How the Ad Exchanges will work – An Overview

More and more online display inventory is being purchased via ad exchanges than ever before. On these platforms, advertisers utilize technology to bid on each and every ad impression in a real-time marketplace based on the value they put on the viewer. For example, retargeting has become a popular tactic as advertisers are able to tag (and then buy ads exposed to) users who have already shown interest in them by visiting their site. This technique has proven to be very effective, with higher than normal click-through rates (CTR), conversion rates, and other key performance indicators (KPIs).

Currently, more than 400 billion global monthly impressions are up for bid to online marketers -- that translates to about 150,000 ads each second during high internet traffic times!

Since the first banner ad was sold more than a decade and a half ago, it's no big surprise that publishers have aggressively sought ways to increase revenue by optimizing their ad inventory. Because so much of online inventory goes unsold or dropped into remnant channels for a micro-fraction of what can be made from presold, premium inventory, ad exchanges were an organic evolution in the ecosystem. A successful model was already in place with paid search where advertisers bid in a real-time, auction environment for ad impressions. As with paid search, exchange ad inventory is optimized by capitalist equilibrium -- some inventory is worth pennies, some is worth tens of dollars. Either way, ad price is determined by what the market is willing to pay.

Because most of the transaction is automated by technology, exchanges are very efficient for publishers to monetize previously unsold inventory without the need for robust sales teams, as well as for advertisers to buy direct inventory without middle men (such as ad networks) inflating costs. This has led some industry experts to predict that the market share of exchange vs. traditional online display buying methods will grow quickly in the next several years. In fact, this may have set off a revolution in which we will see more and more inventory moved to digital channels -- it might not be all available in real-time, but the efficiencies of this model cannot be denied. It's very possible that one day that any inventory that can be sold this way, will be sold this way... not just online, but TV, print, radio, etc.

The debates of the value of audience vs. context, technology vs. manual expertise, commoditization of inventory and its effect on our industry, etc., are already taking place in board rooms, industry conferences, and the blogosphere. As exciting as the new opportunity might be, there is resistance from the owners of the status quo, who will find their importance and market share drastically reduced by this evolution. As well, there is concern about the quality of this inventory and, as is always the case when targeting individual users, there will be privacy issues to take into account.

Regardless of the positive and negative context surrounding ad exchange buying, there still exists some mystery into how the technology actually works. Below is a top-level overview on how a publisher impression gets passed through the exchange value chain and ultimately gets served as an ad to the end user.

Note: This entire process happens in less than one-third of a second.

The publisher

An online user makes it to a publisher's site via a link or direct URL typed into a browser. The page loads and swooshes...

The publisher ad server

...the site's ad server recognizes that an ad box is on the page that needs to be filled. Publishers have a variety of choices on where to buy inventory. They can have in-house sales teams that work to presell their best (premium) inventory, ad networks that agree to help sell the inventory (either on an exclusive or non-exclusive basis), and, of course, ad exchanges, where advertisers can bid, in real time, for the impression.

So the first-party ad server may put the ad impression up for bid on the exchanges directly or through...

The publisher's tools

...which can enable them to let the impression be handled by yield optimizers (such as Rubicon, Admeld, and PubMatic) that can help them maximize their site revenue? They can consult with optimization service teams to help set pricing, decide what kind of ad units should go on specific pages, make deals with ad networks and exchanges, etc. As well, these partners can offer propriety technology to facilitate and optimize ad sales.

If the publisher tool decides at this time that the best value for the impression is on an exchange, it will send the impression there.

The exchanges

Currently, there are only a handful of "major" ad exchanges:

• AdBrite
• AdECN (Microsoft)
• ContextWeb
• DoubleClick Ad Exchange (Google)
• Right Media (Yahoo... currently testing real-time bidding)

These media entities have direct deals with publishers, networks, or publisher tools to sell inventory on their open platforms. On its DoubleClick Ad Exchange, for example, Google has migrated inventory from its very successful AdSense program, which enables it to sell advertising this way on literally billions of web pages. Exchanges negotiate rates with the media providers and get paid to simply handle the transaction.

Advertisers and their agencies can elect to "get a seat" on these exchanges in order to be involved in the bidding marketplace. Exchanges have self-service, back-end platforms that media buyers can log into, set up and manage campaigns, and run analytics reports to analyze and then optimize their accounts without ever talking to a sales person.

However, many advertisers elect to not work with exchanges directly, and opt to use a demand-side platform (DSP) as their trading desk of choice.

The demand-side platforms (DSPs)

Demand-side platforms have risen to help advertisers manage all of their exchange campaigns through a single interface. These DSPs utilize the ad exchange's data connection via application program interfaces (APIs), which provide the same functionality as working on the exchanges' own systems. Some agencies and holding companies have built their own DSPs, and many third-party DSP providers have popped up, such as Turn, Invite Media (Google), [x+1], MediaMath, DataXu, and Triggit.

DSPs provide more features than just letting advertisers manage all of their buys in one spot. By aggregating the entire exchange buying process into one system, advertisers can utilize the high-powered algorithms of their DSPs to optimize their bids. These algorithms can be tuned to target a specific cost-per-click, cost-per-sale, return on investment (ROI), or other business goals. They can also provide integration with various third-party data providers to allow for simple access to purchasing inventory. Another recognized benefit to running everything through a DSP is that advertisers can enable universal frequency capping across all of the exchanges they work with.

Because an ad needs to load quickly, DSPs have service level agreements (SLAs) that set how long they have to return a bid for the impression. The standard time frame for a DSP to return a bid request to an exchange is around 50 milliseconds, or one-twentieth of a second!

The bid

Bids are generally handled at the cost-per-thousand (CPM) level, and advertisers can choose to vary these bids based on the value of the users each placement is targeting. A common targeting choice is contextual, as exchanges classify their inventory by categories (i.e., sports, entertainment, news, finance, etc.) and sub-categories (entertainment - movie; entertainment - music; etc.). It's probably safe to say that an advertiser involved in promoting a new film would be willing to pay more for to users on movies sites than on financial ones.

Another common targeting option is geography -- by country, region, state, DMA, etc. And because you can mix targeting directives in a placement, you could, for example choose to create a campaign that just targets users on automotive-related sites in California and bid accordingly for that traffic.

It's important to note that advertisers are not manually bidding on every impression in real-time -- not even Superman could keep up with 150,000 ads per second. Rather, advertisers choose targeting settings and a maximum bid for what they would pay for an impression that meets those parameters. As with paid search, analysts can continuously optimize their choices by changing bids and targeting settings to ensure the best possible ROI.

The data layer

The piece of the puzzle that seems to most accentuate the value of exchange buying is the various data that can be leveraged in order to target users. By tagging user browsers via anonymous cookies, advertisers can retarget to their website's visitors on publisher sites by bidding more for those users than their competitors; reaching shopping cart abandoners with multiple ad impressions in the first few days after leaving the site has become a smart way to utilize this feature, for example.

Third-party data providers tag users and then sell advertisers’ access to identify those users later on an exchange. These companies (such as BlueKai, eXelate, and Experian) can provide user segments such as male or female, age bracket, income bracket, etc. How do they do this? There are various ways. There are data providers that tag users online who are registering product warrantees; they can provide exchange visibility to audiences based on the types of products they own. Other data providers make deals with travel aggregators so that advertisers can (anonymously) target users who have searched for Caribbean vacation deals or European hotels. Some data providers work with social networks that have registration data on millions of users and can help find audiences with specific niche interests.

The most valuable data seems to be that which can help identify in-market users. For example, a data provider signs a deal with a top-tier automotive review site to allow it to tag its users on key portions of the site. Days later, a major car manufacturer is able to buy impressions on other sites to target those same users who were looking for specific car-related information.

Ultimately, advertisers are going to pay more to reach the most desirable audiences to their business. Data empowers the advertiser to be able to better judge the value of each impression as it is passed to them.

The verification systems

If a bid is submitted and won by an advertiser, the ad can be served at this point. However, to provide a level of protection, verification technology is sometimes inserted into the value chain. Because the focus on the exchanges is audience buying and the human element has been removed, there has been a fear in the advertiser community that the ads may not be served in the best way for their brands -- e.g., being placed next to overtly sexual or violent content. Being served next to a competitor on the same page is also something that could potentially happen. Verification systems try to discern the context of the page before serving the ad, and it will block the ad if it determines the page doesn't fit the advertiser's specified settings.

Another function of verification systems is to validate the buy itself. As the impression comes up for bid and is won by the advertiser, the system determines if it really matches the target that advertiser was bidding on. Is the ad being served in the right geographic area? Is it ensuring compliance to the industry-specific guidelines and not breaking any rules (for example, pharmaceutical companies have strict editorial needs)? Once again, if the verification technology detects anything outside of the ordinary, it will block the ad from being served. Also in this category are contextual providers such as Peer39 and Proximic, which leverage semantic filters in real time to protect advertisers from buying the wrong impressions.

Verification technologies can differ in methodology and implementation, but, basically, if the impression passes the verification system's filters at this point, the ad is ready to be loaded into the blank ad box on the publisher site.

The third-party ad server

On some occasions, advertisers can load ads directly into the exchanges or allow their DSPs to serve them. However, most major advertisers load the exchanges (and DSPs) with creative "tags," which are ad requests that are filled by their third-party ad servers.

Third-party ad servers solve the same problem with serving ads as a DSP does with buying from exchanges. Instead of having to manage all of their display buys for each individual publisher (or exchange), the third-party ad server allows for everything to be managed in one place -- reporting, tracking, creative management -- one platform for the agency or advertiser teams to worry about.

So, the exchange sends the advertiser's creative tag (either directly or from a DSP) to the publisher's first-party ad server. The publisher's server loads the creative tag into the blank ad box. The creative tag "calls" to the advertiser's third-party ad server to then serve the ad. The third-party ad server will serve whichever creative is deemed appropriate for the situation. For example, if it detects that the end user is in Texas, there may be a specified ad to be served to that user. Or, if the third-party ad server detects that the user visited the company's website and checked out a certain product page, it may be directed to serve an ad related to that product.

Abracadabra! The ad is served. Remember, this entire process has to happen virtually instantaneously to ensure a quality experience for a website user. From the moment the page begins to load, to the publisher's tools farming it off to an exchange, to the exchanges receiving bids from their own users and their partner DSPs, to being filtered through the verification systems, and finally returned by an advertiser's third-party ad server-- it all takes place in around less than half of a second.

Summary

It's almost impossible to imagine that technology buying, such as the exchange system, will completely replace human interaction. Frankly, not all inventories can be sold this way. However, with the promise of lower costs from efficiencies, fewer wasted impressions through smart targeting, scalable reach, and controlled frequency; it seems very likely that these technologies will evolve into even more impactful tools. Competency in these platforms has already become a priority for leading advertisers, and new ideas for innovation are springing up every day. It's reasonable to assume that we have only scratched the surface on the capabilities of these systems and that they will be even more powerful and ubiquitous in a very short time.

Source: www.imediaconnection.com

Advertising network – An Overview

An online advertising network or ad network is a company that connects advertisers to web sites that want to host advertisements.

The key function of an ad network is aggregation of ad space supply from publishers and matching it with advertiser demand. The phrase "ad network" by itself is media-neutral in the sense that there can be a "Television Ad Network" or a "Print Ad Network", but is increasingly used to mean "online ad network" as the effect of aggregation of publisher ad space and sale to advertisers is most commonly seen in the online space.

The fundamental difference between traditional media ad networks and online ad networks is that online ad networks use a central Ad server to deliver advertisements to consumers, which enables targeting, tracking and reporting of impressions in ways not possible with analog media alternatives.

Overview

The advertising network market is a large and growing market, with the top 20 companies earning about $2 billion in revenues during 2007. This represents around 13% of the total display advertising market, forecasted to grow to 18% by 2010. This growth has resulted in many new players in the market, and has encouraged acquisitions of ad networks by large companies entering the market.

Ad networks are primarily involved in selling space for online ads to appear. This online advertising inventory comes in many different forms, including space on websites, in RSS feeds, on blogs, in instant messaging applications, in adware, in e-mails, and on other sources. The dominant form of inventory continues to be third-party websites, who work with advertising networks for either a fee or a share of the ad revenues.

An advertiser can buy a run of network package, or a run of category package within the network. The advertising network serves advertisements from its central ad server, which responds to a site once a page is called. A snippet of code is called from the ad server that represents the advertising banner.

Large publishers often sell only their remnant inventory through ad networks. Typical numbers range from 10% to 60% of total inventory being remnant and sold through advertising networks.

Smaller publishers often sell their entire inventory through ad networks. One type of ad network, known as a blind network, is such that advertisers place ads, but do not know the exact places where their ads are being placed.

Large ad networks include a mixture of search engines, media companies, and technology vendors.

Types of ad networks

There are 3 main types of online advertising networks:

Vertical Networks: They represent the publications in their portfolio, with full transparency for the advertiser about where their ads will run. They typically promote high quality traffic at market prices and are heavily used by brand marketers. The economic model is generally revenue share. Vertical Networks offer ROS (Run-Of-Site) advertising across specific Channels (example: Auto or Travel) or they offer site-wide advertising options, in which case they operate in a similar fashion to Publisher Representation firms.

Blind Networks: These companies offer good pricing to direct marketers in exchange for those marketers relinquishing control over where their ads will run, though some networks offer a "site opt out" method. The network usually runs campaigns as RON or Run-Of-Network. Blind networks achieve their low pricing through large bulk buys of typically remnant inventory combined with conversion optimization and ad targeting technology.

Targeted Networks: Sometimes called “next generation” or “2.0” ad networks, these focus on specific targeting technologies such as behavioral or contextual, that have been built into an Ad server. Targeted networks specialize in using consumer click stream data to enhance the value of the inventory they purchase. Further specialized targeted networks include social graph technologies which attempt to enhance the value of inventory using connections in social networks.

There are two types of advertising networks: first-tier and second-tier networks. First-tier advertising networks have a large number of their own advertisers and publishers, they have high quality traffic, and they serve ads and traffic to second-tier networks. Examples of first-tier networks include the major search engines. Second-tier advertising networks may have some of their own advertisers and publishers, but their main source of revenue comes from syndicating ads from other advertising networks.

While it is common for websites to be categorized into tier, these can be misleading. 

While Google is in the clear majority of advertisement impression served, other networks that could be labeled as tier 2 actually dominate over this tier 1 Ad networks as far as the number of customers reached.

Source: Wikipedia.org

Creating a Social Media Marketing Plan

Mobile advertising – An Overview

Mobile advertising is a form of advertising via mobile (wireless) phones or other mobile devices. It is a subset of mobile marketing.

Overview

Some mobile advertising as closely related to online or internet advertising, though its reach is far greater - currently, most mobile advertising is targeted at mobile phones, that came estimably to a global total of 4.6 billion as of 2009. Notably computers, including desktops and laptops, are currently estimated at 1.1 billion globally.

It is probable that advertisers and media industry will increasingly take account of a bigger and fast-growing mobile market, though it remains at around 1% of global advertising spent. Mobile media is evolving rapidly and while mobile phones will continue to be the mainstay, it is not clear whether mobile phones based on cellular backhaul or smartphones based on WiFi hot spot or WiMAX hot zone will also strengthen. However, such is the emergence of this form of advertising, that there is now a dedicated global awards ceremony organized every year by Visiongain.

As mobile phones outnumber TV sets by over 3 to 1 and PC based internet users by over 4 to 1and the total laptop and desktop PC population by nearly 5 to 1advertisers in many markets have recently rushed to this media. In Spain 75% of mobile phone owners receive ads, in France 62%and in Japan 54%. More remarkably as mobile advertising matures, like in the most advanced markets, the user involvement also matures. In Japan today, already 44% of mobile phone owners click on ads they receive on their phones. Mobile advertising was worth 900 million dollars in Japan alone. According to the research firm Berg Insight the global mobile advertising market that was estimated to € 1 billion in 2008. 

Furthermore, Berg Insight forecasts the global mobile advertising market to grow at a compound annual growth rate of 43 percent to € 8.7 billion in 2014.

Types of mobile ads

In some markets, this type of advertising is most commonly seen as a Mobile Web Banner (top of page) or Mobile Web Poster (bottom of page banner), while in others, it is dominated by SMS advertising (which has been estimated at over 90% of mobile marketing revenue worldwide). Other forms include MMS advertising, advertising within mobile games and mobile videos, during mobile TV receipt, full-screen interstitials, which appear while a requested item of mobile content or mobile web page is loading up, and audio advertisements that can take the form of a jingle before a voicemail recording, or an audio recording played while interacting with a telephone-based service such as movie ticketing or directory assistance.

The Mobile Marketing Association and the IAB (Interactive Advertising Bureau) has published mobile advertising guidelines, but it is difficult to keep such guidelines current in such a fast-developing area.

The effectiveness of a mobile media ad campaign can be measured in a variety of ways. The main measurements are impressions (views) and click-through rates. They are also sold to advertisers by views (Cost Per Impression) or by click-through (Cost Per Click). Additional measurements include conversion rates, such as click-to-call rates and other degrees of interactive measurement.

Mobile media can run on a mobile web page or within a mobile application, often referred to as in-App.

Mobile Rich Media

In addition to standard mobile display banners, a growing trend is to include rich media execution within the banner ads. This includes banners that would expand to a larger size, offering advertisers a larger display to communicate their message. Most of the Ads have games within the banner to make the experience of more interactive or a video within the banner space.

There are limitations rich media on mobile because all of the coding must be done in HTML5, since the iOS does not support flash.

Handsets display and corresponding ad images

There are hundreds of handsets in the market and they differ by screen size and supported technologies (e.g. MMS, WAP 2.0). For color images, formats such as PNG, JPEG, GIF and BMP are typically supported, along with the monochrome WBMP format. 

History of Mobile

Martin Cooper invented a portable handset in 1973, when he was a project manager at Motorola. It was almost three decades after the idea of cellular communications was introduced by Bell Laboratories. Two decades later, cellular phones made a commercial debut in the mass market in the early 1990s. In the early days of cellular handsets, phone functionality was limited to dialing, and voice input/output.

When the second generation of mobile telecoms (so-called 2G) was introduced in Finland by Radiolinja (now Elisa) on the GSM standard (now the world's most common mobile technology with over 2 billion users) in 1991, the digital technology introduced data services. SMS text messaging was the first such service. The first person-to-person SMS text message was sent in Finland in December 1994. SMS (Short Message Service) gradually began to grow, becoming the largest data service by number of users in the world, currently with 74% of all mobile subscribers or 2.4 billion people active users of SMS in 2007.

One advantage of SMS is that while even in conference, users are able to send and receive brief messages unobtrusively, while enjoying privacy. Even in such environments as in a restaurant, café, bank, travel agency office, and so on, the users can enjoy some privacy by sending/receiving brief text messages in an unobtrusive way.

It would take six years from the launch of SMS until the first case of advertising would appear on this new data media channel, when a Finnish news provider offered free news headlines via SMS, sponsored by advertising. This led to rapid experimentation in mobile advertising and mobile marketing, and the world's first conference to discuss mobile advertising was held in London in 2000, sponsored by the Wireless Marketing Association (which later merged into the Mobile Marketing Association). 

The first books to discuss mobile advertising were Ahonen's M-Profits and Haig's Mobile Marketing in 2002. Several major mobile operators around the world launched their own mobile advertising arms, like Aircross in South Korea, owned by the parents of SK Telecoms the biggest mobile operator, or like D2 Communications in Japan, the joint venture of Japan's largest mobile operator NTT DoCoMo and Dentsu, Japan's largest ad agency.

Mobile as Media

This unremarkable two-way communications caught the attention of media industry and advertisers as well as cellphone makers and telecom operators. Eventually, SMS became a new media - called the “seventh mass media channel” by several media and mobile experts - and even more, it is a two-way mobile media, as opposed to one-way immobile media like radios, newspapers and TV. Besides, the immediacy of responsiveness in this two-way media is a new territory found for media industry and advertisers, who are eager to measure up market response immediately. 

Additionally, the possibility of fast delivery of the messages and the ubiquity of the technology (it does not require any additional functionality from the mobile phone, all devices available today are capable of receiving SMS), make it ideal for time- and location-sensitive advertising, such as customer loyalty offers (ex. shopping centres, large brand stores), SMS promotions of events, etc. To leverage this strength of SMS advertising, timely and reliable delivery of messages is paramount, which is guaranteed by some SMS gateway providers.

Mobile media has begun to draw more significant attention from media giants and advertising industry since the mid-2000s, based on a view that mobile media was to change the way advertisements were made, and that mobile devices can form a new media sector. Despite this, revenues are still a small fraction of the advertising industry as a whole but are most certainly on the rise. Informa reported that mobile advertising in 2007 was worth $2.2 billion. This is less than 0.5% of the approximately $450 billion global advertising industry.

Types of mobile advertising are expected to change rapidly. In other words, mobile technology will come up with a strong push for identifying newer and unheard-of mobile multimedia, with the result that subsequent media migration will greatly stimulate a consumer behavioral shift and establish a paradigm shift in mobile advertising. A major media migration is on, as desktop Internet evolves into mobile Internet. One typical case in point is Nielsen’s recent buyout of Telephia.

However it should be kept in mind that the rapid change in the technology used by mobile advertisers can also have adverse effect to the number of consumers being reached by the mobile advertisements, due to technical limitations of their mobile devices. Because of that, campaigns that aim to achieve wide response or are targeting lower income groups might be better off relying on older, more widespread mobile advertising technologies, such as SMS.

Viral marketing

As mobile is an interactive mass media similar to the internet, advertisers are eager to utilize and make use of viral marketing methods, by which one recipient of an advertisement on mobile, will forward that to a friend. This allows users to become part of the advertising experience. 

At the bare minimum mobile ads with viral abilities can become powerful interactive campaigns. At the extreme, they can become engagement marketing experiences. A key element of mobile marketing campaigns is the most influential member of any target audience or community, which is called the alpha user.

Interactivity

Mobile devices aim to outgrow the domain of voice-intensive cellphones and to enter a new world of multimedia mobile devices, like laptops, PDA phones and smartphones. Unlike the conventional one-way media like TV, radio and newspaper, web media has enabled two-way traffic, thereby introducing a new phase of interactive advertising, regardless of whether static or mobile. 

This user-centric approach was noted at the 96th annual conference of Association of National Advertisers in 2006, which described” a need to replace decade’s worth of top-down marketing tactics with bottom-up, grass-roots approaches”. Many use 2d bar codes to make offline print material more interactive with their mobile device. This has been proven to be successful in Japan, UK, and Philippines and has been catching on in Northern America.

List of mobile advertising networks

This is a list of notable global mobile advertising networks. Mobile advertising is a form of advertising via mobile (wireless) phones or other mobile devices. It is a subset of mobile marketing. An online advertising network or ad network is a company that connects advertisers to web sites that want to host advertisements.

admob (acquired by Google), Adfonic , Adwhirl, Airpush, Appington, AppLift, Buzz-City, Enpocket (acquired by Nokia), Greystripe (acquired by ValueClick), iAds (previously Quattro, acquired by Apple Inc.), inMobi, inneractive, JumpTap, LeadBolt, MadHouse, madvertise, Millennial Media, Mobclix (acquired by Velti), MobFox, Mobhero, Mojiva, MoPub, MSN Ad Network, Tapclix, Vserv, xAd

Mobile device issues

Coincidentally, however, mobile devices are encountering technological bottlenecks in terms of battery life, formats, and safety issue

In a broad sense, mobile devices are categorically broken down into portable and stationary equipment. Technically, mobile devices are categorized as below:

• Handheld [portable]
• Laptop, including ultraportable [portable]
• Dashtop, including GPS navigation, satellite radio, and WiMAX-enabled dashtop mobile payment platforms[fixed on dashboards]

The battery life and safety issues will perhaps combine to eventually push mobile equipment’s inroads into vehicle dashtops. However, satellite-based GPS navigation and satellite radio may already hit a snag because of their part-time usage and technological hierarchy. Put differently, people want more functions than GPS navigation and satellite radios. 

The trend indicates an ongoing convergence into all-in-one dashtop mobile devices incorporating GPS navigators, satellite radios, MP3 players, mobile TV, mobile Internet, MVDER (vehicle black box), driving safety monitors, smartphones and even video games.

Source: en.wikipedia.org