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.
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!
• 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’
• Invented at Netscape Communications,
• Shipped in Netscape 2.0 released in September 1995,
• Introduced pop ups & pop unders to online advertising.
advertising technology in the following years.
• 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
• Advertiser can buy more inventory from many Publishers
through an intermediary and centralize the reporting for
• Advertiser buys a “package” of impressions and pay in
• 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”.
• 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).
Privacy & cookies
• Cookies were discussed in two U.S. Federal Trade
• 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
• 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.
• Bill Gross at Overture (earlier Goto.com) invented PPM model (Paid
• 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!
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.
• 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.
• 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.
Ad networks & piggybacking
Ad network 1
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)
Early “ad exchanges” launch
• AdECN, RightMedia, AdBrite, ADSDAQ
• For ad networks to address “liquidity” problem,
• Every impression is matched against campaigns in the
• Highest bidder win (no real-time bidding protocol yet),
• Members - mainly ad networks,
• “Exchange” charges a ﬂat transaction fee for every impression
Early “ad exchanges”
Ad network 1
Ad network 1
manual / API campaign targeting
i.e. US trafﬁc from MacOS on tech sites
301 redirect / one-way
• Facebook introduces “Facebook Ads”, “Facebook Insights”
• 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
• 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 ;-)