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The Digital Advertising Ecosystem - Part 1

how do your marketing fans and welcome back, I think it's important for you guys to really understand the basic digital advertising ecosystem. There's a lot that happens every single time a web page with an advertisement on it is loaded. And that process has evolved tremendously since the start of digital advertising in the mid to late 90s. If you are already familiar with these concepts like ad exchanges and ad networks and real time bidding and programmatic advertising, then by all means, once again you could skip right through these sections. But I think it's important to either get a refresher course. Um but most importantly, it's important to understand these concepts because while re marketing really only takes into account a small percentage or or a specific kind of um slice of that digital marketing pie, the concepts in the foundation of what happens when you send a re marketing, add onto another website to track your your previous website visitors, it's really tapping into tha...

t same infrastructure. Additionally, if you're going to go on to run more than just re marketing campaigns and I'm sure you will, you're gonna be running search campaigns, remarketing campaigns, display campaigns, mobile campaigns, video campaigns, native advertising, whatever it may be, it would be very helpful to understand what's really happening. Who's doing what, what the technologies are, what the systems are. So my goal here and in the next couple of sections is to give you that overview is to give you that sense. And to kind of simplify um a lot of the confusion and clarify a lot of what um happens when a web pages loaded, when there's an ad on the page and what the different steps um that take place are and how those steps will affect you, the advertiser. So let's dive in real quick to this keynote presentation I made for you guys. No matter how complicated advertising gets or how sophisticated the technologies and the software has become. Advertising online is essentially a relationship between two primary parties. That is the publisher and the advertiser. When I say the word Publisher, when you hear the word Publisher online, the publisher is anybody who owns website. And the publishers primary purpose is to develop content that people want to consume. Whether that be a video, whether that be blocked post, whether that be a newsletter, um whether that be an e commerce site, it's it's content that's supposed to draw an audience and one of the probably the most popular way of monetizing a website, especially for sure, a new site, any news outlet um monetize, is there traffic with advertisements? So they want to draw a high quality traffic. They want that traffic to be interested in their content. The quality of their content is going to be directly related to the quality of the traffic, the types of people that come to their website and their hope is to then take their their audience take their traffic and and presented as something valuable to other advertisers. Okay, so the publishers who examples of the Publishers, Publishers are the Wall Street Journal Forbes MSNBC budget bites, you know, your mother's cooking blog um or your brothers website for um his his favorite bands and his reviews of them, whatever it may be, any website that has content is a publisher. So the publisher is the first step in this advertising ecosystem. And of course ESPN another example of a publisher website. Now you have the advertiser. The advertiser is is you or the agency companies that want to have ads. So it's it's the advertiser and it's the publisher. Okay. And and no matter once again, no matter how complex this this relationship gets all the different pieces involved, all the technologies, it's ultimately about connecting advertisers. And publishers, publishers have one goal. They want to get the most revenue out of each impression out of each click. Advertisers have one goal. They want to maximize their R. O. I. They want to maximize the efficiency and the scale of their advertising campaigns and they want to reach their consumers in the right place at the right time. And with the right message. Traditionally the way advertisers and publishers connected was simply over the phone. Before there was before there were these complex digital ad networks and ad serving technologies. Advertisers had sales sales team's, publishers had sales teams and they would get on the phone with each other, they'd meet in person and they'd strike a deal, I want, you know, you're an advertiser, you want to take out a home page out of the Wall Street Journal. You call up the Wall Street Journal sales team, you meet with them, you literally negotiate a deal and you by what we call direct, guaranteed inventory. The word inventory is used to describe any section or any place on a web page that is supposed to have an add on it, that the that the publisher wants to have an ad. Advertisers were buying premium guaranteed inventory. We weren't bidding by the impression, we advertisers were buying blocks of impressions in the thousands CPM cost per 1000. It stands for cost per mille which is the most common way of buying ads on the internet And this was guaranteed meaning if I bought 10,000 impressions I paid you I pre paid you for those 10,000 impressions you made sure and I was able to make sure the advertiser was able to make sure that I received those 10,000 impressions their premium. Because we're not talking about um far off websites, we're not talking about little cooking blogs, we were talking about back in the day. Real substantial websites like Forbes and the Wall Street Journal like yahoo getting real traffic to their websites. So premium guaranteed inventory. What happened was because there was such a huge demand for ad inventory. Publishers started creating thousands, hundreds of thousands and millions of pages on the internet. So instead of having um these small contained blogs where it was possible for the sales team to start selling um these ad impressions that selling the inventory for all the publishers, Publishers started started having um millions, literally millions of web pages and it was impossible to keep up with the demand. So what happened was there was lots of what we call remnant ad inventory left over subprime ad inventory that wasn't getting sold to the advertiser because the advertisers teams um weren't able to uh by by by the human amount of of work output. They weren't able to strike deals to capture all the remnant inventory the publishers had to offer. So there was a huge amount of supply and there was a huge amount of demand also, but there just wasn't the systems in place to fill that supply and demand channel. So publishers had an excess of remnant inventory. So what that led to initially was the creation of ad networks. Now keep in mind the, the direct relationship between publisher and advertiser over the phone that still exists today in a major, major way. A lot of big brands, A lot of big brands actually, primarily only buy direct from the publisher over the phone, real in person deals where they're selling their primary inventory. For example, if you want to do a takeover of the Wall Street Journal homepage or Bloomberg news homepage. There's no software technology in the world today that it will allow you to run your ads in that way on those publishers, You got to call them up. You got to strike a deal. It's a it's a person to person sort of thing. Um But what happened was to deal with all this remnant leftover inventory, which is still extremely high quality inventory. We had the birth of ad networks. Ad networks are exactly like a mortgage broker. What they did was they found a buyer and they found a cellar. They packaged up blocks of ads. They sold, they bought those ads from a publisher and they sold them to advertisers at a marked up cost. So for example, um an ad network was a company that would go to the Wall Street Journal would go to the um would go to MSNBC would go to ESPN and they would buy millions of impressions on their sports sections that talk about high school sports. And this was all contextual. So they had a category, we have um a category of millions of impressions in this category across many, many different publishers. So what they did then is they took that block of ads, they brought that to the advertiser and they sold those ads to the advertiser. You also had a third party audience networks that that instead of focusing on the what the content, they started focusing on the who um using cookies. We'll talk about cookies what cookies are in a minute. But we were able to third party audience networks for companies that were able to track user behavior and say, okay you were a 30 to 40 year old female interested at do it yourself projects. Okay. So an advertiser was interested in that user really regardless of what specific publisher that user was on at the time. So advertisers now we're able to buy Prepackaged traffic from ad networks. Prepackaged traffic from 3rd Party audience networks. And they were started they started they started having the ability to really run these campaigns at scale. There are some major issues with the ad network model chief among them was transparency. Advertisers weren't really able to see in most cases exactly which publisher sites. Their ads were showing up on. Another major issue was was the pricing model transparency. Ad networks were buying all this inventory from publishers. They were marking it up and they were re selling it to advertisers. So advertisers didn't really know how much their traffic was being marked up and they didn't really, they weren't really able to get a very clear sense of what their true cost per impression was. Another issue with ad networks was as additional ad networks were popping up and there were hundreds and thousands of ad networks. Publishers were selling the same ad slots to multiple networks and advertisers as a result ended up buying the same exact inventory multiple times. So they were double triple quadruple paying for the same ad slot on the same exact website which of course um ended up being a huge waste of money for the actual advertisers. Another issue with the ad networks is there was a major shift over the course of a few years into more Obi a online behavioral advertising. We're talking about O. B. A. This is that pixel based cookie based advertising where we start where advertisers started to have the ability to track the who and target the who rather targeting the what targeting which website which publisher. So it was great. I could I could you know I was able to make a pretty educated guess that that my products would likely appeal to people reading the sports section of the of ESPN. But that was a much less sophisticated way of targeting users based on interest and based on actual intent browsing activity. So the cookie based advertising, the online behavioral advertising, that model that's the third party audience network's introduced allowed advertisers to start targeting people rather than publishers. So I was able to start I was able to target by income by demographic by browsing activity by recent purchases where I recently flew. These were all um unidentifiable information. It was it was um anonymous information. We didn't know who the person was themselves, We didn't know their name but it gave the advertiser a brand new vista of success and specificity and focused advertising. We were really able to start targeting the right person and it didn't really matter where they were because any specific person who might be interested in my products and they might have actually displayed intent to my products. It's not that much of a of a factor which particular publisher, which particular website there are Now people read all different types of websites at all times. What was really good. Um, was the ability to to target who that person was. And that was that was um, one of the biggest reasons why ad networks started taking a backseat and what we're going to discuss in the next lecture, the modern ad exchange model was born and the ad exchange 100% revolutionized what modern display advertising is and what it continues to be today. It introduced brand new technologies, it introduced brand new targeting parameters. And it totally changed the picture on how advertisers by ads and target users and how publishers sell their ads. So let's in the next section, talk about what the modern ad exchange is, what the current model using the ad exchange looks like who the key players are. And then we're gonna bridge it all back to what this all has to do with re marketing. Um and how re marketing fits into this entire picture. So thanks again and we'll see you in a couple minutes in the next chapter