Online advertising has experienced monumental shifts in recent years. New technologies, new ways of buying and selling ads, new ways of targeting customers and more sophisticated ways to measure attribution have created an industry that is highly saturated and highly diverse. For those of us deep in the technological area of the industry, the following blog might be of no use, but for those closer to the creative and strategic side, the plethora of company and industry acronyms is enough to cause the most placid sleepers nightmares of drowning in whirlpools of alphabet spaghetti. Delicious, yes. Comforting, no.In the famous words of Julie Andrews – let’s start from the very beginning.Ad ExchangesThe best way to understand Ad Exchanges is by thinking of the Stock Exchange. In the Ad world though, buyers and sellers are now advertisers and publishers and the product is ad impressions, commonly referred to as inventory. Advertisers have an ad they want to show and publishers have a website they can show it on. Instead of the typical cocaine-fuelled salesman hype creating the demand and thus the price of the product, advertisers need to use complex algorithms to determine a bid price, based on how valuable the publisher’s inventory might be (i.e. how likely they are to convert a customer/make a sale). This bidding process happens in real-time, in the milliseconds before a consumer’s webpage loads, and so naturally has been coined Real-time Bidding (RTB). Ad exchanges (such as Google’s DoubleClick) provide technology and management systems to help advertisers and publishers manage campaigns efficiently.DSPs and SSPs
If the ad exchange is the place where the bids are made, then someone needs to be making these bids (the demand side) and making the impressions available for purchase (the supply side). This is where Demand-side platforms (DSPs) and Supply-side platforms (SSPs) come in handy. DSPs are used by buyers of ad impressions and they tend to simplify the ad operations process providing reporting and a layer of their own unique technology to help with customer targeting. SSPs on the other hand are used by publishers to manage their ad inventory and maximise revenue from advertisers. They allow publishers to connect their inventory to multiple ad exchanges and networks at the same time. Similar technologies power both DSPs and SSPs, but one is for buying ads one is for selling.
Trading desks and ad networks add yet another layer of technology and media buying expertise to the mix, and most agencies/advertisers tend to go through a trading desk or ad network to manage their media buying. Agency Trading Desks tend to work directly with advertisers, crafting creative messages and designing ads, as well as managing the media buying and campaign implementation. Agency trading desks often offer value in other ways, through campaign management tools, brand safety and retargeting technology. Many large digital/creative agencies have bought out or created their own trading desks to have complete control over the ad buying process. Although this might appear as though it would decrease the price of the inventory, the reality is that these agencies are now bound to one form of technology, with little options to diversify and partner with companies with different strengths or superior technology.
There has been some debate recently around the role Agency Trading Desks will play in the near future. Some argue that as marketers gain a better understanding of the industry, they will be looking to bypass the technology and expertise of ATDs and deal directly with DSPs or even have a seat of their own in Ad Exchanges. The reason this is problematic is because media buying, at a level higher than the actual operation of bidding, is about selecting the right sources; the right funnels to use to buy media that will produce quality leads and conversions. This is not a job for the average marketer Joe – it is a highly complex landscape with many players who all have different abilities. Experienced media buyers need to have not only the technology behind them, but also the understanding of how each source performs in 5 crucial areas. The Agency Trading Desk will only become more relevant as this sector of the marketing industry continues to expand and diversify.