what is online ad value chain? Network/ Advertiser Agency Publisher ExchangeDemand Side Supply Side
What’s the product?product equals “advertising inventory”advertising inventory is the supply of opportunities todisplay advertising in a particular medium.then what is an “impression”?an ad impression is a single viewing of a single ad by asingle individual.
Calculating Ad Inventory• two variables the number of page impressions on the site, the average number of ads per page.
The players• Advertiser• Publishers• Ad Network• Ad Agency
AdvertiserMarketing objectives: – Brand marketing – Direct Response marketingtypically says "I have x million dollars this quarter foronline ad display, and there is this campaign I want torun. I want to target Males, 35-45 years, love football,with family, stay in LA, have a dog…Buy me the bestmedia to reach this target audience".
Publishers• a site, game, blog, mobile portal – Yahoo, Google, Facebook, MSN, CNN• ad inventory as monetization model• Maximize revenue, minimize risks• Monetization model• Larger publishers – have own sales team• Small publishers – sell to ad networks• Search engines – Google, Yahoo, MSFT
Ad Network - I• outsourced sales houses• strikes deals with lots of publishers• sells inventory to advertisers and agencies• value proposition to publishers – sell inventory that the publisher cant sell itself• value proposition to an advertiser – Ad can appear on lots of sites• business model = buy inventory cheaply; sell expensive• Types:- – premium networks – vertical networks – contextual networks
remnant Ad Network - II Simple inventory Arbitrage PlatformGo to Market - Specialization small publishers Vertical Aggregation Behavior Targetting Performance Platform Specialization
Ad ExchangeTechnology platforms Nature of InventoryEfficiency in Ad imp Targeting buying Methods Auction Pricing Modelbased modelBuy audience Placement vs Options Buy sites/ placement
DSP Managing One tool, multiple Ad centralized Exchanges reportingCentral Hub for Data
Data Exchanges and DMPs CookieManage the Big warehouse, Data with analytics firepower Data Agg – allow Advertisers analytics Integrate your data w/ 3rd Party Data Providepurchase andconsumption base data
Credits• Many blogs –• Ben - http://www.adopsinsider.com/ad-serving/how- does-ad-serving-work• Ian Thomas - http://www.liesdamnedlies.com/online_advertising_bus iness_101.html• http://www.allaboutcookies.org/ad-serving/• http://www.adopsinsider.com/ad-serving/what-is- holistic-ad-serving/#more-733• http://www.adopsinsider.com/ad-exchanges/ssp-to-dsp- cookie-synching-explained• The rise of performance-based advertising Article by Brandt Dainow
Some Terms…..• price discrimination, volume discounts and bundling• rate card• frequency capping• guaranteed vs discretionary or non-guaranteedinventory• retargeting• remnant inventory & spot pricing• floor price• spot priced• forward prices• premium publishers• velvet rope advertisers• filler inventory
Why newspapers are like airlines?• both seem to be going out of business • other similarities:- – perishable inventory – finite supply of inventory – charge different customer differently (aka price discrimination) – high fixed costs – maximize revenue by selling as much of their inventory as they can at the highest average price possible.
RTB - I DSPs 1 2User Browser Webserver 3 13 4 7 8 Ad 9 server 12 Exch 6 10 5 SSP 11
RTB - II• Advertisers get impressions at a price that matches their goals and objectives.• Publishers use SSP with supply side algorithms to get the maximum yield out of ad inventory• RTB involves a real time auction for each ad impression in which buyers and sellers come to an agreement• basic premise of RTB• ad impressions are not commodities to be sold in bulk, and that each ad impression is unique• Auctions take place at a blink of an eye.• Volumes of bid requests and bids are also staggering.• Emerging Standards - OpenRTB
Yield Management - I• In eighties, American Airlines led a transformation of the US airline industry• Introduced "Ultimate Super Saver Fares" (1985)• Why? People pay more for same airline ticket when purchased at short notice• Helps airline to sell and advertise tickets at a much lower price for advance purchases.• Hence, yield management business is born.
Yield Management• Yield management• “……practice of maximizing the average price received for inventory through a number of techniques, amongst them price discrimination…”• Yield management specifics:- – a publisher has flexible control over the cost of sale – volume discounts important for sale of online ads• yield management is maximizing gross profit rather than top-line revenue.
RichMedia• “…umbrella term for ads which are more interactive, or use sound and/or video to get their point across...”. Eg:- – An expandable banner with embedded video – An ‘advergame’ (a mini-game embedded inside an ad unit) – A video ad served before, after or during a video clip – A ‘page takeover’ ad (an ad which covers the page it’s on, or interacts with that page or the other ads on it in some way)• Rich Media Vendors• Atlas Rich Media (MSFT), DoubleClick Rich Media (GOOG), Yahoo! Rich Media, Eyeblaster, EyeWonder, Pointroll, Interpolls, Rovion, Unicast• Challenges rich-media campaign:- – Creating the actual ads themselves (the creative) – Trafficking the ads (getting them actually placed onto publisher sites) – Managing and serving the creatives themselves, and measuring delivery and response• Where next?• Available to Big & small Advertisers• Technology to create one single creative to fit all screens.• Uniform playing field