This is part one in a multi-part introduction to online advertising – subscribe to Run of Network’s RSS feed so you don’t miss the next parts!
As anyone in the ad technology industry will tell you, it’s a lot more complicated than you would think. Newcomers to the industry typically think:
This is going to be easy, I’m going to work for a company that rotates ads on websites
And then their first day comes and they get punched in the face by terms like RTB, Ad Exchanges, Yield Optimization, DMPs, Passbacks, Frequency Capping, not to mention all the company names on the Lumascape.
In an effort to help newcomers (and even oldcomers that need a brushup) this series will serve as a primer to the online ad industry. Let’s start the first piece today with a very high level rundown of the players and their motivation:
- Publishers
- Ad Networks
- Advertisers
SELL! SELL! SELL!
Very often you’ll here the terms “Buy Side” and “Sell Side” used to define the primary parts of the ad industry because at a basic level someone is selling ad space to someone that wants to buy the space so they can place their advertisement. The buy side and the sell side have historically been opposite sides of a coin that each have different tools, concerns and revenue models. The sell side is where the rubber meets the road and all those eyeballs on the internet actually hangout browsing Publisher’s content. For today’s article it doesn’t matter if that content is in a mobile app, a web page, or an episode of Modern Family. Publisher’s that generate revenue from ads are selling their ad spots to advertisers and agencies. These ad spots can be simple banners or more complex opportunities like custom rich media or replacing the background theme of a page. Whatever the case, it’s the Publisher that’s the essence of the “Sell Side” or “Supply Side”.
Ad Networks
If a publisher can’t (or doesn’t want to) sell it’s ad inventory it might join an Ad Network to sell some or all of the publisher’s inventory on their behalf. Ad networks are businesses that buy up ad space, or inventory, from many different publishers and bundle it together to sell to buyers like advertisers. This makes a network look like both a sell side and a buy side business since they buy and sell ad inventory, but for the most part they are on the sell side.
There are as many different flavors of ad networks as there are reasons for joining an ad network. There are contextual networks that serve ads based on the text they find on a publisher’s page (like Google Adsense), and ad networks that specialize in mobile or video. Vertical or premium networks often cater to specific types of content, like a vertical network for hunting and shooting sports such as Tactical Republic. Vertical networks are very selective of the publishers they will represent because they sell to advertisers that are looking for a specific audience and content. Often the quality of advertiser (as well as revenue) from premium vertical networks will be much higher than other types of networks. (Check out the Vertical Network Spotlight for a list of premium vertical networks).
Performance networks, on the other hand, are more accepting of different publisher sites and content that can join their network. Their advertisers are often only concerned with getting clicks from anyone and everyone and not as concerned with show ads for a specific niche.
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Come Over to the Buy Side
If publishers are on one end of the advertising value chain with their content and viewers, then Advertisers are on the other end with their dollars just burning a hole in their pocket to buy ad space for their advertisements. They make money by selling good or services and need to spread the word. Whether Ford, Coke, or the local florist, they all have an advertising budget to get customers. Given the amount of budget for these campaigns advertisers are often looking for big buys, which rules out working with smaller sites directly. There are many players in the online ad industry trying to make it easier for smaller sites to get a piece of these media budgets, which are historically spent with ad networks and very large publishers.
An Advertiser is typically looking to either build intent or harvest intent. Building or generating intent through brand advertisement campaigns might introduce or raise awareness of their brand. You’re not expected to click a Ford ad and buy a car, the goal is to plant an image or feeling of Ford in your mind so that later you’ll think of them when you intend to buy a car. These types of campaigns are often bought by the thousand impressions (CPM), since the goal is to get a lot of people seeing a lot of the ads. These Advertisers are typically concerned with where their ads are displayed (Ford wouldn’t want their ad near a youtube video of a car accident) and the prestige of the sites that display them.
Harvesting intent is intended to get you to act now, click the ad and buy my product! These are often bought by the click (CPC) or action (CPA). If you’ve ever used Google Adwords then you’re familiar with this type of ad. You can see here that Chase very much wants you to click the ad and sign up for a credit card:
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In future pieces we can dive in and focus on the players for each segment and associated tools. Don’t by shy in the comments below if you have specific areas you think I overlooked and would be helpful to callout sooner rather than later!