2. what is online ad value chain?
Network/
Advertiser Agency Publisher
Exchange
Demand Side Supply Side
3. What’s the product?
product equals “advertising inventory”
advertising inventory is the supply of opportunities to
display advertising in a particular medium.
then what is an “impression”?
an ad impression is a single viewing of a single ad by a
single individual.
4. Calculating Ad Inventory
• two variables
the number of page
impressions on the site,
the average number of
ads per page.
5. The players
• Advertiser
• Publishers
• Ad Network
• Ad Agency
6. Advertiser
Marketing objectives:
– Brand marketing
– Direct Response marketing
typically says "I have x million dollars this quarter for
online ad display, and there is this campaign I want to
run. I want to target Males, 35-45 years, love football,
with family, stay in LA, have a dog…Buy me the best
media to reach this target audience".
7. Publishers
• a site, game, blog, mobile portal –
Yahoo, Google, Facebook, MSN, CNN
• ad inventory as monetization model
• Maximize revenue, minimize risks
• Monetization model
• Larger publishers – have own sales team
• Small publishers – sell to ad networks
• Search engines – Google, Yahoo, MSFT
8. Ad Network - I
• outsourced sales houses
• strikes deals with lots of publishers
• sells inventory to advertisers and agencies
• value proposition to publishers
– sell inventory that the publisher can't sell itself
• value proposition to an advertiser
– Ad can appear on lots of sites
• business model = buy inventory cheaply; sell
expensive
• Types:-
– premium networks
– vertical networks
– contextual networks
9. remnant Ad Network - II Simple
inventory Arbitrage
Platform
Go to Market - Specialization
small
publishers Vertical
Aggregation
Behavior
Targetting
Performance
Platform
Specialization
10. Ad Exchange
Technology
platforms Nature of
Inventory
Efficiency in
Ad imp Targeting
buying Methods
Auction
Pricing Model
based model
Buy audience Placement
vs Options
Buy sites/
placement
13. DSP
Managing One tool,
multiple Ad centralized
Exchanges reporting
Central Hub for
Data
14. Data Exchanges and DMPs
Cookie
Manage the Big
warehouse,
Data
with analytics
firepower
Data Agg –
allow
Advertisers
analytics Integrate your
data w/ 3rd
Party Data
Provide
purchase and
consumption
base data
19. Credits
• Many blogs –
• Ben - http://www.adopsinsider.com/ad-serving/how-
does-ad-serving-work
• Ian Thomas -
http://www.liesdamnedlies.com/online_advertising_bus
iness_101.html
• http://www.allaboutcookies.org/ad-serving/
• http://www.adopsinsider.com/ad-serving/what-is-
holistic-ad-serving/#more-733
• http://www.adopsinsider.com/ad-exchanges/ssp-to-dsp-
cookie-synching-explained
• The rise of performance-based advertising Article by
Brandt Dainow
22. Some Terms…..
• price discrimination, volume discounts and bundling
• rate card
• frequency capping
• guaranteed vs 'discretionary' or non-guaranteed
inventory
• retargeting
• remnant inventory & spot pricing
• floor price
• spot priced
• forward prices
• premium publishers
• velvet rope advertisers
• 'filler' inventory
23. Why newspapers are like airlines?
• both seem to be going out of business
• other similarities:-
– perishable inventory
– finite supply of inventory
– charge different customer differently (aka price
discrimination)
– high fixed costs
– maximize revenue by selling as much of their
inventory as they can at the highest average price
possible.
24. RTB - I
DSPs
1 2
User Browser
Webserver
3
13
4 7
8
Ad
9
server
12 Exch
6 10
5
SSP
11
25. RTB - II
• Advertisers get impressions at a price that matches
their goals and objectives.
• Publishers use SSP with supply side algorithms to get
the maximum yield out of ad inventory
• RTB involves a real time auction for each ad impression
in which buyers and sellers come to an agreement
• basic premise of RTB
• ad impressions are not commodities to be sold in bulk,
and that each ad impression is unique
• Auctions take place at a blink of an eye.
• Volumes of bid requests and bids are also staggering.
• Emerging Standards - OpenRTB
26. Yield Management - I
• In eighties, American Airlines led a
transformation of the US airline industry
• Introduced "Ultimate Super Saver Fares"
(1985)
• Why? People pay more for same airline ticket
when purchased at short notice
• Helps airline to sell and advertise tickets at a
much lower price for advance purchases.
• Hence, yield management business is born.
27. Yield Management
• Yield management
• “……practice of maximizing the average price
received for inventory through a number of
techniques, amongst them price
discrimination…”
• Yield management specifics:-
– a publisher has flexible control over the cost of
sale
– volume discounts important for sale of online ads
• yield management is maximizing gross
profit rather than top-line revenue.
28. RichMedia
• “…umbrella term for ads which are more interactive, or use sound
and/or video to get their point across...”. Eg:-
– An expandable banner with embedded video
– An ‘advergame’ (a mini-game embedded inside an ad unit)
– A video ad served before, after or during a video clip
– A ‘page takeover’ ad (an ad which covers the page it’s on, or interacts with that
page or the other ads on it in some way)
• Rich Media Vendors
• Atlas Rich Media (MSFT), DoubleClick Rich Media (GOOG), Yahoo!
Rich Media, Eyeblaster, EyeWonder, Pointroll, Interpolls, Rovion,
Unicast
• Challenges rich-media campaign:-
– Creating the actual ads themselves (the creative)
– Trafficking the ads (getting them actually placed onto publisher sites)
– Managing and serving the creatives themselves, and measuring delivery and response
• Where next?
• Available to Big & small Advertisers
• Technology to create one single creative to fit all screens.
• Uniform playing field
