Ad exchange and Programmatic Ad Buying

Ad exchange and Programmatic Ad Buying

There are millions of publishers which would happily take our money to show ads. But we can’t just give away money like that, can we? If only there was a technology where we could specify some rules and then it selected publishers asked on those rules to show our ads. Not just that, what if it also decided the amount to pay all these publishers on its own. Turns out, well there is such a technology. Let’s learn about this technology in detail.

As you know, display advertising is similar to print ads in newspapers. But being digital, display ads give us advantages that print ads cannot. They utilize the full power of technology to create effective and targeted

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campaigns. However, this medium also comes with its challenges. Let’s look at a few issues pertaining to digital display ads that need to be looked into.

Take a simple example. If you are a manufacturer of men’s shoes and you advertise on a popular website, but if 50% of their visitors are female, then you will likely end up wasting 50% of your advertising budget!

Another issue is that buying ad space requires a lot of time and effort to find available slots, negotiate rates, and follow up if ads are actually shown. This issue multiplies manifold on the internet as there are millions of websites and apps where ads can be shown. It is humanly impossible to speak individually to all web and app developers to buy ad space

The solution to these issues are ad exchanges. They are a sort of an intermediary between publishers and advertisers that do the hard work for you by collecting and presenting all the ad space available from publishers. Ad exchanges do this by allowing publishers to add a small piece of code on their digital property where they want an ad to appear. While this process might seem simple, there are two immediate challenges that need to be addressed.


Let’s look at the first challenge: What happens when there are a lot of advertising spaces available for a marketer to choose from.

1. How does the marketer access all these spaces, and the second challenge: 2. How does he or she decide which of these available space to advertise in.

Ad exchanges have the answer for this. There are millions of websites that run an ad exchange code. Ad exchanges list all these ad spaces and the total of all ad space available with an ad exchange is known as ‘ad inventory’. This entire inventory is available to advertisers. As an advertiser, making a choice and identifying a suitable ad space is humanly impossible.

Hence, it becomes essential to divide the ad space into segments that are more manageable for advertisers. This is where Ad exchanges step in and categorize ad space based on where the ad is being shown. An advertiser can pick and chose only those segments relevant to their business.

For example, if you are a restaurant owner you’d be interested in showing your ad. That seems simple enough - doesn’t it?! Wait - You’re not the only advertiser!


Continuing the restaurant example, there would be many other restaurants in your area, and assuming they are as smart as you are, they would also be vying for the same space, trying to show their ads in the food segment.

So that leads us to the third challenge – How does this space get allocated to competing advertisers?

Ad exchanges take care of this too! They conduct an auction between advertisers and select the advertiser who is willing to pay the most. This process is entirely automated. In a way, ad exchanges run like a marketplace. They collect all ad inventory and sell it to advertisers who are willing to pay the best price for it.


Advantages of Ad exchange 1. Automation of buying/selling ad inventory is scalable for both advertisers and publishers. For ex. - NyTimes.com has a huge number of ad spaces. Their direct sales team sells only a fraction of their inventory (premium inventory). The rest is managed through ad exchanges

2. Allows small advertisers and publishers to benefit from advertising. For ex. - Zwende, a bootstrapped start-up can accurately target lovers of handcrafted products, with a small budget; and I can monetize my own Wordpress blog through ads without an ad sales team

3. Efficient with connecting the right user to the right ad (use the Restaurants ad example)


So, ad exchanges divide the ad inventory into sections that you can select from, and they select the advertisers for every ad space. That should certainly make life easy for an advertiser and save a lot of time and money. As advertisers, you would be interested in getting access to all these spaces on the ad exchange.

However, advertisers do not directly interact with an exchange. They have a programmatic ad buying system in place. You will also learn how the Real Time Bidding differs from the programmatic ad buying system.

Let’s learn more about these in detail.

Programmatic ad buying is 1. A method that automates the process of identifying and displaying relevant ads across millions of

possible placements using data-driven technology.

2. It also competes with various other businesses who want to display ads on the same website as you.

3. Programmatic ad buying makes the life of the advertiser and marketer easier by automating the process.


Let’s understand more about this process in detail – As advertisers, you would be interested in getting access to all this inventory on the ad exchange. However, advertisers do not directly interact with an exchange. They can access these using an ad network which buys inventory on behalf of advertisers from ad exchanges.

So the whole ecosystem looks like this: A publisher lists his inventory on a network. The network lists this on an exchange using a supply side platform (SSP) where an auction happens for each impression. Media agencies participate in this auction on behalf of advertisers using a demand side platform (DSP). Finally the winning advertiser’s ad is shown.

Now in this diagram, you also see a Real Time Bidding box.

1. Real-time bidding or RTB is a type of programmatic ad buying. But it’s important to note that all programmatic is not RTB.

2. In the RTB process, every impression is bid for, as opposed to just site placements.

Take the example of Furlenco. Through an RTB Ad Exchange, Furlenco and Zwende, both niche advertisers can target single males and females, from metro cities in India, in the mid-to-high-income bracket.


Now imagine one such user comes on to the NDTV app during her morning commute. This triggers the RTB process. The NDTV app places an ad request and passes on relevant targeting information along with the ad request - the user's location, device, demographics etc. Both Furlenco and Zwende bid for this user's impression. The highest bidder wins THAT specific impression.

RTB takes place one ad impression at a time. From the triggering of the ad request to the display of the ad - all this happens very very fast. Typically in 1/3rd of a second, which makes it seamless to users. RTB is an efficient model to buy and sell ad impressions, but cherry picking impressions isn't always preferred by publishers.

Before programmatic ad buying system, RTB was the considered to be the most efficient process, however, as time progressed, technology continued to improve, and there were more ways to use tech to automate the buying and selling of media, beyond the real-time auction model.

Programmatic ad buying encompasses RTB done in open ad exchanges, but it also includes

1. Guaranteed direct buying, 2. Private exchange buying and 3. Preferred deals.


http://blog.srds.com/blog/we-love-media/what-is-guaranteed-direct-advertising

http://blog.srds.com/blog/we-love-media/what-is-a-private-exchange-webinar-question

There are many ad exchanges in the market that help advertisers achieve their goals. Some of the popular

ones are:

a. DoubleClick by Google,

b. OpenX,

c. AppNexus and

d. Rubicon Project.

In this segment of the session, you will see how Google Display Network is used to reach millions of target customers. You’ll see the steps involved in creating a campaign for display ads in Adwords, and also learn how to do the same on Facebook. So let’s hear more on this.


Google Display Network in Adwords has access to the largest ad inventory. Using this, you can reach 70% of all internet users.

In this session, we’ll cover how to create display campaigns using Google Display Network. But before that, we must know what makes Google Display Network or GDN for short, so powerful.

Google developed AdSense which allowed publishers to place ads on their websites based on their content. Every time a visitor on a publisher’s website clicked on such an ad, Google got paid by the advertiser, a portion of which was passed on to the publisher.

Obviously, just publisher content wasn’t sufficient to show ads that users would click on. Google needed to know who the user is and show ads that best suited him or her. To do this, Google tracks a user’s online behaviour using a cookie that gets stored in their device every time they visit a publisher running AdSense ads.


On the advertiser side of things, Google developed the AdWords platform to 1. Let advertisers select what type of users and 2. Publisher content they wanted to target and 3. How much they want to pay for ads.

Together with Adwords and Adsense, Google is able to show the best possible ad to each user using the real-time bidding process we discussed in the previous session. In this session, we’ll learn how to use AdWords to create display campaigns.

The world’s largest social network comprising over 845 monthly active users. At Facebook, you do not need to be a person who knows all the technical terms in the field of digital marketing. The interface to create ads is so user-friendly that anyone can create an ad.


So, the first step in creating a display campaign on Facebook is to choose the objective of the campaign - Be it brand awareness, consideration, or conversion. Now, before targeting it asks you how you would like to add to your account details in the form of country, currency and time zone

Once, you select the objective, you are in for targeting - location, age, gender, language, demographics, interest, behaviour etc. Thereafter, you go in for the placement of the ad. It could either be on Youtube, Facebook, Instagram or Audience network.


Finally, you decide on the budget and schedule of the ad you want to place. And at the end, you select the format of the ad - how it would look to the user - Carousel, Single Image, Single Video, Slideshow.

Wow. That was a lot of information! So let’s just recap what you learnt. Buying ad space on the internet, like in newspapers, is an inefficient use of money as the ad will be shown to many people, who are highly unlikely to buy your product.

So, 1. ad exchanges solve this problem with a unique method that

a. Uses technology to hold real-time auctions between advertisers for ad space.


To recap, you understood how to

2. set up display campaigns using Google Adwords. To begin with, you understood the basic difference between an Adsense platform, which is used by the publishers, and an Adwords tool, which is used by the advertisers.

Similarly, you also looked at how you can do display advertising on Facebook. So, that’s it for this session, so long until we see you in the next!

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Ad exchange and Programmatic Ad Buying