Online display advertising ecosystem
Media
Buying Desks
Ad
Exchanges
Data
optimization
Re-Targeters
Behavioral retargeting is the next step of retargeting. Plain retargeting is nice, but it suffers from a couple flaws. First, it has limited reach, ie there are only so many cookies that go to a bmw forum. BMW probably wants to reach more purchasers than just those. Second, it doesn’t really help generate intent. If you’re going to a bmw forum, you’re probably already pretty interested in bmws, so that may not be the best person for bmw to advertise to. Behavioral retargeting means any of a variety of ways of trying to figure out cookies to advertise to to get broader reach or cheaper acquisitions than retargeting.
The biggest divide in the online advertising
world is search advertising v/s display advertising. Search sounds exactly like
what it is: the ads next to search results on Google, Yahoo, Bing, and
competitors. Search is bigger than display by revenues, and much more
concentrated.
The benefit of search to advertisers is it corresponds much
better than display advertising to intent. A searcher for “hotels in Palm Springs” is most
likely in the market for a hotel in Palm Springs. The other thing search has
going for it is its easy and quantifiable — you can sign into Google Adwords
with nothing more than your credit card, type up some text ads, and be running
campaigns with impression and click reporting within hours.
The display advertising world is structured
differently. Display ads are obviously those pictures you see plastered all
over the sites you visit. There’s less intent so individual impressions earn a
lot less money. Typically the prices are measured as CPM, Cost Per Mille, i.e.
cost per 1k impressions. It’s also important to understand the structure of the
market a bit.
In the beginning (90s), advertisers pretty naively bought ad
impressions millions at a time on popular sites. Performance was often
evaluated based on pure impressions or CTR, click through rates. Ads were often
sold on the basis of quantifiability — you could, for the first time, measure
how many ads were seen, who clicked, how often, where he or she went, etc. As
search advertising evolved, I think a lot of the people chasing quantifiable
advertising moved to that, while display became more about branding. This, btw,
is the value of facebook — brand advertisers want to be able to precisely
target age, gender, income, and other demographics; on facebook, users freely
and generally accurately share this information.
The display ecosystem has a bunch of moving
pieces. If you look at the display advertising tech landscape graphic from Luma
Partners, you’ll see:
Agencies
These are the big advertising agencies that run
most large advertising accounts go through. Companies like Toyota, GM, General
Mills, etc, will give these companies tend to hundreds of millions of dollars
to run ad campaigns on their behalf.
Media
Buying Desks
The ad agencies weren’t really capable of
managing digital campaigns. That is, when ad agencies came about, your media
outlets were maybe 10 national TV networks, radio stations, local newspapers,
and a couple national magazines. And the media buying process was pretty
simple: the agencies would send out an RFP that said we want manly men in their
40s who buy outdoorsy cologne and the aforementioned publishers would respond
and say how their audience matched that profile. Compared to the online world
of today, where there are thousands of premier publishers such as the NYT,
ESPN, online magazine versions, etc; this was much simpler.
Today, trafficking
ads is an order of magnitude more work and advertisers must decide what they want
to buy, where, on which site, when, with what creative, etc. So the agencies
built or bought companies that have the capability to build digital media,
traffic campaigns, optimize the ads, and create the necessary reporting. Eg
Vivaki is Publicis, b3 is WPP, etc.
Ad
Exchanges
These are, well, exchanges where publishers and
advertisers come together to sell and buy remnant ad inventory. Basically,
there is premier and remnant inventory. Premier inventory is something like
display ads on high quality reporting on ESPN or ads on articles on ARS Technica.
These are often sold by in house salespeople in a process remarkably similar to
how everything used to work, though people mostly email PDFs instead of sending
faxes. Every ad impression that isn’t sold as premier is referred to as
remnant, and these remnant impressions are offered to ad exchanges such as
Right Media — RMX, owned by Yahoo — in exchange for a cut.
So the way this works is I can buy, with some
rules, 1MM impressions on RMX and RMX will put these impressions on their
publishers such as ESPN in ad impressions that ESPN didn’t sell in house. These
impressions go for an order of magnitude less money than premier. RMX is one of
the more technically sophisticated. The benefit for publishers is they get some
money for inventory they didn’t fill. Just to be clear, a good eCPM for premier
might be $20-$40 and a good eCPM for remnant might be $3-$5.
Demand Site Platform
A DSP helps advertisers purchase remnant ads
across multiple ad sources including exchanges, ad networks, and individual
publishers. A good DSP will have sophisticated targeting and optimization
algorithms that incorporate first and third party data on behalf of the
advertisers. Typically, a DSP’s clients are advertisers that aren’t big enough
to go to one of the big seven agencies. Often these advertisers spend $10 –
$50k / month, for example a local Toyota dealership instead of the national
dealer chain, etc.
Ad Servers
These help publishers. See Exp: OpenX,
DoubleClick Dart, etc. Particularly for larger publishers, coordinating all
these ad purchases is complicated. Your advertisers want to give you rules,
such as user bleaching rules (only so many impressions to a given user per some
amount of time), time of day, what pages an ad can run on (few people want to
run next to naked folks, etc).
They also want to be able to update and optimize
their creative or even change the creative or the landing page they go to.
Advertisers, or their agencies, also demand reporting — how many times was an
ad seen. On what pages did users click on the Ad etc., within publishers the ad
sales or monetization folks don’t want to be releasing the site every time they
tweak Ads. Ad servers are internal or external software that manages all this
and can be quite complex.
Data
optimization
This requires some explanation. In the
beginning, people basically bought broad swaths of display ads. The value to
optimization is the more targeted you can make your ad, the more value it has.
My favorite example is espn: assume 10% of their online audience is female. If
you’re an advertiser that wants to sell female sports jerseys, your CTR amongst
women is 5%, your conversion rate is 5%, and a conversion is worth $50, your
value per 1k impressions is 1000 * .1 * .05 * .05 * 50 = $12.5, so your CPM has
to be < $12.50. However, if espn could pick out the women and sell the
publisher only that segment (with some error, obviously), but say espn can
enrich the demos so that women are 50% of impressions in a segment. Suddenly advertising
on espn is worth 5 times as much for the advertiser and hence espn can charge 5
times as much. This is the value of data optimization. It's performed many
ways, from things as simple as geo targeting and day part to more sophisticated
demographic estimation, retargeting, and varieties of behavioral retargeting.
Re-Targeters
Re-targeting is a simple idea. Say that I see
cookies going to a site like a bmw forum. I might reasonably intuit that these
users are interested in bmws and choose to show bmw display ads to them as they
browse the internet.
Behavioral retargeting is the next step of retargeting. Plain retargeting is nice, but it suffers from a couple flaws. First, it has limited reach, ie there are only so many cookies that go to a bmw forum. BMW probably wants to reach more purchasers than just those. Second, it doesn’t really help generate intent. If you’re going to a bmw forum, you’re probably already pretty interested in bmws, so that may not be the best person for bmw to advertise to. Behavioral retargeting means any of a variety of ways of trying to figure out cookies to advertise to to get broader reach or cheaper acquisitions than retargeting.
The other big movement going on in the display
world is the evolution of how people buy ads. In the early days — 90s — people
tended to buy online ads in a high touch process with salespeople. Ad networks
started which brought more buyers and fewer salespeople. Companies like Right
Media — which Yahoo bought — started and allowed you to create bidding rules
that run on their servers so advertisers can buy ads. So I can say that I want
to, across many websites, target cookies that have visited a site or set of
sites (retargeting), or show them so many ads per day, etc, and based on a
variety of characteristics of a cookie and the site which that cookie is
visiting and the web page they are viewing, $X is my bid for that cookie.
RTB or real time bidding
This is the new - now, instead of giving limited rules to
someone like RMX, you register with Google (the largest RTB platform) or
Yahoo’s RTB, and their servers, for each impression, send you a bid request.
Your computers located in a server farm near their servers are given typically
100ms to respond with a per impression bid for that cookie on that page and
that impression. See.
Also, this is obviously an enormous tech investment. DSPs also help with this;
most companies aren’t capable nor is it worthwhile to build this out in house.
Source: blog.earlh.com
Source: blog.earlh.com
If you are looking for a reputable contextual ad company, I suggest you take a peek at Propeller Ads.
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