Digital Media buying basics

AD Exchange

An ad exchange is a technology platform that facilitate the bided buying and selling of online media advertising inventory from multiple ad networks. The approach is technology-driven as opposed to the historical approach of negotiating price on media inventory. This represents a field beyond ad networks as defined by the Interactive Advertising Bureau (IAB), and by advertising trade publications such as Advertising Age.

Ad exchanges can be useful to both buyers (advertisers and agencies) and sellers (online publishers) because of the efficiencies they provide.

SSP (Supply Side Platform)

A supply-side platform or sell-side platform (SSP) is a technology platform with the single mission of enabling publishers to manage their advertising impression inventory and maximize revenue from digital media. As such, they offer an efficient, automated and secure way to tap into the different sources of advertising income that are available, and provide insight into the various revenue streams and audiences. Many of the larger web publishers of the world use a supply-side platform to automate and optimize the selling of their online media space.

A supply-side platform on the publisher side interfaces to an ad exchange, which in turn interfaces to a demand-side platform (DSP) on the advertiser side.

This system allows advertisers to put online advertising before a selected target audience. Often, real-time bidding (RTB) is used to complete DSP transactions.

DSP (Demand Side Platform)

It is software that replaces the service of employees who plan, execute and report online campaigns based on targets and budget. A DSP platform enables Advertisers, Agencies and AdNetworks to buy display impressions across multiple Ad-Exchanges.

Agencies and Publishers alike are using it to buy Display Ad inventory via RTB exchanges.

Fundamentally a DSP is an intermediary between an agency and an ad exchange, and it can also add data from data providers.

DMP (Data Management Platform)

A DMP is a centralized data management platform that allows you to create target audiences based on a combination of in-depth first-party and third-party audience data; accurately target campaigns to these audiences across third-party ad networks and exchanges; and measure with accuracy which campaigns performed the best across segments and channels to refine media buys and ad creative over time.

RTB (Real Time Bidding)

RTB is software used for the automatic controlling of bids in search engine marketing.

Any number of keywords can me managed via various paid search providers. Software transmits changes to bids to the relevant channels automatically via API. The RTBs role is to determine the relevant optimum bid and to continuously adapt it.

Additional functions they provide:

  • Keyword expansion
  • Search query analysis
  • Advertising copy suggestions
  • Controlling of landing page
  • Trademark protection
  • Analysis through login area

The emphasis is on tracking, not only to measure clicks before a conversion but also the funnel as well as other channels such as display and affiliates.

Most RTB tools are based on pay per click CPC.

Targets figures are:

  • Net profit
  • Cost per lead (new customer acquisition)
  • Cost per order (purchase)

RTB VS Direct, targeting Audiences VS Websites

RTB mechanism is similar to AdWords bidding for search. It is a «second-price auction», meaning the highest bidder pays 1c more than the second higher.

The fundamental issues comparing the of RTB vs Direct, is essentially the difference between targeting audiences vs websites.

The main differences are:

  • Buying ad impressions in bulk VS auctioning each impression
  • Direct is good for brands that want to secure premium inventory (pop-ups).
  • Direct has guaranteed volume of impressions from publishers. (RTB has no guaranteed volume !)
  • Direct has huge overheads in planning, negotiating, executing, and reporting.
  • RTB is a primarily programmatic process driven by algorithms and data and not emails-phonecalls-contracts.
  • RTB is real time.
  • Direct buys are always priced in CPM.
  • With RTB you have effective CPM: eCPM

With RTB you have much smaller «minimum budgets» needed to play, compared to Direct buys.