Advertising Network System Unraveled

Within the online advertising networks, there exist three major types:

  1. Vertical Networks: Expensive, Brand-Focused, Controlled Ad Placement
  2. Billed Networks: Run-off-Network Ads; No Ad Placement Control; Low-Cost + targeted advertising technology
  3. Targeted Networks: Targeted using behavioral or contextual advertising, through understanding consumer clickstream data. (Mostly data-driven marketing, similar to the AdRoll or Re-marketing).
  • Vertical Networks
    They represent the publications in their portfolio, with full transparency for the advertisers about where their ads will run. They typically promote high quality traffic at market prices and are heavily used by brand marketers. The economic model is generally revenue share. Vertical network offers ROS (Run off the site) advertising across specific Channels or they offer site-wise advertising options, in which case they operate in a similar fashion to Publisher representation firms.
  • Billed 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 run campaigns as RON (Run off the network. Blind networks achieve their low pricing thorugh large bulk buys of typically remnant inventory combined with conversion optimization and ad targeting technology.
  • Targeted Networks 
    Sometimes called the “next generation” or “2.0” ad networks, these focus on specific targeting technologyies such as behavioral or contextual. Targeted networks specialize in using consumer clickstream data to enhance the value of the inventory they purchase.

Within the advertising networks, there are two types of Tiers: First and Second Tier Networks

  1. First-Tier Advertising Networks 
    – Have large number of own advertisers & publishers
    – Bring in high quality traffic & serves ads and traffics to 2nd Tier networks
  2. Second-Tier Advertising Networks
    – Have some of their own advertisers & publishers (but not all)
    – Most ads revenue come from syndicating ads from other advertising networks

How Advertising Network is Setup

Advertising Network Setup

As shown above in the image, the advertising network is setup by having both the Demand & Supply Side of the advertising inventory. We refer the inventory as the spaces for placing ads. Both the advertisers and publishers compete and bid for limited advertising inventories. DSP (Demand Side Platform) and SSP (Supply Side Platform) serve as ad exchange primary platforms for trading advertising inventories between advertisers and publishers.

Ad Exchanges are technology platforms for buying and selling online ad impressions, and represent a field beyond ad networks. A company that brokers online advertising by brining web publishers and advertising buyers together on a Web site where they can participate in auction for ad space. Similar to the stock exchange market (NASDAQ), an ad exchange is a marketplace where publishers and advertisers can find and execute advertising transactions.

DSP – (Known as demand side platform) is another way of saying “Advertiser-side”. DSP provides access to a technology set designed to serve the demand/advertiser side of the business (focusing on advertisers’ goals). It also consolidate all accounts into one centralized tool for management and reporting. DSP act as a central hub for handling data you bring in to help with the real-time bidding valuation that is crucial to successful ad exchange management.

SSP – (Known as supply side platform) helps out the publisher-side and focuses on improving the publishers’ goals. By consolidating publishers’ content and information, SSP helps evaluate how much impressions they can sell for the highest profit. SSP’s main job is to sell the impression as most as possible and to effectively relate best contents to the advertisers’ ads message.