Demand-side platforms

Another buzzword in the online advertising business is ‘Demand-Side Platform’ (DSP). DSP is better understood in comparison with ‘pre-bought’. The new kids on the online advertising block are real-time bidding, impression scoring and DSP. These three point to buying inventory on the spot, as and when needed. This is in sharp contrast to pre-bought inventory where inventory is bought in advance and used over different campaigns as and when they come up.

DSPs are advertiser/agency facing systems that let buyers do self-service media buying from publishers; publisher aggregators and ad exchanges. A DSP’s key feature is that it enables real-time bidding against inventory. DSP allows buyers to spell out rules describing value of impressions based on audience attributes they have in mind. The buyer can, in a DSP, assign a dollar value to specific audiences and the DSP can bid on every impression based on its actual value to the advertiser.

The DSP usually bids across sell-side platforms, exchanges, and any publishers that directly support real-time bidding, and automatically optimize bids based on success and results. The result can be as simple as reaching 50,000 people that fall into a specific category — or it could optimize across CPC or CPA. Real-time bidding is vastly superior to other mechanisms when it comes to ensuring that the advertiser gets the best ROI. But there are some problems.

Many DSPs run out of real-time biddable inventory, meaning that their CPMs are rising because their supply is limited. A way out is for DSPs to participate in non-real-time auctions to make up impressions but value of being able to examine the impressions before being ‘bid’ is lost.

The long-term doesn’t look too gloomy though. Predictions are that lots of impressions will be made available. The cognoscenti in fact, even predict that eventually most impressions will be available in real-time!

Watch out for more on DSPs in future articles!

Features of a typical Ad-server

Online campaigns revolved around ad-servers. As explained earlier, there can be 2 – 3 ad-servers in a given campaign. The ad-server market is quite a big market in itself. Google with its acquisition of Doubleclick in 2008, now has over 50 % of the ad-server market. Following google, is yahoo with a ridiculously low share of around 10%!

To the uninitiated, the ad-server is a kind of a black box. Beyond the general ‘An ad-server is used to serve ads in online campaigns’, there is little which the layman knows.

Let me, in simple terms. Try to unravel the ad-server mystery.

When one speaks of ad-servers one speaks of the following features –

General Features

Administration Features

Advertiser Features

Publisher Features

Reporting Features

Application Program Interface (API) Features

Let me briefly discuss each of these features

General Features

General features usually covers features and functionalities that are usually available in the average ad-server. It covers –

Installation rules , whether it allows white label licensing etc

Whether things like content based ad-matching are available or not

Indexing engine and how it works and its capacity – how many pages can be processed in a day per server

How easily customizable is the ad-server

Kind of customer login features available

How scalable the platform is and how many impressions it can handle in a single server and multi-server installation

Architectural Scalability

Administration Features

Administration features have to do how an ad-server can help run and manage a campaign from an administration perspective. Areas covered here are –

Kind of interface = web based , or does it require a special software to manage the system

Configuration options

How easy is maintenance of campaigns

Monitoring and monitoring reports

Advertiser search features – can we search advertiser by name, email id, company name?

Advertiser account management – kind of tools available

How easily can ads be suspended?

Management of Account Information

How can payments be accepted – credit card, payments

Posting accountwise credits and debits

Publisher search features – can we search advertiser by name, email id, company name?

Approve / Decline / Suspend accounts
Post credits for bonuses
Payment options

Server Status Report - summary of the health of the ad server.
Daily Performance Reports
Advertiser Performance Reports

Advertiser Features

These are features that the advertiser can use to suit his needs. Covered in this are –

Does the ad-server permit account pre-funding to start a campaign

Does it have a web-based interface allowing for self-management

Does it support quick ad self-creation?

Types of targeting it supports – via content channels, geographical targeting, regional targeting, keyword/phrase targeting

Is a budget capping tool available?

Support for start and stop dates for campaign

Does it support on demand campaign pauses?

Does it email notify low account /exhausted funding on a campaign?

Support for Automatic funding

Does it support pay-pal as a means of payment?

Does it allow CSV downloads of reports?

Publisher Features

These features cater to a publisher and his view of a campaign. Covered in this are –

Availability of web interface

Does it support ad matching to page content ? i.e does it have a contextual engine?

Does it generate a revenue summary report by date?

Does it generate CTR and earnings generated in a date range?

Ability to change account profile and password information.

Reporting Features

This is quite self-explanatory. It deals with the kind of reports the systems generates.

Security Features

What kind of security features does the ad-server support?

Does it help defend against click fraud?

Does it have an inbuilt invalid click detection logic?

Does it provide for automatic account locking after ‘x’ number of tries?

What kind of password functionalities does it support?

Application Programming Interface (API) Features

APIs are ‘pipes’ that an ad-server has to permit users to extract data from the ad-sever. Such extraction is usually done to generate reports, have a customized view of a campaign etc.

Different users of an ad-server will look for APIs to achieve differing purposes, primarily in the area of report generation.

I have tried to keep this article as simple as possible so that the average reader can understand in broad and general terms what features and functionalities one expects from an ad-server. For further reading, I would suggest visiting websites of ad-servers like Double click, Adsense etc and see how they stack up against these feature requirements.

Real-time bidding

There is a great deal of excitement in the market about Real-time bidding (RTB). News has also filtered thru’ that Microsoft has added RTB functionality to their AdECN platform. Views on RTB are divided – for and against. There is a school of thought which says that adding a real-time elemtn will improve performance of online campaigns. And there is a school of thought which says that a proper business case needs to preceed a full-fledged adoption of RTB.

Let’s dwell a bit on what RTB is all about?

What if an advertiser can reach a specific consumer? RTB aims at achieving this end objective.

RTB is a contrivance that allows all participants in the online advertising game to buy impressions in real-time. The prospective buyer can quickly analyze an impression and bid accordingly. When I say quickly, I mean in seconds.

RTB allows the publisher to define an audience and segment their inventory to introduce advertisers to valuable users. An advertiser can bid for an impression in real-time to reach a specific consumer. This is done impression by impression, meaning it is highly targeted – an value can be assigned to each ad impression. In other words, RTB enables the advertiser to use the right consumer at the correct time.

This is done on an impression-by-impression basis, which makes it highly targeted and means that an individual value can be assigned to each specific ad impression

Benefits of RTB

RTB enables the media-buyer to improve and optimize campaigns. RTB allows pre-programming to set a maximum bid per impression.

It helps the publisher better monetize his inventory. RTB allows the market to decide what the value of an impression is. Remnant inventory always goes abegging – RTB might enable the publisher get better value for remnant inventory. Remnant inventory will at last find its place under the sun.

Results from RTB

Results from RTB have been extremely encouraging. Whether it is CTRs, conversion rates or Cost per action. In each of these areas an improvement upwards of 100% has been recorded.

Availability of the requisite sophisticated technology and expertise to further the uptake of RTB is a lacuna. But, with passage of time, I am sure this gap will be quickly plugged.

Advertising Exchange

The online advertising marketing place is multi-tiered. On the one hand you have the publisher who directly solicits clients for advertising inventory. At the next level you have the network. The network ‘recruits’ publishers and sells their advertising inventory to their (network’s ) clients. At the next level you have the advertising exchange.

An ad exchange is like a stock market. It is a mechanism that allows buying/selling of ad impressions openly, transparently. The ideal ad exchange would manage risk and maximize return on every impression purchased. Research conducted by different agencies indicate that a fairly large number of advertising professionals – over 50% - who have not yet ‘adopted’ the ad exchange plan to do so soon.

Benefits of the ad exchange

A buyer’s target has always been to find an efficient way to be able to buy advertising inventory. Upwards of 20% of ad inventory remains unsold. In this context, an ad exchange benefits different players in different ways –

The seller can reduce unsold inventory thereby increasing overall yield. Given the amount of unsold inventory, the ad exchange is a very good mechanism for the publishers to monetize unsold, remnant inventory.

The buyer can ensure better ROIs and achieve better reach for their campaigns – the ad exchange’s dynamic bidding rules enables the buyer get inventory at the best possible price

Disadvantages of the ad exchange

An ad exchange is not the panacea for all ills – it has its own flaws.

Firstly, different ad agencies offering different models like Real time auction and prepay. Neither model has an established superiority over the other. In fact, it is not very clear which model works best for the publisher.

Ad-servers - Part II

In this article we’ll take a close look at how ad-servers actually serve the ads that the user sees.

The first step, our imaginary company Weightloss (WL) has to place its ads into its ad-server. The ad-sever then creates tags. The tags give the following details –

Ad size

Where the ad can be located on the web page

The tags are sent to the publisher alongwith information on WL’s campaign like –

Number of times a day it has to appear also called frequency cap. An ad can be 1/24 frequency capped, meaning it appears once in 24 hours on a particular PC, or 2/24 meaning it appears twice in 24 hours etc

Demographics of the targeting i.e. should the ad be targeted to men/women of a certain age group, who have specific interests ( interested in golf, gardening..)

Geography to which it is targeted – Campaigns could be targeted to the UK, US, Germany….

Specific time during the day when the ad should appear

All of WL’s campaign instructions are now loaded onto our imaginary newspaper the England Journal ‘s(EJ) ad-server. The ads themselves reside on WL’s ad-servers. The EJ similarly receives tags from other advertisers as well.

What happens next?

Suppose a user enters the website URL of The England Journal onto their PC, the EJ website is displayed on his/her PC. What is loaded on the user’s PC is content… A logical question that arises is – How does an ad get loaded onto a user’s browser? The user’s browser follows instructions it receives from The EJ, which in turn directs to get an ad from the EJ ad-server.

The EJ server in turn instructs the WL ad-server to serve an ad. The WL ad-server then has to figure out which ad to show. A cookie helps the WL ad-server in this process. When the EJ ad-server sent the user’s PC content, it also sent it a cookie. A cookie is a small piece of software that travels between the EJ ad-server and the WL ad-server. A cookie identifies a browser. A cookie controls the number of times the user sees an ad, has user information like age, sex , preferences etc.

The EJ ad-server selects the ad and serves it on the user’s PC. The ad selected is based on user information provided by the cookie. When WL’s ad-server sends an ad to the User’s PC, it also sends it a cookie which allows it to identify the user’s browser. This allows WL’s ad-server to track number of times an ad is shown on the user’s PC.

The process of serving an ad, though happens in a few seconds, is a fairly involved process. This process is completely managed by the different ad-servers in the network without any human intervention whatsoever. Amazing isn’t it?

Ad-serving Part 2

As a continuation of my earlier article on basics of ad-serving, I will be dwelling a bit in depth on ad-serving and how it works.

As a first step let’s look at how ad-servers target ads that the user sees on his PC. In a typical online ad display, there necessarily are two ad-servers ( if not more)- the publisher ad-server and the advertiser ad-server.

The publisher ad-sever decides which advertiser’s ad to show. The advertiser ad-server decide which ad to show from among it’s stock of ads.

Going back to our imaginary newspaper of yesterday, the England Journal (EJ). How does the EJ’s ad-server decide which ads a user Roger is going to see? The ads Roger’s browser has show and the ads he has clicked on play a role in which ads Roger sees. Roger’s demographic information – age, sex etc – will also play a role in what he sees. To understand how this can happen, let’s assume that Roger has registered himself on another website with him name, age, sex, kind of work he does etc… Many a publisher shares this demographic information with other ad-servers so that they can demographically target ads.

For example, therefore, a website (publisher) might tell an ad-server that Roger is a male between 35 and 40. And that fact that Roger often visits home and decor websites identifies him as a person who is interested in garden, furnishing etc. Roger might therefore, find that a number of home decor ads start to appear on his website. Roger’s computer IP ( Internet Protocol ) is used by ad-servers as well. An IP address helps identify around what area a PC is located.

Is ad-serving an intrusion into one’s privacy? Do they have your personal details like name sex, email id etc? Not quite. Ad-severs target primarily to an IP address – they do not have any personal details like name, phone number emai lid etc. They primarily target people’s interests, demographics and where people are located.

Where is the Intellectual Property ?

What is your IP ? is a typical question asked by any investor or VC to a startup venture.

If you are a platform provider, then it is imperative to have a solid IP of your own. Be it Amazon or Ebay or Cleartrip all of them come with some great back end technology and a neat looking GUI in the front.

But oflate there are many ventures (even some funded by VCs) who are just using some other’s technology to bring faster service to market. Though there is nothing wrong with the strategy but there is no differentiated value one offers. Also as the market changes, you are not able to deliver your customer’s expectations.

At the end of the day, a business thrives because it solves a business problem or a consumer pain. In the internet era most of it is done through the medium of technology. If the technology is outsourced then what you are doing is just Sales. For doing just Sales, you don’t expect valuation.

This is getting very common with Ad Networks. Companies like Right Media are lending their Ad exchange to prospective businesses for running an exchange service. Though it is great for Right Media but I wonder the value provided by the business which runs the service. And why should a VC invest, if it is not their IP ?