Newcomers to the digital advertising space have a lot to take in. Even to more seasoned professionals, the ad tech space is convoluted and confusing, with many stakeholders and new technologies sprouting up every day. Digital advertising spend is forecasted to hit $154.29 billion in 2015, and will only grow in the coming years. As this medium becomes a larger and larger chunk of overall advertising budgets, understanding the ins and outs of the space will be crucial to leveraging it to your company’s advantage.
Generally speaking, there are two sides to the online advertising space: advertisers and publishers.
The goal for advertisers is to show their advertisements to their target audience for the lowest possible cost.
The goal for publishers is to sell space on their website(s) to advertisers at the highest possible price.
Simply put, advertisers are the buyers and publishers are the sellers.
Ad buying teams vary from company to company and can include in-house marketing teams, advertising agencies, and advertising trade desks that focus on real-time bidding (which we’ll explain later).
Ad operations teams are the publishers’ teams that manage the advertising space on their site(s) and handle the selling of inventory.
There are three different ways that these goals are accomplished online:
- Direct, person-to-person deals
- Ad networks (programmatic, but not real time)
- Ad exchanges (programmatic and real time)
These deals are made between representatives from both sides and tend to deal with the higher-profile inventory, such as home page ads, as well as unique ads that require more customization.
Inventory not sold through direct deals might be sold on an ad network. The inventory is packaged together into ad units, typically based on demographics, geography, time of day, day of the week, etc., and is often sold at a marked-up price. Though some networks strive to have a large inventory quantity and the furthest reach, others strive for more targeted but higher quality inventory. Advertisers can then purchase these ad units programmatically through an Advertiser Campaign Management platform that can serve their ads across the appropriate advertising channels such as display, video, mobile, social, or search.
This gives advertisers less control over where their ads are running and less transparency into who is viewing their ads. In some cases, this allows publishers to make more money off of less-than-stellar ad inventory (say, at the bottom of the page).
Ad exchanges are like ad networks in that they serve as a middle ground between publishers and advertisers. The difference is that ad exchanges allow for ad inventory to be purchased on an impression-by-impression basis in real time – this process is referred to as real time bidding (RTB).
The bidding happens as the webpage loads, when the system already knows the demographics and overall profile of that ad impression. A number of advertisers then bid on that ad impression in the milliseconds before the page loads, and the highest bidder’s ad(s) will be shown once the webpage loads.
Ad exchanges are often compared to stock exchanges, and buyers can use them to find the impressions that meet both their budget and target audience. The bidding is performed through demand side platforms (DSPs) on the advertiser side, and supply side platforms (SSPs) on the publisher side. These tools allow both parties to set rules and limits to follow as they make bids on ads.
Advertisers and publishers typically use different software tools, although a handful of platforms can be used by both sides of the ecosystem. These tools help facilitate and automate the transactions between advertisers and publishers and work to optimize ad buys on both sides.
Advertiser Campaign Management: Advertiser campaign management platforms provide advertisers the tools to buy, manage, place, and track their online advertising efforts. These tools may be specific to an advertising channel, but often function as cross-channel platforms that serve ads across three or more channels.
Because performance across channels differs for every platform, evaluating advertiser campaign management products by their channel functionality allows advertisers to see how the tools perform on each channel.
Ad channels include display, video, mobile, social, and search advertising. Additionally, DSPs are included in advertiser campaign management products as they are needed to bid on and serve ads in real time through ad exchanges. DSPs mainly handle display ads but are spreading across other channels as the technology matures. DSPs are not a standalone product, however. They are typically used in conjunction with more robust advertiser campaign management platforms, and might also be included as part of these platforms.
Publisher Ad Management: Publisher ad management software automates the processes by which website publishers sell advertisements. Publishers benefit from these products by streamlining advertising operations, maximizing the ROI of impressions, and forecasting both the availability of inventory and how well it will perform.
Publishers decide what kind of ads they want to show on their website, and can create ad blocks for display, video, and mobile ads within their ad management platform. Publishers also utilize SSPs when selling their inventory in the RTB environment. Utilizing SSPs helps publishers improve their yield optimization and ensure all of the ad blocks are filled.
Other advertising-related software
In addition to the tools and processes mentioned above, several other categories of software are used often in the digital advertising space.
Data Management Platforms (DMP): DMPs pull in data from a variety of first-, second-, and third-party sources to aggregate and analyze the data in unique ways. This allows users to get a full 360-degree view of all consumer data in conjunction with data from previous ad campaigns and other sources. Many advertisers and publishers use these platforms to find unique audiences to target in future campaigns.
Attribution: Attribution software provides marketers with the full customer journey, allowing them to see all consumer touch points and attribute value to each step along the way. Marketers use these tools to optimize their advertising strategy by identifying which of their advertising efforts are contributing most toward purchases.
Native Advertising: Native advertising platforms allow publishers and marketers to structure ad content that blends in with other content on a publisher’s site. This content tends to be more engaging and of more interest to consumers, in hopes they will think more highly of the advertiser for contributing valuable content.
Check out the digital advertising reviews on G2 Crowd for first-hand insights into how marketers and advertisers are using different ad tech products. As the digital advertising space is constantly changing and evolving, we will keep you informed on industry trends and what tools and software you need to know about to develop and run successful digital advertising campaigns.