prices. They cherry-pick a narrow segment of the audience from the esteemed publishers and resell it at a premium price.
Ad networks started utilizing advanced programmatic trading methods, such as private marketplaces and reserved deals, to offer inventory to selected groups of advertisers on special conditions before entering the open auction.
Some networks concentrated on the niche inventory, giving rise to video ad networks, native ad networks, rich media ad networks, etc. Others preferred to diversify, to provide the full spectrum of ad placements. Certain ad networks buy inventory from SSPs or ad exchanges to meet its demand partners’ needs, while others exclusively sell the inventory of its own publishers.
For instance, the New York Times has its own ad network– a self-service platform for small advertisers with less than $10,000 to complement its direct deals department.
Rise of horizontal ad networks
Between 2001 and 2010, most ad networks concentrated on particular verticals, accumulating ad spaces in certain content categories, such as travel, finance, automotive, luxury goods, parenthood, etc. Vertical ad networks were considered a path forward for the industry.
However, the adoption of real-time bidding in 2010, which required sophisticated setup and a lot of processing power, shifted the funding to the horizontal ad networks, which served multiple verticals and industries. Those advertising networks sold similar data sets, technology, and media spaces, etc. both to FMCG and automotive industries.
The introduction of audience targeting allowed showing the right ad to the right user even on the unrelated content category’s website. Independent horizontal ad networks consolidated, in the wake of Google and Facebook expansion, while vertical ad networks mostly left the stage.
Future of ad networks
The wave of privacy regulations and the phase-out of advertising IDs (elimination of 3rd party cookies in web browsers, IDFA opt-in on iOS) will soon render a lot of programmatic capabilities obsolete.
Digital advertising will quickly have two distinct environments: authenticated audience and anonymous audience. Advertising to the first group will rely extensively on the logged-in data or identity solutions still under development. Advertising to the second group is problematic and might bring back to life vertical ad networks.
The comeback of vertical ad networks
Scaled buying and advertising to the unidentified users will be possible only through contextual campaigns. This may lead to the resurgence of vertical ad networks, which can gather highly contextually-rich publishers.
Moreover, horizontal ad networks frequently offer one-size-fits-all solutions, which can be counterproductive for some sensitive product categories, such as healthcare, education, and real estate. Horizontal advertising networks are indispensable when promoting low-cost and low-consideration products.
But the situation is drastically different for products that are expensive and can be considered for months and years. Winning over those customers is different than getting a lot of impressions or clicks. A vertical ad network, which is designed for a single industry, can be more effective here.
Solutions to the identity problem
We considered possible advertising solutions for the anonymous web. Let’s review identity solutions that can replace advertiser IDs and resolve the critical problem with establishing user identity for further re-targeting:
1. Single Sign-on
A technology that gives users access to multiple resources without re-authentication.
The unified ID is a common identifier used by different platforms on top of other IDs. With a single sign-on, there is no need for additional cookie-matching.
This technology aims to identify users cross-site, similar to 3P cookies but using different identifiers.
In Unified IDs, two identifiers will work in conjunction:
- 1st-party website cookies,
- Permanent user identifiers, such as email (hashed) and phone number (hashed).
Premium ad networks that maintain close-partnerships with publishers, or ad networks of media holdings with multiple publishers and owned media, are ideally positioned to implement the single sign-on solution across their media assets. This way, they can generate 1st party data and provide targeted audiences across their inventory.
2. Data Pools
It’s an independent data storage, where publishers could upload their 1st-party data from one side, and advertisers do the same thing.
With this technology, advertisers get a deeper understanding of their customers from the publisher’s resources and can activate the audience with publishers data. The solutions comply with existing privacy regulations.
Ad networks direct relationships with publishers, make it a great intermediary between publishers and advertisers in setting up data pools.
3. User Graphs
This solution binds together different identifiers, both PII (like emails, phones, physical addresses) and non-PII (like cookies, MAIDs, and pubIDs).
The main advantage is that ad networks can provide their audiences for activation across different channels through user graphs and connect users’ activities in different environments.
If you want to create your own ad network, you should consider the White Label Platform. It is a comprehensive solution, that allows you to easily build an ad network and connect it to reliable programmatic monetization sources.
We’ve previously described how to choose the right tech partner to create an ad network.
To sum up
Understanding the role of ad networks in the evolution of the programmatic marketplace is crucial to understanding this industry. Ad networks were initially developed as a way of selling remnant inventory, after most valued placements were sold via direct deals. Ad networks resolved the problem with automating the media trading, and significantly reducing the time on face-to-face negotiations.
However, due to the nature of their media trading method- waterfalling, ad networks were not able to ensure diverse demand, could only provide fragmented audiences to advertisers and had issues with external integrations.
Introduction of SSPs resolved innate problems of ad networks, with the adoption of open RTB – first truly programmatic trading methods. This development caused consolidation on the market since openRTB technologies require complex and time-consuming setup. Instead of many vertically integrated ad networks, concentrated on particular content niche or industry, we got a few horizontal SSPs.
Nowadays, the difference between ad networks and SSPs is blurred. Entities that still call themselves ad networks, usually concentrate on the premium inventory, sell owned media, or are dedicated to a particular content format or narrow audience.
Ad Serving 101: Where Advertisers Meet Publishers
Ad serving is a combination of technology and services that place ads on the website, mobile app, CTV or any other digital platform. It includes the range of functions from delivering ads and targeting users to ad performance reporting and optimizing campaigns based on the results. Previously, we described the key components of the programmatic ecosystem.
To choose the most effective way of monetizing the inventory or buying audiences at scale, it is vital to understand which adtech solutions will better fit your business model and goals.
The appropriate solution for publishers depends on the size, traffic volume, integrations and partnerships. Large-scale publishers need a comprehensive solution to manage various segments of their ad inventory and audiences, while small publishers are better off with a more basic solution. Similarly, there are distinct ad serving models for a single advertiser, and for the agency that represents multiple brands.
For this reason, we are going to explore various connections between publishers and advertisers and break down SaaS products and technical solutions that can accommodate them.
Technical ad serving solutions
Ad tags are used both for programmatic media buying and direct ad serving.
How do ad tags work?
- An initial ad tag is generated by the ad server. It’s installed on the web page to deliver ad requests to adserver.
- When a user lands on a website, the browser sends the ad tag with information about the user and ad placement to the ad server.
- The ad server may forward the request to DMP to get more information about the user and show the right ad.
- The ad server checks if the request matches with current ad campaigns or gets bids from external DSPs if connected.
- Adserver defines the most appropriate ad to be shown (decision made by auction or priority model)
- Finally, the ad server returns the creative to be served to the user.
This is a simplified process of ad serving that usually happens in direct media buying. Yet, publishers can also add the partner supply-side platform (SSP) in the interface of the primary ad server to sell remnant traffic and connect additional monetization sources.
SSP adds the publisher’s ad space to the list of inventory available for sale. When a user visits the publisher’s website, the ad tag passes the ad request to the SSP, informing it about the user and his characteristics, to match it with the appropriate ad from the advertiser.
Video advertising ad tags (VAST and VPAID)
Ad tags used for video ad serving have to be more specific than the regular tags for banner ads. Just a few years ago, the advertiser who wanted to display a video ad, had to check if their video serving protocol was compatible with the publisher’s ad player. However, since then, the industry has moved toward standardization eliminating redundant work.
Interactive Advertising Bureau (IAB) has developed a unified protocol for video ads – Video ad-serving template (VAST). Now, ad tags for video-surfing have to comply with VAST. This industry-standard eliminated the cumbersome and time-consuming synchronization and enabled advertisers to serve video ads across a multitude of publishers’ sites.
VAST by itself supports only relatively simple in-stream video formats and doesn’t provide capabilities for interaction.
For this reason, IAB introduced Video Player Ad Interface Definition (VPAID) – a common communication protocol between video players and ad units, enabling diverse interactive in-stream ad experience. This shared interface allows advertisers to have more control over their video campaigns. VPAID is turning obsolete because it is highly susceptible to fraud. The advertising market is gradually abandoning this protocol and searching for new industry standards.
Audio advertising ad tags (DAAST)
Audio advertising exists in various environments and previously faced issues with adopting programmatic due to the fragmented nature of this market. For this reason, IAB released Digital Audio Ad Serving Template (DAAST), an industry-standard for video ad serving. DAAST defined the principal guidelines for audio ad delivery, reporting, and attribution for major platforms and devices.
DAAST laid down the groundwork for scaling this ad format across various environments, by filling the gaps in the ad serving infrastructure. For instance, it addresses the needs of mobile audio apps and in-car radios where access to a web browser is limited, which complicates ad and play tracking functionality.
To adopt DAAST, publishers need to comply with its requirements, and support linear ads and optionally companion ads, ad pods, or skippable ads.
OpenRTB is a method of sequentially selling the publishers’ inventory, requesting demand sources in turns. OpenRTB connects to the publisher’s website via SSP platforms through the system of endpoints. RTB endpoints are locations in the publisher network that connect it to the programmatic ecosystem. Publishers conduct a series of real-time auctions until all of their ad inventory is sold.
Publishers offer the inventory in series to the demand partners according to the yield from previous actions, or in a predefined order.
OpenRTB works via the second-price auction model. The winning bidder pays the price offered by the second-highest bidder plus $0.01.
Header bidding is a programmatic buying method that enables publishers to simultaneously collect multiple bids from a number of demand sources on all of their ad inventory prior to a sale. In header bidding instead of the separate auction for each demand partner, ad exchanges can bid at the same time in the wrapper on the web page. Header-bidding uses a more straightforward first-price auction model.
The prebid connection is implemented through a header wrapper, which is installed into the page code. It significantly speeds up the ad serving process.
A header wrapper is not a single tag, but rather a repository of tags. With the ordinary ad tag, you would have to alter the code each time you add a new demand partner, but not with the header wrapper. A header wrapper significantly simplifies the management of the demand partners for publishers. The technology organizes buyers and sets up timeout rules for the RTB auctions and collects multiple bid responses.
The open-source header wrapper technology was developed by Prebid.org, a nonprofit organization, creating adtech solutions. Based on the wrapper, Admixer created its own solution, which by default, has an adapter connecting it to HB demand from Admixer.SSP.
Each time a page loads, demand sources can bid on each impression on that page, even if some or all of the inventory has already been sold through direct deals between an advertiser and the publisher.
There is also a hybrid model that merges features of header-bidding and OpenRTB to maximize yield from each impression. The server initiates the OpenRTB second-price auction and then conducts the Header Bidding first-price auction.
The winning bids compete in an additional auction that determines the best price offer. The hybrid model increases the chances of getting higher bids and amplifies monetization. To deploy hybrid model, publisher need to insert Admixer tag directly into their website
Ad SDK for in-app advertising
In-app ad spaces need a different type of connection. To connect a mobile application to an ad network, publishers need to implement an Ad SDK (Advertisement Software Development Kit). It is a software library that is incorporated into the app to enable ad networks to serve ads.
Additionally, instead of cookies, for in-app ads, advertisers employ user-resettable identifiers provided by the mobile device’s operating system, AdID for Android and IDFA for Apple.
Those IDs allow media buyers to match their user profiles with the impression received from the publisher.
Mobile advertising IDs work similarly to cookies and enable advertisers to measure the performance of their campaigns effectively, track user activity, and facilitate attribution, frequency capping, and re-marketing.
How publishers and advertisers connect to the programmatic ecosystem with Admixer
Publishers and advertisers can start trading traffic by connecting to the programmatic ecosystem. Depending on the type of business and its scale, they should use different technical solutions:
Small and medium-sized publishers
SaaS solution: ad server Admixer.Publisher
Connection via: ad tags (VAST/DAAST/JS) and header bidding
Buying method: waterfall or header bidding for sale of the inventory
Small publishers that want to start serving ads, but don’t need the functionality of the ad network need an ad server, for instance, Admixer.Publisher. It is a full-scale solution for impression monetization from direct ad sales and ad exchanges.
Admixer.Publisher has a free plan for small publishers. Want to give it a try?Try for free
With ad server, publishers connect to advertisers via ad tags and/or header wrapper and sell their inventory via water-falling or header bidding. They have to set up campaigns and upload creatives manually. Ad server provides limited options for trading inventory programmatically and automating ad placement and creatives adjustments.
Large-scale publishers, ad networks, and media houses
SaaS solution: Enterprise-level ad management solution Admixer.Network
- for connection with publishers: ad tags (JS and VAST tags) and header bidding;
- for demand integration: direct campaign creation by uploading creatives or adding external tags; connection to DSPs (own partner demand providers – DSPs/SSPs or/and Admixer.SSP) via OpenRTB protocol and header bidding.
Buying method: programmatic buying methods
Large-scale publishers, ad networks, and media houses need diverse options for selling and monetizing their inventory – more comprehensive capabilities of the Admixer.Network.
In this solution, network owners can set up self-service individual trade desks for advertisers or agencies to purchase inventory and manage their advertising campaigns. This way, advertisers get a self-service platform and don’t need to invoke the ad network owner each time they need to update creatives in their campaign.
A network owner can add additional modules to enhance their ad serving, for instance, DMP to gather and analyze first-party data, Creatives for building WOW-banners or video/audio player with built-in monetization.
You can create and manage your ad network with Admixer.Network solution. It connects all dots in the programmatic ecosystem. The structure may look like this:
Want to learn more about Admixer Network or request a demo?Learn more
Ad agencies and media buyers
SaaS solution: DSP trading desk Admixer.DSP
Buying method: direct deals and programmatic buying methods
Agencies and media buyers can use DSP to purchase inventory at scale and manage their ad campaigns. DSP allows brands to buy audiences from the diverse inventory of supply, measure, and optimize marketing campaigns in real-time.
For instance, brands can use Admixer.DSP, which has diverse functionality. It provides access to the global market of premium supply (large-scale direct publishers, ad exchanges, SSPs, and ad networks), numerous targeting options, reporting, and analytics.
SaaS solution: Agency Tech Stack Admixer.ATS
Buying method: direct deals and programmatic buying methods
Admixer provides a special SaaS solution for global advertising agencies – ATS. An owner sets up trade desks in ATS for other agencies and partners, so they can access and buy ad placements on the platform. Basically, it is an ad network for the demand side, with an ability to connect modules with additional features.
On top of the DSP module, agencies can connect DMP for the advanced campaigns analytics, and integration of the 3rd party data,
With a Marketplace module, ATS can get access to the inventory of Admixer.SSP, or if they want external inventory – set up agreements with publishers and networks via direct deals. ATS can generate a string of code for the direct ad serving on the publisher’s website.
To sum up
You should carefully weigh out all the options and choose the SaaS solution that better fits your business model.
- If you are a niche publisher with specific audiences, you can just set up an ad server (Admixer.Publisher) and sell impressions directly to advertisers in your industry.
- If you are a large-scale publisher with a diverse audience, media house or ad network with multiple publishers, you need Admixer.Network to diversify your demand partners and maximize fill rate. With the solution, you can connect to ad exchanges to sell excessive inventory programmatically, set up a private marketplace, collect and monetize user data.
- If you are an agency, you may use Admixer.DSP to purchase ads from diverse sources, including premium Admixer.SSP inventory and manage your ad campaigns.
- If you’re a large-scale agency and need an effective solution to deliver inventory to your clients, as well as ensure reliable supply – Agency Tech Stack is the best option out there.
Programmatic Advertising Explained: Terms, Elements, Buying Methods, Programmatic Monetization
Programmatic advertising is swiftly expanding its market share and is becoming the dominant model in the digital advertising ecosystem. According to the joined report by IAB and PwC, programmatic ad revenues currently account for 80% of all digital display advertising revenues. Programmatic advertising enabled companies to capitalize on their consumer data and reach audiences more cost-effectively.
According to recent estimates, brands spent $106 billion on programmatic advertising in 2019. The prediction for 2020 says that programmatic ad spendings will grow to $127 billion and will reach $147 billion by 2021.
What is programmatic advertising?
Programmatic advertising is the process of buying digital ads through automated platforms. It is gradually replacing the traditional model of digital advertising that involved human negotiations, manual insertion orders, and requests for proposal (RFPs).
The software takes over the menial tasks previously done by human ad buyers. In direct media buying, you would have to look for publishers, negotiate the price, and ad placement in person. Programmatic technology streamlines the ad-buying process and makes it cheaper by removing human interactions wherever possible.
It allows marketers to spend more time on tailoring their targeting and customizing campaigns, removing redundant ad-buying procedures. It is a data-driven approach that replaces inefficient manual practices prone to human error.
Advantages of programmatic advertising
Programmatic advertising introduces transparency to the digital marketing marketplace. It eliminates the informational asymmetry that used to plague the industry. Direct media buys stimulated deals behind the closed door, obscuring the actual market value of the traffic.
With programmatic monetization, publishers can access the demand and get a fair price for their ad spaces.
At the same time, now advertisers can get precisely what they paid for. Programmatic platforms are optimized in real-time based on the extensive publisher’s data. It allows marketers and advertisers to aim at individual impressions instead of buying blocks of advertising. Auctioning may drive up the price of specific placements, but in the long run, it is a more cost-effective strategy for advertisers than direct deals.
Programmatic advertising rests upon the whole ecosystem of ad exchanges and digital platforms (e.g. SSP and DSP), connecting publishers and advertisers and facilitating the ad inventory trading. Buyers and sellers transact in real-time, a lot like stock exchanges.
Key elements of the programmatic advertising ecosystem
A supply-side platform (SSP) is a programmatic monetization gateway for publishers, who can use it to sell advertising spots across their websites, mobile apps, or games through automated auctions. SSP connects to ad exchanges and demand-side platforms, enabling advertisers to bid on ad inventory.
SSP enables publishers to check their fill rate, overall yield, and evaluate the demand from the buyers. It provides a unified platform to oversee multiple ad networks and DSPs.
The goal of SSP is to provide access to real-time data and maximize the price for the ad space. Publishers usually set a bid floor they are willing to accept.
SSP can feature a wide variety of formats. At the same time, it can be devoted to a particular type of advertising, for instance, in-game ads.
A demand-side platform (DSP) is a platform that lets companies, ad networks, and agencies to buy ad spaces from publishers and ad exchanges. DSP puts forward the advertiser’s requirement on the audience, price, and campaign goals.
After that, the platform automatically assesses available ad inventory, and purchases ad spaces that meet these criteria most cost-effectively. DSP also can measure and optimize marketing campaigns in real-time.
Advertiser ad server
An ad server is a platform where an advertiser hosts its creative assets, such as video, native ads and banners, as well as stores data about them. It ensures delivery of the creatives to the ad spots within milliseconds, once the impression is sold.
An ad server also equips advertisers with campaign tracking, performance reporting, and ad management, in cases where there are multiple versions of creative assets. The ad server can help to consolidate data when multiple DSPs and publishers are involved.
Publisher ad server
An ad server is also an irreplaceable tool for publishers. It is an ultimate gateway for programmatic monetization of the traffic that allows publishers to set ad units, connect to multiple demand partners, prioritize ad delivery and monitor campaigns.
An ad network is a platform that accumulates ad spaces from multiple publishers and websites to bundle them together and sell to agencies and advertisers. Ad networks sell advertising inventory of a particular website, of specific categories of sites, and impressions to certain audiences.
Ad networks used to be the primary intermediary for the ad buyers in the early days of digital advertising. They allowed advertisers to secure ad spots across hundreds of media sources, yet this model lacks transparency.
Today, ad networks focus on the premium inventory, ad formats, and placements that cannot be acquired through programmatic, such as branding, rich media, and packages of high-quality inventory. Ad networks remain a critical piece of advertising infrastructure for many categories of publishers.
If you want to create your own ad network, you should consider the White Label Platform. It is a comprehensive solution, that allows you to easily build an ad network and connect it to reliable programmatic monetization sources.
We’ve previously described how to choose the right tech partner to create an ad network.
An ad exchange is a virtual marketplace that allows publishers and advertisers to trade advertising spots automatically. Exchanges enable advertisers to buy ad spots across a range of sites in bulk, in contrast to negotiating buys directly with specific publishers.
Exchanges operate via real-time auction, with advertiser bidding on the available ad inventory from publishers. The dynamics of supply and demand determine the price of an ad. Usually, exchanges appraise ad placements on cost per thousand impressions (CPM) basis.
Ad exchanges enable buyers to assess the price of sold impressions and provide greater transparency than ad networks.
Agency trading desk
An agency trading desk (ATD) is a platform that allows advertising agencies to manage programmatic marketing campaigns of different clients.
Brands using a trading desk basically outsource campaign management to the agency, which removes the need to hire an in-house programmatic specialist. At the same time, such advertisers pay extra ATD fees on top of the DSP commission. And, unlike DSP, advertisers cannot access the available inventory directly.
Agency Trading Desks are responsible for analyzing data, research audiences, measuring key campaign indicators, optimizing strategies, and ad budgets. ATD bring to the table additional expertise and toolbox for working with DSPs, audience planning, and getting the most cost-effective ad placement.
ATD advantages for advertisers
- Extensive experience. Agency media buyers working with ATD are usually more knowledgeable than in-house programmatic specialists hired by brands.
- Performance optimization. The technology automates menial processes while humans execute more complex tasks. Advertisers don’t need to interfere in any processes.
- Broader campaign data. ATD employs historical campaign data, optimization techniques and bidding methods that have proven effective to forecast and optimize the results of current campaigns.
- Access to several DSPs. ATDs that have access to multiple demand-side platforms, may provide more effective ad placement.
A data management platform (DMP) is a software platform that consolidates data about the target audience from multiple sources and channels.
What does DMP do?
- It analyzes user behavior on sites and mobile applications as well as user data from other sources, and packs users into segments in line with demographics, location, and behavioral attributes.
- DMP divides audience data into clusters and provides suggestions on targeting, messaging, and primary channels of communications.
- DMP analyzes big data and creates lookalike audiences, where users with similar characteristics are suggested for scaling.
A cookie is a small piece of data stored in the users’ browser by the site they visit. The browser stores the cookie and sends it back during the next visit. Typically cookies help websites to keep the user logged in, remember the language, items saved in the shopping cart, etc.
Cookies underpin digital advertising and make sure that the ads displayed to the users are relevant. They allow advertisers to recognize the users across websites and platforms, and serve them targeted ads of their product.
How cookies work
- A user visits your website, clicks around your product inventory, and leaves to the news site to follow up on the new smartphone release.
- A pixel on the website registers this behavior and places the cookies in the user’s browser with the data about the website visit. It allows the advertiser to show the most relevant ad.
- While on the news site, the cookie notifies retargeting platforms, which serve a relevant ad about a smartphone the user has just been searching with a discount.
Mobile advertising IDs
Cookies do not work in mobile apps. Instead, advertisers employ user-resettable identifiers provided by the operating system of the mobile device, AdID for Android and IDFA for Apple.
Those IDs allows media buyers to match their user profile with the impression received from the publisher. Mobile advertising ID works similarly to cookies and enable advertisers to measure the performance of their campaigns effectively, track user activity, and facilitates attribution, frequency capping, and remarketing.
First-party data is the data that a company or brand collects directly from its customers or audience. It consists of data from the user behavior on the app or website, data from CRM, email newsletter subscribers, or social media followers.
First-party data comes at a minimal cost since it is collected in-house. It allows brands to personalize the customer experience and gain insight into their audience. Nevertheless, first-party data provide a limited data set, fitting for retargeting, but insufficient for large-scale outreach.
Second-party data is fundamentally first-party data of other platforms and partners. Frequently, advertisers gain second-party data when they have a direct relationship with the publisher. Second-party data allows brands to reach new audiences, and better predict the behavior of the customer base, due to the additional layer of data.
Third-party data is obtained through the outside sources that are not original collectors of the data. Those are large aggregators that pull it from various sources and publishers.
Third-party data vendors, like Data Logic and Nielsen, supplement first- and second-party data with large data sets of demographic and geographic information. Google announced that by 2022 it will phase-out third-party cookies, which will force publishers to look for alternative ways of data collection.
We’ve recently described how cookie elimination will impact the industry.
The amount of data is immense and hard to manage without the data management system. DMP consolidates first-, second-, and third-party data and conveys it to the DSP, which in conjunction with ad exchanges and SSP, finds the most relevant audiences.
Programmatic monetization and buying methods
RTB or real-time bidding is the model of buying advertising spaces in the form of individual impressions through the real-time auction.
The selling and buying take place in the ad exchange that connects to publishers through SSP and to advertisers through DSP.
- Publishers make the impressions available through SSP.
- Then, the ad exchange places a bid request on the DSP.
- Once advertisers assess the available ad inventory, they send a bid request back to the ad exchange.
- SSP evaluates the bids and sells the impression to the highest bidder. A DMP facilitates this process through the exchange of data, and cookie matching between the supply and demand platforms.
- After the transaction is finalized, the ad server places the creative in the ad spot of the publisher’s site.
The deal and following ad placement happen instantly within milliseconds while the web page is loading. Real-time bidding is usually an open marketplace without particular restrictions, where everybody can join. RTB is one, but not the only form of programmatic advertising.
Header bidding is another auction model that is taking hold in the industry. In header bidding instead of each ad exchange having their own auction, one at a time, ad exchanges can bid at the same time at the highest priority in the ad server. Other programmatic buying methods focus on prior negotiations.
A private marketplace or PMP is an exclusive trading platform, where participants have to be invited. It is usually a closed ecosystem or premium publishers that provide their inventory for the group of hand-picked big advertisers.
In the private marketplace, the advertiser’s DSP connects directly to the inventory of the publisher bypassing the ad exchange. The process of buying and selling ad space also happens through the real-time auction.
Programmatic guaranteed is a practice of buying ad spots directly from the publisher. Publishers and advertisers agree on the price of the ad placements and the number of impressions beforehand, and those impressions never enter the auction. There is no bidding process involved, but the negotiations also happen automatically through an API.
Preferred deals is a way of offering ad inventory to the preferred advertising partners first, at the fixed price. If advertisers skip the chance of purchasing the ad space, it is then transferred to the private marketplace or RTB. Preferred deals are an efficient way for publishers to sell inventory to exclusive partners, with a chance to sell it on the auction if the inventory remains unused.
Wrapping up. Benefits of the programmatic ecosystem
Now when you aware of the key players in the programmatic ecosystem, you can see the full picture of the industry transformation. The work that was previously performed manually by the team of media buyers is now done programmatically through the DSP and SSP platforms.
The complex process of negotiations is reduced to automatic real-time auctions on ad exchanges. Direct deals are not extinct but rather streamlined through API negotiations. The preferred deals allow publishers to make use of direct deals as well as programmatic auctions.
Negotiations that used to take days of communication now happen within milliseconds while the page is loading. Fragmented data-sources are now consolidated through the DMP for the most efficient optimization of ad campaigns.
If you’re considering the implementation of programmatic solutions for your ad inventory or media buying, contact Yaroslav Kholod, Director of Programmatic at Admixer.
DOOH Reinforced by Programmatic: What’s the Power?
Increasing volumes and popularity of DOOH (Digital Out Of Home) is a steady trend of the last years, especially in the US and Europe. Advertisers allocate bigger and bigger budgets for this media channel. The latest research indicates a significant growth of the DOOH market across the globe, according to the DAN report. Surveys by Statista also illustrate remarkable boost and forecast a long-term acceleration of DOOH advertising market at least till 2027:
Depending on the marketing goals, DOOH can help to deliver addressable advertising, raise brand awareness, ramp up regional presence, and to bring a customer up to the product shelf. Most consumers make purchasing decisions when out of their home, and topflight video ad has a memorable habitude. Thus, according to Beeoutdoor, 55% of digital display advertisement viewers could revoke the exact message they saw.
According to the IAB DOOH Buyer’s Guide, for the last 20 years, people spend up to 50% more time outside their homes. Thus, the amount and diversity of touchpoints with prospects are increasing. At this point, brands consider digital outdoor advertising channel more attractive and perspective than classical static posts and billboards.
Today, outdoor advertisement isn’t just a billboard you need to print, place, and wait for a new advertiser to replace the ad space. It’s also not just a video screen with revolving ad content. DOOH is rather an engaging display encouraging users to interact, and pushing them to make an online purchase.
The challenge of addressable ads via DOOH was solved with users’ mobile data and digital signages synchronization. Through Wi-Fi connection, DOOH platforms are capturing mobile ID and data which allows delivering relevant content.
With this, the ad message can be tailored to the bullseye, and this is how a persona profile is creating. On the same principle, digital signages collect information about human traffic on the location and provide optimal content to the audience.
Another profiling method is facial recognition. Some digital out of home media platforms are equipped with a camera allowing to identify a specific person within a particular radius. In this way, additional data attributes (like age, gender) are collecting.
The synergy effect of DOOH and Programmatic
In its recent article, Digiday raises the issue of how programmatic is changing the landscape of the OOH advertisement in the US for both, SSP and DSP sides.
With the growth of DOOH mediums, the question of effective inventory management is becoming urgent. Since programmatic is available for DOOH networks, manual advertising configuration has become rudimentary.
Today, technological companies that are powered with Ad Tech Stack are capable to provide demanders with customized solutions that cover digital out of home advertising programmatic maintenance. With this capacity, advertisers can easily tune their campaign including its views frequency.
On top of that, the programmatic ecosystem helps to engage independent auditors to supervise the results of ad campaigns and win more trust from clients. Programmatic solutions allow DOOH publishers to participate in real-time bid auction and easily sell remnant inventory for the best price keeping the supply and demand balance for the most wanted ad spaces.
Similarly to online advertising, growing demand for programmatic in the DOOH area pushes advertisers to try different tech solutions and integrations. Due to its specific, such processes are quite sophisticated and time-consuming. However, integrations happen, providing DSP with new horizons, pushing media buying borders, and developing the market.
How you can embrace DOOH with Admixer Technologies?
Programmatic implies a bunch of difficulties on its way to the implementation in DOOH. Principal barriers are related to a mandatory audit of creatives that are publicly placed, and their high-quality requirements that are due to a bigger displaying area.
Admixer Technologies is making confident steps in the direction of DOOH media integration into the global programmatic ecosystem. We contribute our partners with the programmatic demand sources and the ways to integrate them are smoothly and easily. Our SaaS Tech Stack allows not only to connect to programmatic demand sources but includes blacklists (by categories, advertisers, and brands) and allows conducting entire creative quality assurance.
The technical problems that should be decided by DOOH media owners’ side:
- constant access to the Internet – to get instantly new ads coming from the auction model
- in-time ad creatives confirmation
- gathering all screens and partners into structured packages to be presented on Admixer.DSP
For market-leaders who have their own proprietary or leased software and CMS systems, the future challenge would be to connect to Admixer Tech Stack through API for full-stack smooth integration. However now it’s not necessary, one could start selling DOOH inventory without direct integration.
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