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Online Advertising Technology Overview

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“Half the money I spend on advertising is wasted. The problem is I don’t
know which half.” That quote attributed to John Wanamaker, a 19th-century
retail merchant, is familiar to many of us.
That’s the real beauty of Online Advertising platforms. Unlike Wanamaker,
modern marketers do know which of their ads are working, converting,
selling and driving revenue.
Often down to the last click. Even better, not only do marketers know
which Online Advertising programs are working and how well, but also
they can change the ads that aren’t performing-in real-time.
Today, Online Advertising can be characterized as fast, responsive and
immersive. Fast because online ads, especially those on mobile devices,
must catch the consumer at the very moment of consideration.
Responsive because the ads must respond to behavioral or interest triggers
to be relevant to clients. Increasingly, ads are also immersive, requiring
interactivity from the user to get the message and issue a call to action.
The two biggest trends in Online Advertising are Real-Time Bidding
(RTB) and Programmatic Media Buying.
RTB enables advertisers to bid for available ad space with publishers at the
precise moment a potential customer is looking for that type of solution.
Programmatic Media Buying enables marketers to automate the buying,
placement and optimization of advertising based on preset parameters
for budgets, audience segments, number of impressions and other key
criteria for optimizing advertising ROI and reach. This will be covered in
more detail later in this report.
In the ecosystem of Online Advertising, there are three main ways
companies can use to purchase their ads:
Directly from the site or publisher (or through that publisher’s affiliate
program).
Through an ad network such as AdSense (Google) or The Destination
Travel Network.
Through an online exchange (DoubleClick by Google, OpenX or Yahoo!
Ad Exchange) that matches advertisers to publishers.

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Online Advertising Technology Overview

  1. 1. ONLINE ADVERTISING TECHNOLOGY OVERVIEW
  2. 2. Technology Overview Table of Contents 1 3 2 7 3 11 4 14 Executive Summary Online Advertising Market Overview Online Advertising Vendor Landscape Evolution of the Landscape 18 17Analyst Bottom Line Technology Overview Methodology About Demand Metric 19 ONLINE ADVERTISING
  3. 3. Executive Summary ONLINE ADVERTISING TECHNOLOGY OVERVIEW
  4. 4. 4ONLINE ADVERTISING: TECHNOLOGY OVERVIEW Programmatic Media Buying enables marketers to automate the buying, placement and optimization of advertising based on preset parameters for budgets, audience segments, number of impressions and other key criteria for optimizing advertising ROI and reach. This will be covered in more detail later in this report. In the ecosystem of Online Advertising, there are three main ways companies can use to purchase their ads: Directly from the site or publisher (or through that publisher’s affiliate program). Through an ad network such as AdSense (Google) or The Destination Travel Network. Through an online exchange (DoubleClick by Google, OpenX or Yahoo! Ad Exchange) that matches advertisers to publishers. EXECUTIVE SUMMARY “Half the money I spend on advertising is wasted. The problem is I don’t know which half.” That quote attributed to John Wanamaker, a 19th-century retail merchant, is familiar to many of us. That’s the real beauty of Online Advertising platforms. Unlike Wanamaker, modern marketers do know which of their ads are working, converting, selling and driving revenue. Often down to the last click. Even better, not only do marketers know which Online Advertising programs are working and how well, but also they can change the ads that aren’t performing-in real-time. Today, Online Advertising can be characterized as fast, responsive and immersive. Fast because online ads, especially those on mobile devices, must catch the consumer at the very moment of consideration. Responsive because the ads must respond to behavioral or interest triggers to be relevant to clients. Increasingly, ads are also immersive, requiring interactivity from the user to get the message and issue a call to action. The two biggest trends in Online Advertising are Real-Time Bidding (RTB) and Programmatic Media Buying. RTB enables advertisers to bid for available ad space with publishers at the precise moment a potential customer is looking for that type of solution. Executive Summary Advertising options range from the traditional Paid Search or Pay Per Click (PPC) and banner ads (web, mobile, social) to the new native and immersive ads that directly link sponsored and unsponsored content and/or require direct participation of the consumer to provide the message.
  5. 5. 5ONLINE ADVERTISING: TECHNOLOGY OVERVIEWEXECUTIVE SUMMARY Then there are the marketing options: standard advertising, retargeting, real-time ad versioning, direct-response campaigns, dynamic segmentation models, etc. The features of Online Advertising solutions will be discussed more in the State of the Marketing sub-section and the Online Advertising Vendor Landscape section of this report. This report will also take a close look at the benefits of Online Advertising platforms, the state of the market and the complex ecosystem of Online Advertising. This report will also provide an overview of the top solutions for both general Online Advertising and Mobile Advertising solutions so that organizations can choose the solution that is right for them. From our research, one conclusion is clear: Online Advertising is driving increased revenue and profits. Organizations doing more than 20% of their advertising online should consider investing in an Online Advertising platform. Demand Metric defines Online Advertising solutions as the technologies, tools and platforms that create, purchase, distribute, manage, measure and optimize online media buying across advertising exchanges and publisher private-marketplaces. Online Advertising platforms manage the exchange of media between the demand side (advertisers) and the supply side (apps, websites) for video, display, social and mobile advertising. Benefits of Online Advertising Platforms You can advertise online without investing in an Online Advertising solution. Marketers can purchase ads directly on a website or through a publisher for placement as they have in traditional media buying or by joining an Affiliate Marketing program. Ad Networks such as Google AdSense, Adversal or Chitika (Leadbolt or Mojiva for Mobile Advertising) continue to be the most popular way to purchase Online Advertising whether for paid search, PPC, banner or display ads. However, given the current complexity of the market, the trends toward functionality, such as retargeting, RTB and local geo-targeting, means that any company looking to place 20% or more of its ads online will get a better ROI using an ad exchange and DSP. Successintherapid-fire,high-volumeexchangeenvironment requires the right tool, which usually means implementing an Online Advertising platform or solution. Online Advertising platforms are often called Demand Side Platforms (DSPs); they automate the purchase of Online Advertising.
  6. 6. 6ONLINE ADVERTISING: TECHNOLOGY OVERVIEWEXECUTIVE SUMMARY Online DSPs enable marketing organizations and advertisers to Build optimal audiences with targeting and retargeting by finely tuning customer segmentation. Reach larger audiences with custom retargeting for discovery. Provide relevant ads based on optimized frequency, placement and timing. Design more effective and efficient ad campaigns. Offer real-time personalization of image/display/mobile ads. Reduce production costs. Optimize ad timing when the customer is in the mood to buy. Reachcustomersacrossmultipledevicestoreinforcemessage. Test advertising strategies, messages and creative design. Experiment with new ways to reach an audience without major production costs and ad spending. Measure response in real time and immediately adjust advertising strategies. Link ad spending to KPIs. Increasingly, as we see above, the quantifiable benefits to Online Advertising platforms are better converting sales and higher revenue advertising campaigns On the other side of the equation, Supply Side Platforms enable publishers to maximize ad revenue as well as ensure their web visitors get relevant advertising that works well with the content the site is providing. Like DSPs, SSPs enable fast, real-time advertising, help fill advertising space at the best available price through RTB and reduce sales costs. Mobile SSPs offer these same benefits to app developers and mobile websites. Most of the Online Advertising platforms reviewed in this report support both DSP and SSP functionally to some extent. Benefits to Demand Side Platforms (DSP) Benefits to Supply Side Platforms (SSP)
  7. 7. Online Advertising Market Overview ONLINE ADVERTISING TECHNOLOGY OVERVIEW
  8. 8. 8ONLINE ADVERTISING: TECHNOLOGY OVERVIEWONLINE ADVERTISING MARKET OVERVIEW The big excitement around Online Advertising for Demand Generation is the growing use of ad exchanges for the purchase and sale of advertising. Ad Exchanges function like an auction, similar to our major stock exchanges, with the use of RTB. Demand Metric’s Online Advertising Benchmark Report showcases the growing trend toward both Online Advertising and RTB. Here are the highlights: 70% of large companies, 53% of medium companies and 54% of small companies are investing in Online Advertising. 37% of companies are spending more than $10,000 per month on Online Advertising. 52% are spending on average over $20,000 per month. The top benefits of RTB are that it is targeted, measurable and provides a proven ROI. Demand Metric’s research indicates that while Online Advertising among mid-market and smaller Enterprises is growing, it still lags behind other Digital Marketing strategies as the preferred method of reaching new customers. In Demand Metric’s newly released study, the Referral Marketing Benchmark Report, Digital Advertising is number four on the list behind social media, email marketing and events. Digital Advertising stays at number four when we examine effectiveness. The top five strategies in use, defined with frequency of use (%), are as follows: social media (95%), email (90%), events (88%), Digital Advertising (85%) and referral programs (83%). In terms of effectiveness, the top five strategies, defined with the percentage reporting each strategy’s effectiveness, are referral programs (68%), events (63%), email (62%), Digital Advertising (57%) and social media (48%). Online Advertising Market Overview Demand Metric’s Online Advertising Benchmark Report indicates that mid-market companies are considering more Online Advertising and RTB programs. Demand Metric believes that this trend will not only continue but accelerate over the next few years. ONLINE ADVERTISING Benchmark Report V I E W R E S O U R C E
  9. 9. 9ONLINE ADVERTISING: TECHNOLOGY OVERVIEW Direct Model Ad Networks In the direct model, the publisher and advertiser complete transactions without the aid of a third party. The challenge with the direct model is the increasing complexity of the market as the number of channels and volume of digital advertising grows exponentially. That has led both publishers and advertisers to move en masse toward other models. Publisher Publisher AdNetworkAdvertiser Advertiser Put simply, ad networks are marketplaces where adver- tisers and publishers meet to exchange goods and services. The ad network acts as a facilitator and conduit of the transaction and takes a fee for services. The key value of an ad network is aggregating inven- tory across multiple sites to increase audience reach. The services they provide include forecasting and offering inventory (space for placement), negotiating and completing the transaction. ONLINE ADVERTISING MARKET OVERVIEW Broadly speaking, as noted previously, the Online Advertising ecosystem has three models: direct advertiser to publisher; advertising networks and advertising exchanges.
  10. 10. 10ONLINE ADVERTISING: TECHNOLOGY OVERVIEW Ad Exchanges Ad exchanges also facilitate transactions between publishers and advertisers; however, they operate differently. Ad exchanges operate as auctions in the marketplace. With the introduction of Real-Time Bidding (RTB), exchanges operate as live auctions. In this environment, the advertiser has ads available and the publisher has space available. However, the transaction for advertising does not occur until it is triggered by an event, usually when a visitor arrives at a website or clicks the app on her phone. At this point, the auction begins and the exchange offers the space to the bidders (advertisers). The best bid wins the space and the ad is instantly deliv- ered to the visitors on the site or device. This model makes it easier for advertisers to fine tune their ads to the specific site, device and customer and enables publishers to get the highest value for their ad space. ONLINE ADVERTISING MARKET OVERVIEW We examine the leading vendor solutions for Online Advertising and Mobile Advertising in the Vendor Landscape section of this report. Publisher AdExchange S S P D S P Advertiser DSPs that offer marketers and advertisers advanced technology and tools to segment audiences, preselect advertising parameters (programmatic buying), offer real-time personalization and track consumers across devices and sites with retargeting are a crucial component of effectively using an advertising exchange.
  11. 11. 11ONLINE ADVERTISING: TECHNOLOGY OVERVIEW Online Advertising Vendor Landscape ONLINE ADVERTISING TECHNOLOGY OVERVIEW
  12. 12. 12 This vendor landscape examines Online Advertising platforms and Mobile Advertising platforms. Focusing on DSPs, the vendor solutions in this landscape have been evaluated by the criteria discussed in this section. Online Advertising Vendor Landscape Demand Metric’s Online Advertising Vendors Matrix covers the offerings, key features and unique strengths of 23 vendor solutions for Website and Mobile Advertising. ONLINE ADVERTISING VENDOR LANDSCAPE V I E W R E S O U R C E The following features are key, standard features for DSP platforms: Audience Targeting and Retargeting (web, social, mobile) Ad Serving for Display Ads, Video, Mobile and Rich Media Ad Versioning (modifying the ad for a specific market/customer) Creative Services (Static and Dynamic) Real-time Dynamic, such as Admotion’s Dynamic Creative Optimization AdRoll’s Liquid Ads Campaign Management Audience Building and Discovery Cross-device, Cross-platform Ad Integrity Analytics, Reporting Standard Features DSPs also offer the following features to enhance platform functionality further: Dynamic, Creative Optimization (which creates new ad creatives in real-time) Deeply Personal Retargeting (goes beyond retargeting the company/brand to serving actual products previously viewed) Performance Management B2B Funnel Management Web Analytics Enterprise Integration Advanced Attribution and Decision Systems Advanced Features ONLINE ADVERTISING: TECHNOLOGY OVERVIEW
  13. 13. 13ONLINE ADVERTISING: TECHNOLOGY OVERVIEW Demand Metric also recommends using the Online Advertising System RFP to collect information from vendors on their product/services and the Online Advertising Vendor Evaluation to assess vendors you are considering during the research process. ONLINE ADVERTISING VENDOR LANDSCAPE V I E W R E S O U R C E V I E W R E S O U R C E Online Advertising System RFP Online Advertising Vendor Evaluation 9O%LORE M IP SU M
  14. 14. 14ONLINE ADVERTISING: TECHNOLOGY OVERVIEW Evolution of the Landscape ONLINE ADVERTISING TECHNOLOGY OVERVIEW
  15. 15. 15EVOLUTION OF THE LANDSCAPE The changing Online Advertising Vendor Landscape, like most of Digital Marketing, is characterized by vendor consolidation, application integration and Enterprise-level functionality. The rise of DSPs has been accelerated by the increasing volume and omni-channel advertising environment. Demand Metric sees five key trends impacting the growth and capabilities of the Online Advertising market segment Evolution of the Landscape Programmatic Media Buying Real-Time Bidding (RTB) Programmatic Media Buying enables marketers to automate the buying and placement of advertising based on preset parameters for budgets, audience segments, number of impressions and other key criteria for optimizing advertising ROI and reach. Although a small portion of Digital Advertising is purchased via programmatic systems today, the acceleration of ad exchanges will increase the trend toward Programmatic Media Buying in the next several years. According to Forbes, almost 90% of brands and agencies plan to up their use of programmatic buying of display, video and mobile ads by more than half in the next six months. RTB enables advertisers to bid for available ad space with publishers at the precise moment a potential customer is looking for that type of solution. This dramatically increases the conversion rate for the ad. It also allows for higher quality metrics on advertising. Today, RTB usage is still low. Demand Metric’s Online Advertising Benchmark Report pegged current usage at around 11%. However, RTB is a key component of ad exchanges, and that fact alone will increase its acceptance and use. ONLINE ADVERTISING: TECHNOLOGY OVERVIEW
  16. 16. 16EVOLUTION OF THE LANDSCAPE Branded Interactive Advertising Digital Video Cross-screen Advertising Branded Interactive Advertising offers blending advertising, content and interactive participation for the potential customer. Interactive or immersive advertising invites the viewer to participate in the ad by becoming a character and choosing a role or by ranking or voting within the ad itself rather than being directed to another site. Native ads can also fall into this category, if they ask for action other than direct purchase. Demand Metric expects this form of advertising to increase dramatically in the next couple of years. especially in certain settings such as sporting events. The Digital Video train has left the station. It’s nearly impossible to visit any publisher site on the web or on a mobile device to watch a content video without first having to watch a video ad. Increasingly, video ads are popping up in front of text-based content. Through integrated advertising and retargeting, Cross- screen Advertising means that a specific ad or product can follow a customer from laptop to tablet to phone while recognizing and responding to the actions taken by the customer on any of these devices. Mobile Advertising vendors, such as Millennial Media and Drawbridge, are particularly focused on this functionality. Today, cross-screen primarily refers to web, tablet and phone. Soon, Smart TV will be included. Will watches and glasses be close behind? ONLINE ADVERTISING: TECHNOLOGY OVERVIEW
  17. 17. 17ANALYST BOTTOM LINE Analyst Bottom Line As this report clearly shows, Online Advertising has matured in the last few years. If your organization is still on the fence about Online Advertising or has not yet moved beyond the basics of paid search and PPC, follow these five steps to improve your current strategies: Use the Online Advertising Vendors Matrix to choose the best vendor solution for your ongoing Online Advertising needs. No Modern Marketing Organization can afford to ignore the Online Advertising environment as part of a larger Demand Generation strategy. Online Advertising has matured from simple paid search to display, video, social and mobile advertising. Evaluate your advertising ROI. How well is your current advertising campaign performing? Is it meeting your revenue and customer goals? If not, it’s time to look for stronger performing ad vehicles. Evaluate your Digital Marketing mix and identify any gaps. Do you have the right mix of advertising vehicles? If not, evaluate your advertising program as a whole and investigate new options. Determine how and where Online Advertising fits into your marketing plan and create smart goals. Evaluate your tools and technologies for meeting these goals. Use this report to consider new tools, such as DSPs. ONLINE ADVERTISING: TECHNOLOGY OVERVIEW Just as it was critical to drive your search rankings with SEO, now is the time to evaluate how and where Online Advertising fits best. MMOs should view SEO as a strategic enterprise resource that must be continually upgraded to stay ahead of the fast moving SEO market landscape.
  18. 18. 18TECHNOLOGY OVERVIEW METHODOLOGY ONLINE ADVERTISING: TECHNOLOGY OVERVIEW Technology Overview Methodology The Modern Marketing landscape is an ever-changing, ever-evolving environment in which new strategies, technologies, vendors and products appear continually. Demand Metric Technology Overviews provide marketers with a focus on a specific technology solution set or focus area so that they are armed with the knowledge, information and tools they need to develop effective strategies for their organizations. Each Technology Overview involves hours of analyst research (mainly publicly available information), is for a specific technology solution, and is usually accompanied by several practical tools. Our Customer Engagement series includes Technology Overviews on Online Event Marketing Advocacy and Loyalty Gamification Our practical tools are designed to provide marketers with the tools and templates they need to plan for an initiative in a given focus area, analyze the vendor landscape and select the best vendor for their organization. We provide a comprehensive overview of Customer Engagement in the companion report Customer Engagement Best Practices Report. V I E W R E S O U R C E
  19. 19. 19ONLINE ADVERTISING: TECHNOLOGY OVERVIEWABOUT DEMAND METRIC About Demand Metric Demand Metric is a marketing research and advisory firm serving a membership community of over 120,000 marketing profes- sionals and consultants in 75 countries. Offering consulting methodologies, advisory services, and 500+ premium marketing tools and templates, Demand Metric resources and expertise help the marketing community plan more efficiently and effectively, answer the difficult questions about their work with authority and conviction, and complete marketing projects more quickly and with greater confidence, boosting the respect of the marketing team and making it easier to justify resources the team needs to succeed. To learn more about Demand Metric, please visit www.demandmetric.com
  20. 20. 20ONLINE ADVERTISING: TECHNOLOGY OVERVIEW © Demand Metric Research Corporation. All Rights Reserved. www.demandmetric.com Follow us on Twitter Like us on Facebook Join Linkedin Group

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