The way in which online advertising is bought and sold has changed for good and, while this comes with potentially huge benefits, it’s also a minefield of confusing acronyms and un-answered questions. This article aims to not just clear up some of the confusion but also to explain how we got to where we are.
The traditional method of online advertising is referred to as a ‘direct buy’. This involves the advertisers or agencies buying advertising space directly from the publisher. The publisher will have a certain number of impressions available across all of its advertising space and the agency or advertiser will buy these at a cost per thousand impressions or CPM.
As more and more publishers created more websites and more advertising space on those websites, they began to find themselves with unsold inventory, which resulted in the rise of ad networks. Ad networks would buy the unsold inventory from publishers, then group the inventory into audience packages and sell the packages to advertisers.
This proved to be a successful model and so more and more ad networks were created, making the buying process a very complicated one and resulting in advertisers buying inventory that reached the same audience multiple times from different ad networks.
Something had to change to simplify the process of buying and selling online advertising and that change came in the form of the ad exchange, which allows publishers and advertisers to trade audiences rather than inventory. The publisher makes its audience available on the ad exchange, the advertiser selects its audience and then bids on the inventory available in front of this audience. The successful bidder then gets their advert shown in the space.
This model benefits all parties involved – the publisher gets the best possible price for its inventory as it’s always sold to the highest bidder, the advertiser can be highly specific with their audience targeting and internet users see ads that are more relevant to their interests and lifestyle. This is known as programmatic advertising, whereby programmatic ad buying uses software to purchase digital advertising in real-time.
To assist with the buying of advertising space through the ad exchange, some agencies now have access to Demand Side Platforms (DSP). These allow us to utilise vast amounts of data – far more than a human could ever cope with – to influence strategy and decision making. A DSP can analyse the quality of a potential ad placement based on data and other factors and subsequently alter the amount that it is willing to bid on that placement, all within the time it takes for the web page to load.
JJ has been utilising the latest advances in online advertising to benefit a number of clients. By using the data available, we can serve the right ads to a more targeted audience and at the most effective time, which has led to campaign results that have surpassed expectations. In addition to this, the data collected from the campaigns offers valuable audience insights which can be applied to any aspect of the client’s marketing plan.