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Navigating
Planet Ad Tech
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Part One
The Ad
Tech Sectors
Ad Exchanges
An ad exchange is a marketplace where
media is bought and sold, with complete
transparency and fluidity, modeled
after the same principals as the stock
exchange. It is in the exchange where
bidding from agency trading desks and
demand side platform (DSPs) is done.
Who has an ad exchange?
Appnexus, Google Adx, OpenX and Yahoo
RMX. Supply Side Platforms (SSPs) such
as PubMatic, Admeld and Rubicon also
act as exchanges.
History of ad exchanges
Ad exchanges were created as venues for
the real-time exchange of media inventory
to be executed by multiple buyers. When
introduced in 2007, real-time bidding
(RTB) allowed advertisers to bid auction
style on an impression-level basis and
load an ad in milliseconds.
Benefits of ad exchanges
Exchanges provide publishers and advertisers with an open and automated online
advertising
market,
promising
liquidity, operational efficiency, the
ability to cherry-pick impressions and
transparency.
Agency
Trading Desks
Agency trading desks are the audiencebuying divisions of agency holding
companies. Their promise is to help
match the right audiences to the right
ad impressions efficiently at scale.
Trading desks do not typically own
proprietary technology. They are made up
of people who specialize in analytics and
ad trafficking, and they often license one
or more demand side platforms (DSPs),
which collect and analyze audience data,
to deliver on this promise. The trading
desk team may also include ad operations
teams from each of the agency DSPs.
n
n
n
n
n
Data
Management
Platforms
A growing number of ad tech vendors
are incorporating data management
platforms (DMPs) as part of their service
to clients. DMPs are data warehouses
for gathering and analyzing both first
and third-party data.
Some of this data is collected offline,
or at least off the Internet; for example
supermarket data collected from loyalty
cards, or customer registration data. The
rest is collected online, either from past
campaigns or via cookie data.
DMPs can now also track mobile data
assets, as well as unstructured audience
data collected online from sources like
video, social and web analysis tools, and
points of sale.
DMPs are aggregators, collecting and
managing data that enables marketers to
scrutinize characteristics of an audience
segment, which can then be translated
into more focused and effective campaigns and content. This means classifying audiences into categories, such
as Technology Enthusiast or Soccer
Mom.
DMP technology is typically deployed
within a marketing department or inside
the agencys trading desk to help marketers
understand their customers.
History of DMPs
Demdex, the first DMP, was launched in 2008
as an improvement upon cobbled-together
in-house systems working to collect and analyze the large volume of new online data.
Publishers started using DMPs to manage
and segment their audience data, enabling
them to profit from audience targeting and
site personalization. Real-time audience
buying prompted agencies and brands to use
DMP technology to understand and oversee
the customer journey.
Benefits of DMPs
DMP technology exists to help marketers
and publishers simplify data analysis to
discover trends and deconstruct audience
behavior so that clients can formulate
optimal targeting strategies.
A DMP can tell you, for example, how
many users bought childrens clothes in a
certain range of sizes and also searched
for video game software; it is also possible
to estimate those users income levels,
geographic location and other interests.
DMPs have a quite varied range of
offerings. None of them provide all of the
following services so it is important to
know what you are trying to deliver before
selecting a provider.
n Distribute
n Integrate
n Analyze
n Integrate
Demand-Side
Platforms
Demand side refers to the purchaser of
mediaor the advertiser. Demand-side
platforms (DSPs) are systems that serve
ads on behalf of the advertiser in realtime based on specified rules. Those
rules are based on the data provided by
advertisers and by inventory sources
(Exchanges and SSPs) when an
impression is offered for auction or sale.
The data stream, sometimes called
bid stream, provides limited information
about a user and the content where the
impression will be displayed. A DSP may
use behavioral targeting data to determine if the audience segment and content should be targeted. If the targeting
criterion meets the advertisers objectives some DSPs determine how much
it should bid for such impressions on
behalf of their client using algorithms
that analyze the incoming data stream.
DSPs are most often licensed by
agency trading desks but they are also
used directly by independent agencies
that dont have internal trading desk
teams, ad networks and some brands
that do their own media planning and
buying. DSPs focus mainly on display
advertising but are increasingly tapping
into video and mobile inventory, as well
as newly developed social opportunities.
History of DSPs
DSPs were created to facilitate real-time
bidding on ad exchanges. Each DSP
must hold a seat on each exchange in
order to receive the bid stream information. In response to slow adoption by
agencies, the first DSPs (Turn, Rocketfuel, [x+1]) positioned themselves as ad
networks, a perception that persists in
the marketplace.
Another concern is that DSPs sometimes fall prey to click-bots and other
fraudulent activity prevalent on exchange
traded media.
Benefits of DSPs
DSPs make it possible for advertisers to buy
audiences on a one-to-one basis, rather than
in bulk from a particular publishers website
as was done in the past. They also facilitate
buying from multiple inventory sources via
one platform, thus making the process less
complicated for the agency and client.
A DSP can constantly assess available
inventory, refine campaign optimization
modelsboth automated and manualand
make the best possible real-time bidding
decisions. They allow for better price transparency and let buyers choose only their
most desired impressions and then bid for
those users dynamically.
Used well, a DSP can improve intelligence about customers, improve understanding and engage more prospects, and
offer potential to significantly boost marketing performance.
n Do
History of SSPs
SSPs emerged as a more efficient way for
larger publishers to navigate ad networks
and fill as much remnant inventory space
as possible.
n How
n How
will you provide insights and information on not only my presumed target
audience but my potential audience?
n How
n How
Supply-side
Platforms
Supply refers to the seller of mediain
most cases the publisher. Supply-side
platforms are vehicles for publishers
to make their inventory available for
programmatic buying via an exchange
type marketplace.
Benefits of SSPs
SSPs help marketers access more valuable
inventory during the real-time bidding
process, and they help uphold a publishers brand standards by maintaining the
right to block certain advertisers from
accessing their inventory.
price established?
n How much of your revenue comes from ad
PART 2: PRICING
Part Two
Pricing
Cost per mille
Cost per mille (CPM) actually represents
cost per thousand, which is the price
an advertiser pays to reach a thousand
viewers. In digital advertising CPM is
calculated by dividing the cost of an
advertising placement by the number of
impressions (expressed in thousands)
that it generates.
Dynamic
cost per mille
Dynamic cost per mille (dCPM) provides
advertisers with the exact clearing cost
of media plus a technology fee, allowing
for variable daily pricing adjustments.
Defining ad
tech basics
RealTimeBidding
RTB enables a marketer to participate in
an auction for the purchase of individual
online ad impressions in real time, i.e.
during the milliseconds that elapse while
a user downloads a web page.
The idea is to provide marketers
with the ability to target key audiences
wherever they might be online for an
appropriate price, based on a range of
consumer attributes and their potential
worth to an advertiser. The marketer can
then place a bid and select the most suitable advertisement for that particular
targeted consumer. For the first time in
the history of advertising, advertisers no
longer have to rely on the publisher as a
proxy for audiencethe consumer can
now be found and targeted with relevant
advertising directly.
Programmatic buying
Programmatic buying is the automated
Programmatic selling
This is the automated selling of a publishers online inventory, usually ad space that
was previously unsold; so-called remnant inventory ramped up for audience
buying with the help of first and third party
data. It usually takes place through RTB,
but not always. Prices are usually less than
for direct sales made between an advertiser and a publishers sales team. And
although publishers can help drive up revenue from ad space that would have been
left unfilled this way, some are wary of
the system, out of fear that it drives down
prices, introduces new middlemen, and
cannibalizes their own inventory. There
is also some use of private marketplaces
in programmatic selling which, although
automated, still allows for one-to-one
communication between publisher
and advertiser.
PART 3: TACTICS
Big data
Part Three
Algorithms
Algorithms, the so-called secret sauce
for technology giants like Google, are
similarly the secret sauce for ad technology firms, driving how bids are made in
programmatic buying of online ad inventory wherever it is found within display,
search, social media, or other venues. In
pure computer terms an algorithm is the
automated code that makes sense of a
group of variables and data in order to
make a decision. In ad tech, an algorithms
job is to make the most efficient, targeted,
relevant and customized marketing decision, by combining instructions on budget, marketing performance, goals, the
market itself, together with factors like a
users location, the time of day, information on consumer history, and third-party
data, in order to make a bid for a single
ad impression. However, some ad tech
providers are pulling back the curtains
in favor of providing full transparency
and control to clients. These companies
include DataXu with their algorithm marketplace and Digilant with its custom valuation technology known as BOSS.
Because of proprietary issues, the
exact workings of a vendors algorithm
and why it works can be tricky to ascertain. The algorithm is not just a machineautomated task, but something that needs
to be tended and expertly tweaked by professionals in order to best leverage their
results for a better and more relevant customer experience.
Tactics
Audience
Targeting
Audience targeting relies on data available via the browser cookie, and algorithms that analyze the cookie data,
neither of which is a good proxy for
actual human behavior. Algorithms can
also be easily fooled by click-bots or inaccurate cookie data so advertisers who
deploy them should ask what precautions
are made to avoid this activity.
Some marketers also argue that context is more important than audience
targeting.
Contextual
Targeting
.
Look-alike
Targeting
Retargeting
When a consumer visits a website a pixel
often is triggered and a cookie is dropped
on the users browser (typical browsers
are Internet Explorer, Chrome and Firefox).
The retargeting cookie enables ad
technologists to track and analyze a users
behaviors online so they can reach them
with additional advertising message
across the different online properties.
Part Four
Big Topics
Cookies
History of cookies
Originally, Web pages did not allow storage of a users history or requests. Each
page would load in isolation of the one
that came before it. Netscape designed the
cookie in 1995 to provide a trail to keep
track of where a user was in the midst of
a web application, allowing features like
shopping carts or memory of a user preferences or login information.
Benefits of retargeting
It works. Retargeting has been more successful in boosting clicks and transactions than
any other digital advertising strategy thus far.
It also provides for the best possible cost per
acquisition, (CPA) because the prospect is
already clearly interested in the brand. Retargeting reliably produces measurable ROI for
clients when using last touch/last click measurement, especially compared to display
advertising overall, where success can be more
difficult to trace.
First-party cookies
This is information collected by a brand
or an online publisher for its own use. In
the case of Amazon, for example, such
cookies store information about customer
purchases and preferences.
Third-party cookies
These cookies are used to follow the same
browsers across the entire internet. Thirdparty cookies are placed by a party other
than the site the user is currently visiting.
When a user is detected visiting a publishers site, the publisher sets the firstparty cookie and the advertiser sets the
third-party cookie.
Many other parties including ad networks,
exchanges and DSPs, set third-party cookies.
Connecting
The Dots
Attribution
Attribution is the ability to identify
the effect of every single impression
across every medium during the
customer journey.
When a brand employs a mix of TV,
search, and digital display advertising,
to which does it attribute each customer
action? The most common attribution
model used in digital advertising is last
touch/last click. One hundred percent
of the customer action is attributed to
either the last ad clicked or the last ad
served. This can be either a display ad,
search ad or other type of digital ad.
But last click/last touch is an imperfect measure. For example search tends
to get a disproportionate amount of
credit towards the end of the sales cycle,
where display advertising has clearly
played a role in creating interest for a
particular product or brand. For this
reason attribution has begun to focus
on the more complete story of a customers journey towards a purchase or
ACKNOWLEDGMENTS
This white paper was produced by MIT Technology Review Custom. Thank
you to the following people who contributed their opinions and expertise:
Jeremy Hlavacek, VP,
Strategy and Business
Operations, WeatherFX
at The Weather Channel
(formerly at Varrick)
Jason Fairchild, Chief
Revenue Officer, Open X
Ed Montes, CEO of
Digilant
Joe Zawadzki, CEO, Media
Math
Christina Beaumier, VP
of Product Development,
Xaxis
Sandro Catanzaro, VP
Strategy, Dataxu
Matt Prohaska,
Programmatic Advertising
Director, The New York
Times / NYTimes.com
John Slade, Commercial
Director, Digital Advertising,
The Financial Times
Brian Morrissey, Editorin-chief, Digiday
Scott Neville, Chief
Marketing Officer,
IPONWEB
Tom Hespos, President,
Underscore Marketing.
Marc Goldberg, CEO,
dailyRx (formerly CEO,
About.com)
Alex Sutton III, Acquisition
Manager, My M & Ms,
Mars Retail Group
Debi Kleiman, President,
MITX
Eric Hjerpe, Partner,
Kepha Partners, VC Firm