Advertising network

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An online advertising network or ad network is a company that connects advertisers to websites that want to host advertisements. The key function of an ad network is an aggregation of ad supply from publishers and matching it with the advertiser's demand. The phrase "ad network" by itself is media-neutral in the sense that there can be a "Television Ad Network" or a "Print Ad Network", but is increasingly used to mean "online ad network" as the effect of aggregation of publisher ad space and sale to advertisers is most commonly seen in the online space. The fundamental difference between traditional media ad networks and online ad networks is that online ad networks use a central ad server to deliver advertisements to consumers (ad serving), which enables targeting, tracking and reporting of impressions in ways not possible with analog media alternatives.

Contents

Overview

The advertising network market is a large and growing market, with Internet advertising revenues expected to grow from $135.42 bn in 2014 to $239.87 bn in 2019. [1] Digital advertising revenues in the United States alone are set to reach $107.30 bn in 2018 which is an 18.7% increase from 2017 ad spend. [2] This growth will result in many new players in the market and encourage acquisitions of ad networks by larger companies that either enter the market or expand their market presence. Currently, there are hundreds of ad networks worldwide and the landscape changes daily.

The inventory of online advertising space comes in many different forms, including space on the desktop and mobile websites, in RSS feeds, blogs, instant messaging applications, mobile apps, adware, e-mails, and other media. The dominant forms of inventory include third-party content websites, which work with advertising networks for either a share of the ad revenues or a fee, as well as search engines, mobile, and online video resources. [1]

An advertiser can buy a run of network package, or a run of category package within the network. The advertising network serves advertisements from its central ad server, which responds to a site once a page is called. A snippet of code is called from the ad server, that represents the advertising banner.

Large publishers often sell only their remnant inventory through ad networks. Typical numbers range from 10% to 60% of total inventory being remnant and sold through advertising networks.

Smaller publishers often sell all of their inventory through ad networks. One type of ad network, known as a blind network, is such that advertisers place ads, but do not know the exact places where their ads are being placed.

Types

There are several criteria for categorizing advertising networks. In particular, the company's business strategy, as well as the quality of the networks' traffic and volume of inventory can serve as bases for categorization.

Based on business strategy

Online advertising networks can be divided into three groups based on how they work with advertisers and publishers:

  1. Vertical networks: They represent the publications in their portfolio, with full transparency for the advertiser about where their ads will run. [3] They typically promote high-quality traffic at market prices and are heavily used by brand marketers. The economic model is generally revenue share. Vertical Networks offer ROS (Run-Of-Site) advertising across specific Channels (example: Auto or Travel) or they offer site-wide advertising options, in which case they operate in a similar fashion to Publisher Representation firms.
  2. Blind networks: These companies offer good pricing to direct marketers in exchange for those marketers relinquishing control over where their ads will run, though some networks offer a "site opt out" method. The network usually runs campaigns as RON or Run-Of-Network. Blind networks achieve their low pricing through large bulk buys of typically remnant inventory combined with conversion optimization and ad targeting technology.
  3. Targeted networks: Sometimes called "next generation" or "2.0" ad networks, these focus on specific targeting technologies such as behavioral or contextual, that have been built into an ad server. Targeted networks specialize in using consumer clickstream data to enhance the value of the inventory they purchase. [4] Further specialized targeted networks include social graph technologies which attempt to enhance the value of inventory using connections in social networks. [5]

Based on the number of clients and traffic quality

Ad networks can also be divided into first-tier and second-tier networks. First-tier advertising networks have a large number of their own advertisers and publishers, they have high quality traffic, and they serve ads and traffic to second-tier networks. Examples of first-tier networks include the major search engines. Second-tier advertising networks may have some of their own advertisers and publishers, but their main source of revenue comes from syndicating ads from other advertising networks.

While it is common for websites to be categorized into tiers, these can be misleading because tier 1 and tier 2 networks might perform differently based on different metrics, such as reach versus impressions.

Ad targeting and optimization

One aspect of ad-serving technology is automated and semi-automated means of optimizing bid prices, placement, targeting, or other characteristics. Significant methods include:

Mobile and video ad networks

Ad networks often support a wide spectrum of ad formats (e.g. banners, native ads) and platforms (e.g. display, mobile, video). This is true for most ad networks. However, there also are ad networks that focus on particular kinds of inventory and ads:

  1. Mobile ad networks, focus on the traffic generated via mobile web and mobile apps, and work with the corresponding ad formats.
  2. Video ad networks serve ads via inventory, associated with online video content.

Video and mobile ad networks can be acquired by larger advertising companies, or operate as standalone entities.

Issues

  1. Positioning: Most ad networks don't disclose impressions per site. This means that advertisers or media agencies aren't sure where their ads will run. This can be a dangerous proposition if your ad turns up on a website that you don't want to be associated with.
  2. Malware: Some ad networks have been implicated in aiding the distribution of malware due to allowing malicious advertisers to buy inventory across their partner sites without enough scrutiny.
  3. Price transparency: Let's examine a scenario. An ad network packages display inventory to an agency at say $10 CPM (cost per mille – or cost per thousand impressions). The ad network would then buy a very small portion of the inventory on premium publications at $50 CPM and a large portion of the long tail inventory at $2 CPM. The real eCPM (effective CPM) of the campaign for the ad network is around $2.50, and is far from the agency's claim of premium inventory. The marketer is however appeased with screen grabs of his ads appearing in premium positions, oblivious of the masquerade while the ad network walks away with a big margin.
  4. Ad relevance: More often than not, the ads were out of relevance with the website content as a fall out of point 1, and also because there weren't intelligent contextual engines built into the ad servers (the server system that churns out the ads) of these ad networks.

Online ad networks and advertising publishers

Most online ad-network platforms offer website owners and marketers to signup as advertising publishers. Publishers can then display ads shared by the advertising network and the revenue is shared between both the advertising network and publisher. When the beginners could not pass through the minimum criteria for publishing advertisements, ad placement services could ban the publisher for not fulfilling the requirements. Some networks demand strict terms and conditions while there are other ad publishing alternatives times commissions vary on what sells otherwise user still to earn a good commission when one matches the criteria, and the publisher is allowed to display and share ads provided by the platform earns a good revenue. Getting approved as a publisher of the best advertising platform is a thorough process. Websites with a clean interface, more traffic and engagements are preferred to be selected as ad network publishers by the advertising platforms.

History

The first central ad server was released by FocaLink Media Services and introduced on July 17, 1995, [8] [9] for controlling the delivery of online advertising or banner ads. Although most contemporary accounts are no longer available online, the Weizmann Institute of Science published an academic research paper documenting the launch of the first ad server. [10] The original motherboard for the first ad server, assembled in June 1995, is also preserved. FocaLink re-launched the ad server under the name SmartBanner in February 1996. The company was founded by Dave Zinman, Andrew Conru, and Jason Strober, and is based in Palo Alto, California. In 1998, the company changed its name to AdKnowledge and was purchased by CMGI in 1999. [11] The AdKnowledge name was subsequently purchased by a company in Kansas City in 2004, which now operates under the brand name AdKnowledge.

The first local ad server was released by NetGravity in January 1996 [12] for delivering online advertising at major publishing sites such as Yahoo! and Pathfinder. The company was founded by Tom Shields and John Danner, and is based in San Mateo, California. In 1998, the company went public on NASDAQ (NETG), and was purchased by DoubleClick in 1999. NetGravity AdServer was then renamed to DART Enterprise. In March 2008 Google acquired DoubleClick. Google has continued to improve and invest in DART Enterprise. The latest version of the product was renamed and shipped as DoubleClick Enterprise 8.0 on September 28, 2011. [13]

See also

Related Research Articles

<span class="mw-page-title-main">Web banner</span> Type of advertising

A web banner or banner ad is a form of advertising on the World Wide Web delivered by an ad server. This form of online advertising entails embedding an advertisement into a web page. It is intended to attract traffic to a website by linking to the website of the advertiser. In many cases, banners are delivered by a central ad server. This payback system is often how the content provider is able to pay for the Internet access to supply the content in the first place. Usually though, advertisers use ad networks to serve their advertisements, resulting in a revshare system and higher quality ad placement.

Digital display advertising is online graphic advertising through banners, text, images, video, and audio. The main purpose of digital display advertising is to post company ads on third-party websites. A display ad is usually interactive, which allows brands and advertisers to engage deeper with the users. A display ad can also be a companion ad for a non-clickable video ad.

Affiliate marketing is a marketing arrangement in which affiliates receive a commission for each visit, signup or sale they generate for a merchant. This arrangement allows businesses to outsource part of the sales process. It is a form of performance-based marketing where the commission acts as an incentive for the affiliate; this commission is usually a percentage of the price of the product being sold, but can also be a flat rate per referral.

Google AdSense is a program run by Google through which website publishers in the Google Network of content sites serve text, images, video, or interactive media advertisements that are targeted to the site content and audience. These advertisements are administered, sorted, and maintained by Google. They can generate revenue on either a per-click or per-impression basis. Google beta-tested a cost-per-action service, but discontinued it in October 2008 in favor of a DoubleClick offering. In Q1 2014, Google earned US$3.4 billion, or 22% of total revenue, through Google AdSense. AdSense is a participant in the AdChoices program, so AdSense ads typically include the triangle-shaped AdChoices icon. This program also operates on HTTP cookies. In 2021, over 38.3 million websites use AdSense.

Click fraud is a type of fraud that occurs on the Internet in pay per click (PPC) online advertising. In this type of advertising, the owners of websites that post the ads are paid based on how many site visitors click on the ads. Fraud occurs when a person, automated script, computer program or an auto clicker imitates a legitimate user of a web browser, clicking on such an ad without having an actual interest in the target of the ad's link in order to increase revenue. Click fraud is the subject of some controversy and increasing litigation due to the advertising networks being a key beneficiary of the fraud.

Pay-per-click (PPC) is an internet advertising model used to drive traffic to websites, in which an advertiser pays a publisher when the ad is clicked.

Cost per action (CPA), also sometimes misconstrued in marketing environments as cost per acquisition, is an online advertising measurement and pricing model referring to a specified action, for example, a sale, click, or form submit.

Online advertising, also known as online marketing, Internet advertising, digital advertising or web advertising, is a form of marketing and advertising that uses the Internet to promote products and services to audiences and platform users. Online advertising includes email marketing, search engine marketing (SEM), social media marketing, many types of display advertising, and mobile advertising. Advertisements are increasingly being delivered via automated software systems operating across multiple websites, media services and platforms, known as programmatic advertising.

Cost per mille (CPM), also called cost per thousand (CPT), is a commonly-used measurement in advertising. It is the cost an advertiser pays for one thousand views or impressions of an advertisement. Radio, television, newspaper, magazine, out-of-home advertising, and online advertising can be purchased on the basis of exposing the ad to one thousand viewers or listeners. It is used in marketing as a benchmarking metric to calculate the relative cost of an advertising campaign or an ad message in a given medium.

Contextual advertising is a form of targeted advertising for advertisements appearing on websites or other digital platforms, such as content displayed in mobile browsers. Contextual targeting involves the use of linguistic factors to control the placement of advertising material. The advertisements are selected and delivered by automated systems, taking into consideration the context of a user's search or browsing behaviour. As advertisers and marketers increasingly prioritise brand safety and suitability, contextual advertising has emerged as a crucial aspect in safeguarding the reputation and value of a brand.

In Internet marketing, search advertising is a method of placing online advertisements on web pages that show results from search engine queries. Through the same search-engine advertising services, ads can also be placed on Web pages with other published content.

Website monetization is the process of converting existing traffic being sent to a particular website into revenue. The most popular ways of monetizing a website are by implementing pay per click (PPC) and cost per impression (CPI/CPM) advertising. Various ad networks facilitate a webmaster in placing advertisements on pages of the website to benefit from the traffic the site is experiencing.

<span class="mw-page-title-main">Targeted advertising</span> Form of advertising

Targeted advertising is a form of advertising, including online advertising, that is directed towards an audience with certain traits, based on the product or person the advertiser is promoting.

Behavioral retargeting is a form of online targeted advertising by which online advertising is targeted to consumers based on their previous internet behaviour. Retargeting tags online users by including a pixel within the target webpage or email, which sets a cookie in the user's browser. Once the cookie is set, the advertiser is able to show ads to that user elsewhere on the internet via an ad exchange.

Performance-based advertising, also known as pay for performance advertising, is a form of advertising in which the purchaser pays only when there are measurable results. Its objective is to drive a specific action, and advertisers only pay when that action, such as an acquisition or sale, is completed.

Google Ad Manager is an ad exchange platform introduced by Google on June 27, 2018. It combines the features of two former services from Google's DoubleClick subsidiary, DoubleClick for Publishers and DoubleClick Ad Exchange (AdX). Google Ad Manager initially used a second-price auction format, before announcing that it would be replaced with a first-price auction format in March 2019. Google Ad Manager is the free version of this online ad management software and it is recommended for small businesses. Google Ad Manager 360 is the paid version. Google Ad Manager does not require a minimum amount of impressions on individual active ads, but it does have a limit of 200 million impressions per month. Google Ad Manager manages inventory for advertisers, publishers and ad servers. Advertisers are able to manage their inventory of ad creative, publishers are able to manage their ad space inventory, and ad servers can use the platform to determine which ad to serve and where to serve it. Additionally, Google Ad Manager can use data collected from ad performance and ad space performance to make suggested optimizations to the user. These optimizations suggest what the user could change to better reach the goals they have set for a particular campaign.

In the online advertising industry, a viewable impression is a measure of whether a given advert was actually seen by a human being, as opposed to being out of view or served as the result of automated activity. The viewable impression guidelines are administered by the Media Rating Council and require that a minimum of 50% of the pixels in the advertisement were in an in-focus tab on the viewable space of the browser page for at least one continuous second.

A supply-side platform (SSP) or sell-side platform is a technology platform to enable web publishers and digital out-of-home (DOOH) media owners to manage their advertising inventory, fill it with ads, and receive revenue. 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 demand-side platform (DSP) is a concept that combines various software solutions for advertisers to automate the process of buying and selling ad impressions in real time.

Search syndication is a type of contextual advertising which allows online search advertisers to buy keyword-targeted traffic outside of search engine results pages. This is considered to be an alternative to advertising on search engines, since 43% of all searches occur outside of the top search engines.

References

  1. 1 2 "Internet advertising: Key insights at a glance". PricewaterhouseCoopers . Retrieved 2015-07-30.
  2. ↑ "Digital Ad Spending Benchmarks by Industry 2018 - eMarketer". eMarketer. Retrieved 2018-07-17.
  3. ↑ Clifford, S. (4-28-2008.). A Web Shift In the Way Advertisers Seek Clicks. New York Times, Retrieved 04/10/10 from LexisNexis database.
  4. ↑ Khan, Imran; Weishaar, Bridget; Karasyov, Vasily; Polinsky, Lev; Boushelle, Joseph (2007-10-11). "The Rise of the Ad Networks: An In-Depth Look Into Ad Networks". J.P. Morgan . Retrieved 2015-12-18.
  5. ↑ David Berkowitz (2009-08-11). "David Berkowitz's Marketing Blog: The Social Graph Ad Targeting Buyer's Guide". Marketers Studio. Archived from the original on 2014-05-02. Retrieved 2014-04-30.
  6. ↑ Chen, Jianqing; Jan Stallaert (2014). "An Economic Analysis of Online Advertising Using Behavioral Targeting". MIS Quarterly. 38 (2): 429–449. doi:10.25300/MISQ/2014/38.2.05.
  7. ↑ Wauters, Robin (November 2010). "From Bootstrapping To $300M In Value: Meet The Founder Of Directi (TCTV)". TechCrunch. Retrieved 2016-08-19.
  8. ↑ "Hyperlink Advertising Explodes on the World Wide Web". Archived from the original on 18 July 2011.
  9. ↑ "Dave Zinman – on the first ad server, BlueLithium and beyond". Paleo Ad Tech. 25 January 2022. Retrieved 11 December 2022.
  10. ↑ Targeted Online Advertising, academic research
  11. ↑ "COMPANY NEWS; ENGAGE TECHNOLOGIES AGREES TO BUY ADKNOWLEDGE (Published 1999)". The New York Times . Archived from the original on 2022-12-11.
  12. ↑ NetGravity Launches AdServer, the Premier Advertising Management System Software for World Wide Web Publishers, company press release
  13. ↑ http://www.google.com/support/de/bin/static.py?page=guide.cs&guide=25797&topic=27665&answer=174348 [ dead link ]
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