ad exchange

How Ad Serving Works – Mobile vs. Web Environments

The most popular article on this blog is one of the very first ones I ever wrote – How Does Ad Serving Work. What I probably should have titled it though was How Does Ad Serving Work on the Web, because there are a few important differences when you’re talking about the mobile ecosystem.

Server Redirects vs. Client Redirects

For the most part, it comes down to the interaction between a client and a server – in desktop environments, the user’s browser, or the client in technical-speak, does most of the work fetching and redirecting information, which is ideal for lots of reasons. For one, redirecting the client gives each platform in the ecosystem the ability to drop or read a cookie, which helps with downstream conversion tracking, frequency measurement, and audience profiling. Secondly, it facilitates client-side tracking of key metrics like clicks and impressions for billing purposes. Client-side tracking is the preferred methodology for advertisers because it measures requests from a user instead of from a server, and is therefore a more accurate measure of what a user actually saw.  This process requires more work from the browser, but that’s OK because high-speed connections and unlimited data usage is pretty much the norm these days for home and office connections.

Desktop Ad Serving Sequence

In mobile environments though, connection speeds really matter. Many users are on slow enough connections that if the browser or app was responsible for fetching the ad the way it does on desktop connections, the user is likely to abandon the page before the ad finished loading. Because of that, you often see more of the work being done in the cloud for mobile ad serving, independent of the client. So instead of the browser calling a server, and then being redirected to another server, the browser tends to call a server, which then calls other servers, which can talk to each other through the ultra-fast fiber-optic landlines instead of the cellular network. (more…)

History of the Ad Exchange Landscape Part I: Rise of the Ad Networks

In this new series of articles, I will try to explain the current landscape of digital advertising as it relates to remnant monetization from the publisher perspective.  Specifically, this series covers how publishers have sought to cope with a ever-fragmenting marketplace of remnant buyers and the upstart technology companies built to help them.  I think for anyone trying to understand the current marketplace of technology vendors, data companies, and yield optimizers, it helps to know the history.

Part I: Rise of the Ad Networks

Since most major publishers can rarely sell more than a fraction of the available ad inventory on their site with a direct sales team, they historically sold off whatever was left over to a handful of ad networks, or tried to monetize the unsold space with performance-based advertising, like Google AdSense.  This pile of unsold inventory was typically sold off at fire-sale prices, as little as 5 or 10% of what the publisher might charge for the exact same ad space on a direct buy from an ad agency.  Who bought it?  Well an advertiser eventually bought it, but through a type of company called an ad network.  Ad Networks were initially setup to aggregate a number of publishers together in order to provide advertisers with low cost ads that could reach a lot of people and had very aggressive ROI goals.  Basically, they were built for direct response advertisers who were trying to sell something.  While it seemed like a good idea at the time for publishers to hand off this inventory to a network – some revenue was better than no revenue, right? – this practice started to catch up with publishers.  Agencies decided that prices were so much cheaper on networks, and the quality was pretty much the same, they could get more bang for their buck by moving more of their budgets to the ad networks, including for brand advertisers, the bread and butter of publisher sales teams.  From the publisher perspective ad networks were supposed to help monetize their inventory, but ended up cannibalizing the efforts of their sales team instead.

It was great for the networks, publishers desperately needed them to monetize their unsold inventory, and the network could change a huge margin and still be much cheaper than buying from the publisher directly.  And even though technically networks were supposed to aggregate a few publishers together to dilute the value of the ad placement, there was so much inventory available that they didn’t really need to, especially if they could charge an advertiser a bit more money to run them exclusively to one site versus a handful.  The best part was you didn’t really need any infrastructure to start an ad network, just someone to call a bunch of publishers to aggregate some cheap inventory, and someone to call a bunch of advertisers, trying to sell that inventory.  It was easy!  So easy in fact that a few hundred sprang up over the course of just a few years.  Competition drives specialization, and that’s exactly what the networks did – they started to specialize in various levels of ad quality or audiences to differentiate themselves in the marketplace, and of course, maintain their high margins.

Read More –  History of the Ad Exchange Landscape Part II: Network Fragmentation and the Ad Ops Problem

Dynamic Creative Optimization – Where Online Data Meets Advertising Creative

Dynamic Creative Optimization Basics

Dynamic creative optimization is a relatively new technology to the online advertising space, but it is sure to see tremendous growth this year.  Why?  Because dynamic creative optimization allows marketers to put the right message in front of the right consumer.  It allows them to differentiate and custom-tailor ad creative to people using data, and it is extremely effective at increasing a campaign’s performance, almost to the point of suspicion.  Many case studies show an increase to CTR well above 100% vs. non-personalized creative, and decreases in cost metrics of 60 – 70%.  Combine these two metrics and the impact to ROI is usually eye-popping.

As we’ve written before, thanks to data marketplaces and real-time bidding through ad exchanges, marketers now have very powerful tools to reach a very precise audience on the web thanks to an explosion in consumer data.  Literally hundreds of companies are in the business of qualifying people into anonymous buying segments and reselling that intent data to marketers, who then use it to target those users with ads across the web.  So technology has allowed marketers to reach the right person at the right time with fairly impressive scale and pricing efficiency.  Powerful stuff to be sure, but what about the right message?  For example, if you knew about a single, 25 year old male in California who was in the market to buy a car, the last thing you want to show him is an ad for a minivan that performs well in the snow.  He’s probably much more interested in a hybrid car that can store a surfboard on its roof.  That’s a comically extreme example, but the point is that regardless of the targeting, marketers still need compelling creative. And dynamic creative optimization is where data meets the creative message.  It’s difficult to understate how exciting this technology is – placing the right ad in front of the right person and the right time is practically a holy grail for marketers and it looks as though the online advertising industry has figured out how to do it, or at least invented the tools to do it. (more…)

How Real Time Bidding, DSPs, SSPs, and Ad Exchanges Work

Let’s say you’re online one day and decide to do a little shoe shopping. You navigate to your favorite store, check out a pair of boots, add something to your cart and just as you’re about to checkout, the phone rings and you get distracted.  By the time you’re done talking to your friend, it’s late and you decide to buy the shoes later.

Then, the next day, you check to see who won the big game last night and you notice an ad from the shoe store you were on last night.  Not only is it an ad for the store, but the exact pair of boots you were looking at are in the ad!  Weird.  You decide to check your email and see that your mom sent you a link to a news article. You go to read the article and staring you in the face on the page is another ad for the same pair of boots, this time tempting you with a 10% discount!

How did the ads know you were shopping for shoes last night, and how did they wind up on all those different sites?  The answer is, probably through an ad exchange.

Ad Exchanges have been around for a few years, but have exploded in importance in the last year.  Along with Demand Side Platforms (DSPs) and Supply Side Platforms (SSPs), Ad Exchanges are dramatically changing the way digital media is bought and sold. If you are a digital marketer or publisher, it is a very exciting time to be working in the industry.

What makes these companies so innovative is how they allow buyers and sellers to value inventory on an impression by impression basis and in real-time.  That’s right, real time.  That means that when you clicked on your mom’s link to the news article and your browser requested an ad from the news site, the publisher put that ad up for auction on an exchange, marketers bid on that impression, and it was served to your browser in about 250 milliseconds, so fast it was indistinguishable from the time it took any other image on the page to render.  Welcome to the world of real-time bidding, or RTB, where marketers value each impression as it is created and the Ad Exchange is where it all happens.

From a technical perspective though, how does the ad exchange process differ from regular ol’ third-party adserving?  I’ll answer that question and diagram the process in my next post, similar to what I showed you in my diagram for how third-party ad serving works.