The Agency

In advertising, the Publisher and Advertiser are two critical companies but another critical company is the Agency.  An advertising agency is typically hired by Advertisers to provide expertise and services that many Advertisers are not equipped to handle themselves.  There are many different types of ad agencies and how each Advertiser leverages an agency varies.

Ad agencies can provide an outside viewpoint to help sell the Advertiser's products or services.  To do so, they can provide marketing strategies, branding strategies, sales promotions, produce commercials for TV and radio, online advertising, and more.  There are a lot of different types of agencies which we won't enumerate here.

For now, we will focus on media agencies which help buy the media for the Advertiser.  Media is basically the ad inventory available whether on TV, radio, a publisher's website, in a mobile app, etc.  For AdTech, the media typically bought is online ads.

A lot more can be written about agencies but we'll stop here and move on to Ad Networks in our next post.

Ad Servers - Advertiser Ad Server

We went over a high-level overview of the Publisher Ad Server last time so we will turn our attention to the Advertiser Ad Server.  With the advent of the Publisher Ad Server, there were a few challenges that remained for the Advertiser including having to contact all Publisher for new ads or any changes.   To address this, the Advertiser Ad Server was developed.

Advertiser Ad Server

With the Advertiser Ad Server, the ads are no longer delivered by the Publisher Ad Server but rather the Advertiser Ad Server.

1. User in the browser goes to a Publisher's web site such as www.yahoo.com
2. The Publisher web server returns HTML to the browser to load the page and the ad tags
3. The web browser loads the ad tag which sends the browser to the Publisher ad server
4. The Publisher ad server sends a redirect to send the browser to the Advertiser ad server
5. The Advertiser ad server delivers the ad to the browser

The Advertiser Ad Server is commonly called a 3rd Party Ad Server.  So who is the 3rd party and 1st party in this flow?  The first party is the Publisher since the ads are being served on the Publisher's web site but the browser needs to go to another ad server which is the Advertiser which is a 3rd party in this flow.

What functionality does the Advertiser Ad Server offer?

• Manages which ad should get served by following rules set up by advertiser such as how many times to display an ad to a user (frequency capping), targeting specific users, and more
• Allows advertisers to manage all the creatives
• Delivers reports for the advertiser such as how many times an ad was served, the number of times an ad was clicked, and tracking conversions

Similar to the Publisher Ad Server, the landscape has changed rapidly so for a recent listing of Ad Servers, do a web search.  One popular one is DoubleClick Campaign Manager which was formerly known as DoubleClick for Advertisers.

Ad Server Summary

As you can see now, the ad server made management of online ads much easier for both the Publisher and Advertiser.  It helps the Publisher manage their inventory with multiple advertisers.  The ad server helps the Advertiser manage their ad buying across multiple publishers.  The above has gotten more complicated over time but the general principles still apply.

In the next few posts, we will go through the rapid proliferation of ad tech companies and give an overview of the evolution and some of the players.

 

Ad Servers - Publisher Ad Server

In our last post we discussed the early days of ad serving which had some challenges for the Publisher to manage their ads.  Making frequent changes to their production web server was not sustainable due to the risk and tediousness.  The solution to this was the Publisher Ad Server.

Publisher Ad Server

The Publisher Ad Server is another server set up to deliver the ads so that the production web server did not have to be changed for every single ad update required.  Certain areas of the web page that have inventory for ads can be replaced with code, typically called the ad tag, that will make a call to the Publisher Ad Server to deliver the right ad.  The Publisher Ad Server has the functionality to rotate through different ads and ensure the right number of impressions are served.

1. User in the browser goes to a Publisher's web site such as www.yahoo.com
2. The Publisher web server returns HTML to the browser to load the page and the ad tags
3. The web browser loads the ad tag which sends the browser to the Publisher's ad server to load the ad
4. The ad is delivered to the browser

The Publisher Ad Server has evolved in functionality over time to do more complex tasks including targeting ads to certain users, managing billing, reporting, management of ads, tuning and optimization of ads, and predicting available inventory (forecasting).  

Technology moves so quickly that I hesitate to provide examples of Publisher Ad Servers as these names may be defunct when you read this.  One of the most popular currently Google's DoubleClick for Publishers.

The Advertiser Challenge

Just like the Publisher had challenges with the original ad serving setup, the Advertiser experienced issues with the Publisher Ad Server.  For the Advertiser, every time they wanted to change or ad any new ads, they would have to send it directly to all the Publishers they are working with.  In addition, for reporting, not only do they need to aggregate across all the Publishers they are advertising with, but they also rely on the Publisher for reporting.  For any changes in their advertising strategy, the Advertiser also does not have control and would have to contact all the Publishers.

The solution to all these problems?  The Advertiser Ad Server is what we'll discuss in our next post.

Online Ad Serving - In the beginning...

In our first post, we did an overview of inventory, supply, and demand.  In this post, we start exploring how ad serving has evolved through the years.  Back when online advertising began in the early/mid 1990s, it was a simple set up with a Publisher selling ad inventory directly to the Advertiser (and/or Agency.  We'll write more on other players like ad agencies later).

After the Advertiser agreed on rates directly with the Publisher to place ads on the site, the Advertiser would send the image for the ad (called the creative) to the Publisher.  The Publisher places these ads on their web pages similar to any other image and load it all in their web server for delivery.  Below is a simple flow showing how a user on a browser is served an ad.

1. User in the browser goes to a Publisher's web site such as www.yahoo.com
2. The Publisher web server returns HTML to the browser to load the page and any images including the ad
3. The web browser fetches content such as images and the ad from the web server
4. The content including the ad loads on the browser

This all seems nice and easy but the workflow was tedious.  Any time an advertiser wanted to change ads or new advertisers signed up, the Publisher would have to make changes to their live web site which was risky and time-consuming.  We'll explore in our next post how the ad server was created to help the Publishers with this.

Note: if you're a beginner to Internet and don't understand the basics of how it works such as HTML, browsers, etc., you can learn more at another blog http://www.learninternetbasics.com.  It's early stages as of this original post but will be built out quickly to provide foundational knowledge to continue with this blog.

Ad Tech 101 - Supply, Demand, and Inventory

Introduction

For our inaugural post, we are starting very basic for absolute beginners.  The key terms to understand Ad Tech are actually general advertising terms.  We will review the following:

• Inventory
• Supply
• Demand

Ian Thomas writes the blog Lies, Damned Lies... which is a great resource to get some introductory background to advertising.  I actually learned a lot from his Online Advertising Business 101 posts when I started in this industry.  I will reference some of his materials but make some my own and present it differently.

Inventory

To start, it is important to understand what is being sold in the advertising industry.  What "product" is changing hands in advertising?  This "product" is typically referred to as inventory*.  Ian Thomas has a great definition for advertising inventory:

Advertising inventory is the supply of opportunities to display advertising in a particular medium.

Let's use a few examples to make this easy to understand:

• In television or radio, for each program, there is a limited set of time slots available for commercials.  That is inventory and different advertisers (say Coca-cola) will buy up that inventory.
• In newspapers and magazines, there are areas or pages which are set aside as space for ads.  This is again inventory for advertisers to buy to promote their products.
• You see inventory everywhere!  There is inventory on the side of buses, inside the subway train, on billboards on the road, on the bus benches, etc.

Ad inventory on the side of a bus

So what does inventory mean in Ad Tech?  Inventory is often referred to as an ad impression in the online advertising world.  Again from Ian Thomas:

An ad impression is a single viewing of a single ad by a single individual.

As he notes, there are complexities as ads have become increasingly complex with different ad types (e.g., partial viewing of video ads).  We will explore this more in detail later.  One simple example though in the Ad Tech world is on the CNN web site, there is inventory available on each page for ad impressions.

At this point, you should have foundational knowledge on Inventory and not be scared when you hear the term being used.  If you are confused about any of the above, leave a comment and we will try to clarify and improve the above.

Supply 

Another term you will hear a lot is Supply.  This term is used to explain who is providing/supplying the inventory for ads.  In general, this would be the Publishers who are sometimes referred to as the Suppliers.

In Ad Tech, Publishers are the companies that have web sites, web apps, have online video content, etc.  For example:

• New York Times has a web site which has a supply of inventory to sell to advertisers
• Angry Birds developer Rovio has an app with a supply of inventory to sell to advertisers to display ads within the app
• YouTube allows advertisers to buy an ad that plays before the video content you are watching

Angry Birds mobile app provides supply for ads in game (see arrow)

Note: the term ad space is commonly used for the area of the web site that Publishers set aside for ads.

When people use the term Supply Side, this refers to the Publisher side of the advertising ecosystem.  Note that it isn't that straightforward that Publishers sell directly to Advertisers always.  We'll dig into that in more detail in a later post.

Demand

On the other side of the advertising ecosystem is the Demand.  This term refers to who is demanding the inventory for ads.  In general, this would be the Advertisers.

An advertiser is anyone who wants to buy ads to sell their products, improve their brand image, etc.  Examples include Geico, Coca-Cola, Honda, etc.  

Obviously then, when people use the term Demand Side, this refers to the Advertiser side of the ecosystem.

Final Word

At this stage, hopefully you have a good understanding of the Inventory, Supply, and Demand.  Inventory is the opportunity to display an ad.  Publishers provide this Supply of inventory where as advertisers have a Demand for this inventory.  We'll go more into depth on how this simple ecosystem started in the early days and how it has evolved over the years.

Footnote:

* For the novice, to understand traditional inventory, think about your local clothing store.  The amount of inventory they have for a dress shirt is the number of dress shirts in the store.  More info here: http://en.wikipedia.org/wiki/Inventory

Coming Soon

Stay tuned for more!