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The History of Advertising Technology

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The history of advertising technology.

How did the first banner look like?
How did the ad tech ecosystem grow so complex over last 20+ years?
Why cookies are used in advertising?
Where is the ad tech industry heading?

This presentation gives a brief overview of the key events in the ad tech industry history that lead us to the point where we are today.

Published in: Technology

The History of Advertising Technology

  1. 1. The history of Advertising Technology Clearcode B&B event 8th May 2015 Maciej Zawadziński
  2. 2. WHAT IS AD TECH?
  3. 3. What is ad tech? • Software solutions for online advertising: • delivery, targeting & control, • data collection and decision making, • measurement and analytics, • ad delivery across different channels: Web, Mobile, Video/TV, Online Radio, IoT, VR etc.
  4. 4. What is ad tech? • What’s so exciting about ad tech? • Reach: ad delivery to 3+ bln internet users, • Scale: tera-, peta-, zeta-… of data, • Performance & High-availability, • Data science: making smart decision based on the data, • Google, Yahoo, AOL, Oracle, Facebook, Twitter and other tech giants - they all rely on ad tech!
  5. 5. 1993
  6. 6. The first banner ad • New concept - special sections on the site to display banners • Oct 27, 1993 • Publisher: hotwired.com (Wired Magazine) • Advertiser: AT&T • CTR 44% (sic!)
  7. 7. The first landing page
  8. 8. It was very simple! • Advertiser had a direct relationship with the Publisher, • HTML placement (468x60 pixels) with GIF format image.
  9. 9. 1994
  10. 10. Cookies • Lou Montulli and John Giannandrea invent cookies while working at Netscape Communications, • Use case - “a way of distinguishing online shoppers”, • Implemented in Netscape and Mosaic browsers, • Cookies become inseparable element of ad tech in the following years that enable advertisers to track users’ behaviour online.
  11. 11. Web browsers 94’ - 09’
  12. 12. 1995
  13. 13. JavaScript • Invented at Netscape Communications, • Shipped in Netscape 2.0 released in September 1995, • Introduced pop ups & pop unders to online advertising. • Similarly to cookies, JavaScript is widely adopted by the advertising technology in the following years.
  14. 14. WebConnect • World’s first ad network (in 1995 they syndicated 160 sites), • Placed ads on network of sites that signed up, • Pricing based on the website audience profile (Site Price Index), • Introduced “frequency capping” to prevent “banner fatigue” as well as banner rotation, • In ’96 advertiser’s panel with statistics of the campaign: impressions, clicks, responses/sales (conversions) - developed in CGI/Pearl.
  15. 15. WebConnect’s ICS system
  16. 16. Ad network • Advertiser can buy more inventory from many Publishers through an intermediary and centralize the reporting for the campaign. • Advertiser buys a “package” of impressions and pay in CPM model.
  17. 17. 1996
  18. 18. DoubleClick • an ad network, • an ad server for publishers’ direct sales, • measures impressions, clicks, spent, ROI etc. • CPM pricing model, • used cookies which tracked user’s history in order to serve ads relevant to them, • its competition, WebConnect opted out of using cookies because “it violates the users’ privacy”.
  19. 19. DoubleClick website ‘97
  20. 20. Ad server Ad server Publisher’s website Ad network Direct deal Browser/ User • Direct deals - inventory sold by the Publisher’s sales team, • Ad networks - fill the remaining inventory (but for some Publishers this become the only or the largest rev stream).
  21. 21. 1997
  22. 22. Privacy & cookies • Cookies were discussed in two U.S. Federal Trade Commission hearings, • RFC 2109 specification released - HTTP State Management Mechanism (Cookies) • third-party cookies were either not allowed at all, or at least not enabled by default • recommendation NOT FOLLOWED by Netscape and IE
  23. 23. RFC 2109
  24. 24. 1998-2000 aka Dot Com Bubble
  25. 25. Popup/Popunder explosion • intention - increase revenue from advertising while banner ads effectiveness (measured in CTRs) decreases, • major browsers add popup blocking functionality from early 2000s, IE adds this functionality in 2004.
  26. 26. PPC advertising • Bill Gross at Overture (earlier Goto.com) invented PPM model (Paid Placement Model), • Today it is called PPC (Pay Per Click), • Introduced auction model for advertisers - the higher your bid, the higher your listing, • CPCs in ’98 - up to $1/click. • Overture monetized large portals such as Altavista, MSN and Yahoo, • In 2003 the company was acquired by Yahoo!
  27. 27. The Dot Com Bust • startups spend substantial amounts on advertising until bubble bust, • many startups go out of the business, including ad tech companies, • other ad tech companies had to scale back, DoubleClick and Overture survive.
  28. 28. 2000-2005
  29. 29. AdWords • launched in 2000, • used CPM pricing model up to 2002, • introduced CPC pricing in 2002 - Google focused not only on the highest bid, but also on relevance. • As of 2013, 85% of Google’s revenue are from AdWords, • CPCs go as high as $200/click.
  30. 30. AdSense • Applied Semantics - created AdSense contextual advertising technology in 2002, • Acquired by Google in April 2003, • Google launches AdSense network, enabling publishers to monetize their content with PPC ads.
  31. 31. Original AdSense press release
  32. 32. AdSense in mid 2004
  33. 33. Ad networks & piggybacking Publisher Ad network 1 load  an  ad no  ad  -­‐  fallback  to     ad  network  2 no  ad  -­‐  fallback  to     ad  network  3 Ad network 2 Ad network 3 • Early-mid 2000s: • piggybacking becomes commonly used to fill remnant inventory, • endless redirects cause some ads not to load at all, • ad networks’ struggle with “liquidity” problem - their inventory is either under-filled (not enough campaigns) or over-filled (too many campaigns)
  34. 34. 2005
  35. 35. Early “ad exchanges” launch • AdECN, RightMedia, AdBrite, ADSDAQ • For ad networks to address “liquidity” problem, • Every impression is matched against campaigns in the system, • Highest bidder win (no real-time bidding protocol yet), • Members - mainly ad networks, • “Exchange” charges a flat transaction fee for every impression
  36. 36. Early “ad exchanges” Publisher Ad network 1 load  an  ad Ad exchange no  campaign  -­‐  send     to  exchange Advertiser Ad network 1 not  enough  inventory  -­‐     get  from  exchange  (50%) Ad exchange insertion  order  (campaign) Publisher own  inventory  (50%) under-filledover-filled manual / API campaign targeting i.e. US traffic from MacOS on tech sites 301 redirect / one-way return  an  ad
  37. 37. 2006
  38. 38. Mobile ad networks • AdMob - text links on featured phones, • soon followed by other players, • this was before smartphones era - first iPhone released a year later, in 2007.
  39. 39. 2007
  40. 40. Facebook Advertising • Facebook introduces “Facebook Ads”, “Facebook Insights” and “Beacon”, • Beacon relies on a code installed on third party partner websites that collects the information about user activity and broadcasts to the user feed (by default!), • Beacon raised a lot of privacy controversy and was shut down in 2009 after class-action lawsuit (Facebook paid $9.5M fine)
  41. 41. Facebook Beacon
  42. 42. 3 key acquisitions • AdECN by Microsoft • MS switched from AdECN to AppNexus for its real-time bidding needs 3 years after acquiring it • RightMedia by Yahoo! • DoubleClick by Google
  43. 43. DSPs founded • DataXu • Invite Media • BrandScreen • MediaMath • AdBuyer.com
  44. 44. 2008-today
  45. 45. Rise of RTB APIs
  46. 46. RTB APIs Publisher Advertiser DSP 2 Ad exchange 2 insertion  order  (campaign) < 100 ms Ad exchange 1 SSP/ad network DSP 3DSP 1 load  ad return  ad $1.10 $1.15 $1.15
  47. 47. More inventory sources traded in RTB • Display banners, • Native advertising, • Video and advertising, • Digital radio and Digital TV advertising, • …
  48. 48. Advertiser's budget 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Media Agency Trading Desk DSP 3rd Party Data Ad Exchange Ad Network/SSP Publisher
  49. 49. U.S. ad spend by quarter
  50. 50. RTB spend
  51. 51. Future
  52. 52. Future • RTB evolution - new instruments futures, forwards etc. (like in finance), • IoT - Internet of Things, VR - Virtual Reality, • Need for more transparency, privacy and openness! • Let’s be a part of it ;-)
  53. 53. Questions? Maciej Zawadziński maciej@clearcode.cc @zawadzinski

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