By Pradeep Gulipalli – Co-Founder and Chief Delivery Officer.
Over the last couple of decades, digital advertising has driven a very significant change in the traditional advertising industry. Digital advertising driven by advertising technology (AdTech) is rapidly evolving in terms of technologies, key players, customer preferences, communication channels etc.
At Tiger Analytics, we work on a lot of AdTech, albeit from a data science perspective. There are a lot of innovations happening, and it’s easy for someone new to this space to be thoroughly overwhelmed. In this article, I try to give a high-level overview of AdTech in simple language – just enough for a beginner to better understand the landscape and some of the jargon. I use Brand names only illustratively to make the story easy to follow.
Let’s say Nike wants to shows an ad on the ESPN’s website. Nike is the Advertiserwho wants to communicate their message/brand to sports lovers (Target Audience). ESPN publishes Nike’s advertisement on their website for a fee — ESPN is the Publisher. ESPN has several spots on their website they can show ads on (Inventory).
Nike would typically entrust an external agency (Ad Agency) with the job of advertising across various publishers. The Ad Agency would design the ad creatives of various advertisers, and manage the logistics of getting the ad shown on various publisher websites. Managing this would be very difficult if the Ad Agency had to speak to a whole host of publishers (there are millions of websites). Enter Ad Networks – they do the job of dealing with the publishers, consolidate the ad inventory, and then sell the ad space to whoever wants to advertise.
However, this solves only one side of the problem. The Ad Agencies still have a lot of options to advertise, each associated with a different cost, audience characteristics, geographic targets etc. DSPs (Demand Side Platforms) help the Ad Agencies by negotiating down the prices and buying the required impressions – all in a programmatic manner.
The DSPs give the Ad Agencies better control of what they buy and for how much. The publishers too want better control of who they are selling the impressions to and for how much. SSPs (Supply Side Platforms) help the Publishers with this by trying to maximize the price of their inventory and giving them options of choosing/filtering out certain advertisers.
The Ad Networks of the old were somewhat like a middle man, who bought the ad inventory from the publishers for a price and sold it at a premium to the Ad Agencies / Advertisers. To make this system efficient, Ad Exchanges came into play. Ad Exchanges are digital marketplaces that facilitate buying and selling of ad impressions for a small fee. DSPs representing advertisers and SSPs representing publishers connect to the Ad Exchanges. This buying and selling often happen in real-time in an online auction for ad impressions (RTB – Real Time Bidding). Ad Exchanges are more popular than Ad Networks – in fact, some Ad Networks buy inventory from Ad Exchanges.
As you can imagine, with all of this happening there is a lot of data that gets generated in the process. This, if used appropriately, has a lot of valuable insights. DMPs (Data Management Platforms) ingest data from various sources, build a 360-degree view of the system, and help the advertisers, agencies, and publishers make sense of it all.
Today, the lines between various functions are blurring. For example, as part of its Digital Advertising Suite Google covers almost all areas – Double Click is an Ad Exchange, Double Click Bid Manager is a DSP, and Double Click for Publishers is an SSP, Audience Center 360 is a DMP.
The next time you read about an innovation in the digital advertising space, you now know where to place the action in the overall AdTech landscape.