Ad Tech

Explained

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Chapter 1: Introduction
Hi, and welcome back to our lessons where we make sense of the various types of
advertising technology - or ad tech - used today, and how they fit together.

Last time we covered the basics of the digital advertising ‘ecosystem’, exploring
who’s involved, how campaigns are planned, and the all-important issues of
measurement and optimisation.

This time we’ll dig deeper into the technology itself, examining: the essential
components of the ‘ad stack’; a close examination of programmatic trading and
some of the more sophisticated opportunities on offer today; before addressing
some important issues in ad tech that you need to be aware of.

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Chapter 2: Tech I: The Ad Stack

In conversations about ad tech, you’ll often encounter the term ‘ad stack’, which is
just a convenient way of referring to the various technologies and services that come
together to serve a relevant ad to a targeted user, in the best place and at the best
time.

As we’ll see, there are various bits of tech used by different parties, and some that
are used by all players involved.

We’ve already been introduced to the advertisers and publishers - the demand side
and the supply side of the market, and they each have specific tools that help them
with their activities...

Demand Side Platforms, or DSPs, help advertisers to buy and optimise ad

placements. With so many options on offer, provided by so many different ad
networks, exchanges and other inventory sources… it could all easily become a little
too much. Thankfully, Demand Side Platforms allow advertisers to deal with all this
on a single interface.

These platforms can also take on a lot of the work, allowing advertisers to automate
the selection of inventory to meet certain criteria. The demographics and
behaviours of the advertiser’s desired audiences, the impressions they want to
achieve and the price that they’re willing to pay for them, and a blacklist of any
publishers that the advertiser wants to steer clear of, are all taken into account.
Some DSPs can also offer the ability to handle the management of ads both through
direct deals with publishers and real-time bidding.

So, Demand Side Platforms help advertisers buy ad placements from multiple
sources, in real time and via a single interface. Well, publishers are supported by a
very similar platform… a Supply Side Platform, or SSP, which helps them to sell their
inventory to many different advertisers, again: in real time, via a single interface.

Supply Side Platforms allow for the integration of pre-arranged deals and open ad
exchanges, and for the setting of minimum bid levels, maximising the potential for
space to be used profitably. They also offer analysis and distribution of data about
user characteristics to facilitate more informed ad buying, and ensure that the ads
displayed are in line with the publisher’s brand identity and values... and that the
advertisers aren’t undesirable or blacklisted for any reason.

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DSPs and SSPs are the key technologies used by advertisers and publishers
respectively, but - there's also a third party that complements their arrangement,
providing valuable information that really lets the demand and the supply side make
the most out of the opportunities on offer. These are data providers.

Effective digital advertising campaigns increasingly rely on huge volumes of data for
accurate targeting, user segmenting, and personalisation of creative in real time.

Data providers supply this data, and they do so using another component of the
ad stack...

They use a Data Management Platform, or DMP - a unifying system that allows for
the collection, integration, storage and analysis of data from multiple sources. This
includes both first party data owned by the advertiser or publisher, and third party
data that’s obtained elsewhere.

Data Management Platforms primarily store user data and contextual data.

User data includes demographic information like age, gender, marital status,
income and geographic location. It also draws from historical information about past
purchases, and predictive insights regarding levels of purchase intent.

Contextual data, on the other hand, gives a picture not of the user, but of the actual
setting in which an ad might be displayed, and the content that might surround it.
Also known as “semantic” data, this is an important extra layer of information.

Imagine that a publisher is selling ad space next to an article that discusses

“sunbathing”. Now, if you were a travel industry advertiser, wouldn't you want to
know whether the article detailed the “best beaches in Florida”, or “the biggest
dangers of overexposure to the sun”?

DMP analysis can be used to estimate the audience numbers for an ad targeted to a
particular user segment, or the potential response rate to a particular ad, so they can
be very helpful to both advertisers and publishers in terms of maximising the
available opportunities.

There’s an essential part of the ad stack that we haven’t discussed yet: ad servers.

These are used across the digital advertising landscape by advertisers, agencies,
publishers and ad networks alike to manage and run campaigns, typically making
instantaneous decisions about which ads to display.

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Ad servers can host a variety of display ad formats, and actually deliver the
appropriate creative to visitors on publishers’ sites and within mobile apps. They
provide analytics such as tracking impressions and clicks for each ad and each
publisher, allowing advertisers to monitor the performance of individual campaigns,
and to compare their server’s results with those reported by the vendors.

Some ad servers also have the capability to report on engagement metrics

and conversions.

One of the best known ad servers was DoubleClick, which became the industry
leader following its acquisition by Google in 2008. This has since become part of the
company’s new platform known as Google Ad Manager - providing one integrated
solution for all parties involved in the process.

Regardless of which ad server you’re using… how does it ‘know what to do’...?

An ‘ad tag’ is a piece of code, and the best way to explain them is probably by
explaining how they’re used...

Browsers use them to request either an ad or another tag from an ad server.

Advertisers use them to direct the user’s browser to load a specific creative.

Publishers use them to sell ad space.

Ad servers use them to control decision-making about which ads to show

… and Data Providers use them to collect information about users for segmentation
and personalisation purposes.

So, here’s how the process works, step by step, for a publisher...

1. When a user calls up a publisher’s site or mobile app, the browser sends an
initial ad tag to the ad server for that publisher. This tag contains
information about the user and about the size of the ad placement.

2. The publisher’s ad server may, in turn, send another ad tag to a data

provider to access any relevant information about contextual targeting or
personalisation.

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3. The ad server then passes a tag to the advertiser to obtain an ad. This may
either be a direct request for a pre-existing guaranteed buy, or it might
request bids from multiple advertisers and conduct an auction to achieve
the most profitable real-time deal for the publisher.

4. The ad server then delivers a final ad tag to the user’s browser… which
contains a link for the creative to be displayed.

So that’s an overview of how different components of the ad stack work together to

ensure that an ad appears - at least in theory - to the right user, in the right place and
at the right time.

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Chapter 3: Tech II: Trading & Personalisation

Now that we’re familiar with the key components of the ‘ad stack’, it’s time to look in
more detail at how ad tech facilitates ‘programmatic trading’ - the automated
buying and selling of ads in real-time.

It’s important to recognise that many companies will contract out the management of
their ad trading to external agencies that carry out programmatic and other media
buying for them. To facilitate this, the agency may layer their own platform on top of
the DSP or other ad tech that the client is running.

Agency trading desks perform tasks such as ad verification, dynamic creative

optimisation, and audience measurement and reporting.

Private trading desks, also known as ‘Programmatic Buying Units’, are agency
teams that are exclusively dedicated to media buying, optimisation and reporting for
just one client.

There are enormous amounts of online advertising opportunities, some targeting

niche audiences, and some for more general viewership. This leads to hugely
complex tasks in managing multiple campaigns and target audiences, together with
ensuring that the right creative runs in the right ad slots, and making
appropriate payments...

Ad networks can help in this area by acting as a middleman, directing advertisers to

a wide range of publishers with available inventory that meets their marketing needs,
particularly “remnant” placements that haven’t already been directly sold.

Inventory is typically sold in categories such as “males aged 25-34”, “movie sites”, or
by specific site or page.

Ad network services can connect with both DSPs and SSPs.

Because it’s important for networks to maintain transparency around their

processes, they rely on robust analytics and reporting tools for accurate tracking of
impressions, as well as accounting software that can ensure on-time payments and
deal with international currency transfers.

On ad exchanges, advertisers bid for publishers’ available inventory in real

time. The ad exchange is an autonomous auction-driven platform that facilitates
programmatic ad buying, and so is used by all players in the digital advertising

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space, including ad networks which buy unused inventory to mark up and sell for
a profit.

Programmatic trading employs sophisticated algorithms to ensure that advertisers

and publishers can both achieve optimal results.

Open ad exchanges, as they sound, are public marketplaces with inventory from
many publishers that’s available to anyone. These exchanges are attractive to
brands looking for the widest range of publicity, but offer a much lower level of
information and control over which publishers are used, and have led to widespread
concerns about ad fraud.

Individual publishers are establishing private marketplaces in which they invite

known advertisers to participate in the auction, but on pre-agreed terms with
regards to target audience, type of inventory, ad formats, frequency caps - which
control the number of times an ad can be shown to each user - and so on. Private
marketplaces can ban selected ad networks or other vendors, and are generally
considered to be more secure and transparent.

On pay per click and social media advertising platforms, bids are generally set
either manually or automatically. Manual bidding allows advertisers to define a cap
on the amount that they’re willing to pay, whereas automatic bidding specifies that
ads will be shown at the lowest possible cost, but the actual price will be
determined by the system, with no cap.

In this scenario, manual bidding offers more control and the opportunity to optimise
the use of the available budget. However, automated bidding has the advantage of
being low maintenance, especially for large campaigns.

When ads are traded programmatically, ‘real-time bidding’ allows for the live
trading of individual ad impressions in the form of an auction, typically via an
ad exchange…

1. SSPs list their inventory on the ad exchange, with full details of page
location, topics, and so on...

2. When a user enters the address of a publisher’s site - meaning that a page
needs to be generated for viewing - available impressions for that page
automatically appear in the auction.

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3. Data about the user is collected and sent to the publisher’s server and to the
ad exchange.

4. The ad exchange sends bid requests to DSPs and to ad networks. Each DSP
reviews the impression opportunity and all relevant information about the user
and the placement to decide whether to bid. If so, it sends its maximum price
offer and the location of the ad creative back to the ad exchange.

5. The ad exchange reviews all the bids that it receives for the impression, and
eliminates any that do not meet the requirements of the publisher. For
example, the publisher may have specified that it only wants ads in a certain
language, or around a specific topic.

6. The ad exchange then sells the impression to the highest remaining bidder.
The ‘winning’ ad is served in the page displayed to the user.

This entire process takes place in milliseconds... just before the ad is delivered, with
millions of impressions being handled at the same time, without impacting the load
speed of the page, and without the user even being aware of what’s happening!

‘Header bidding’ is an advanced programmatic technique whereby advertisers get

priority “pre-bid” looks at inventory across a number of ad
exchanges simultaneously...

Competing in real time for specific impressions, rather than being part of the
general auction, offers benefits for both sides. Advertisers gain from being able to
see and bid on a wide range of inventory, while publishers benefit from the
greater exposure.

A publisher puts a piece of code into the header section of their web page -
containing a list of advertisers to be contacted if inventory becomes available.

When the page is requested by a user, the code fires and invites bids from those
advertisers for all of the placements and formats that are currently open. The
publisher’s server receives the responses, allocates impressions to the highest
bidder, and the page is loaded and displayed to the user.

One unforeseen consequence of header bidding has been that DSPs are
inundated with bid requests – often far more than their infrastructure can
cope with.

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Since ad exchanges can be included in the header lists, bid requests for the same
impression can be duplicated, causing confusion about the source of the request.

Supply Path Optimisation refers to the methods that DSPs and agencies use to
identify the bids that are most likely to win in an auction. These methods employ
algorithms to purge duplicate or suspect bid requests and to prioritise those that
each advertiser is most likely to win.

Publishers can also use supply path optimisation to reverse engineer this process
and identify ways to optimise how their inventory reaches buyers.

Overall, both the demand and supply side of digital advertising are looking to
increase quality and transparency and to reduce the need for middlemen in their
transactions.

Aside from the sophisticated tools and methods now available for automating the
process of trading ads, continued developments in ad tech now allow for users to
enjoy an extremely personalised advertising experience...

As with many marketing tactics, the use of personalisation to engage individual

users can significantly improve campaign results.

A technique known as ‘Dynamic Creative Optimisation’ allows advertisers to

customise ads in real time using parameters such as gender, age, known
behaviours and preferences, purchase history… and can even factor in location, time
of day and prevailing weather conditions.

So, for example, a coffee lover in Chicago during the winter might be offered a
coupon for a hot mocha, whereas someone in Arizona at the same time might be
notified of iced coffee specials. Another person in Arizona who’s never purchased a
coffee might receive a promotion for a new smoothie flavour.

Of course, to do this effectively requires both vast amounts of - hopefully accurate -

data and also... potentially hundreds or even thousands of variations of a given ad.
Specialist companies can handle serving the appropriate creative and layering on
rich media, dynamic messaging and features such as customised maps or videos.

The possible graphical components of each ad are defined when the campaign is
set up, and, rather than showing the same ad to every viewer, the optimal dynamic
content is determined in real time as the ad is served to each individual, including
both the actual components shown and the creative look and feel, such as colour

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choice and the wording of any ‘calls to action’. In fact, machine learning is now used
to study the results and help to continuously refine the process.

The availability of this technique means that the initial design and definition of a
campaign can be much simpler, since the creative staff can be less concerned with
ways to appeal to specific target audiences. Instead, they’re free to focus on
imaginative visuals and content, while the Dynamic Creative Optimisation manages
data analysis and ad delivery.

Often, it’s not enough to simply identify a user and serve them a single ad.

Ad retargeting refers to the practice of showing users ads based on their previous
interactions with a company’s digital presence, especially for those users who might
have initiated some level of conversion such as a purchase or filling in an enquiry
form, but who failed to complete it.

Retargeting works by dropping a cookie from the advertiser’s site onto the user’s
browser. This can be checked for by publisher sites, ensuring that retargeted ads
are only shown to users who are already somewhat familiar with the business.

Retargeting solutions may be included in a comprehensive advertising platform, or

they may be stand-alone, with the ability to integrate with other tools. Sophisticated
retargeting systems can perform audience targeting and segmentation, oversee
automated bidding and manage creative, as well as providing detailed analysis
and reporting.

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Chapter 4: Ad Verification
So, we’ve looked at the technologies which help to ensure that ads are served
correctly, and which help to maximise the opportunities for all parties involved.
However, in order to have a complete picture of the advertising landscape, there are
still some areas you need to be aware of.

Now, we'll take a look at ad verification and the issues it tackles, before turning our
attention to ad blocking.

‘Ad verification’ refers to the techniques used to check where and how ads are
appearing online. These services exist to give advertisers and publishers a deeper
understanding of how campaigns are performing, enabling them to ensure that ads
are being delivered according to the terms that were agreed upon.

In order for verification services to be able to do this, an ad verification tag is

‘attached to’ an ad. Then, when the ad impression is served, this tag sends tracking
data back to the verification service.

Using this data, the verification company can then report to the advertiser on a
number of things, including where the ad was displayed; the specific placement of
the ad; and the nature of the content surrounding the ad… and even whether or not
the ad was viewable to the user...

In the context of digital advertising, ‘viewability’ is the measurement of how much

of an ad is on a user’s screen, and for how long. This is used to determine whether
an ad impression was ‘viewable’, by which we mean... whether it had the
opportunity to be seen by the user it was served to.

This doesn’t mean viewability can tell you whether an ad was actively viewed by a
user - only that enough of it was on screen for long enough that they had the
chance to view it.

Ideas about when an ad impression is viewable can vary - with some advertisers and
publishers setting out their own standards for viewability. However, industry
standards as set out by the Internet Advertising Bureau and the Media Rating
Council dictate that at least half of a display ad’s pixels must be on screen for at
least one second to be considered ‘viewable’; whilst a video ad is only viewable if at
least half of the video player is on screen for at least two seconds.

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Needless to say, viewability is incredibly important in the world of advertising. After

all, an ad can only have an impact on a user if it can actually be seen! Viewability is
so important, in fact, that it’s leading some advertisers to change their entire pricing
model. Many are now opting for ‘vCPM’ or ‘viewable cost per mille’. Here,
advertisers are only charged for impressions that are viewable, and therefore don’t
waste ad spend on impressions that didn’t even have the opportunity to make an
impact on a user.

There are a number of steps that advertisers can take to improve the viewability of
their advertising – and, similarly, steps that publishers can take to make their ad
spots more viewable.

However, there are no cut and dried rules to improving viewability, and it can take a
fair amount of trial and error alongside the insights provided by ad verification tools
to get it right.

Beyond viewability, ad verification tools are also utilised in the fight against ad fraud.

By ‘ad fraud’, we mean the use of techniques or tactics that deliberately manipulate
ad serving systems. Often, this involves deceiving advertisers into paying for fake or
misrepresented impressions, clicks, or other activities in order to generate revenue.

These techniques take various forms – from fraudsters using bots to generate fake
page views, to unauthorised ads being displayed on a publisher’s site.

Ad fraud is a massive issue for both advertisers and publishers. Developments in ad

tech software and real-time bidding have opened the door to criminals who stand to
make significant amounts of money through these fraudulent practices; and
advertisers are wasting valuable ad spend on clicks and impressions that aren’t
coming from the right users - and sometimes not even human users.

In fact, ad fraud is now estimated to cost advertisers more than $19 billion a year,
with video and programmatically-traded ads being the most vulnerable to
fraudulent activity.

It’s crucial for both advertisers and publishers to be aware of the types of fraud that
they may be susceptible to, and the steps they can take to protect themselves.

Ad verification tools are also used by advertisers and publishers to protect

brand safety.

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By brand safety, we mean monitoring and taking steps to prevent an ad from

appearing in a context that is detrimental to a brand’s image, mission or goals - for
example, next to offensive or otherwise inappropriate content.

Needless to say, this is incredibly important to brands, who are growing increasingly
sensitive about the context in which their content or messaging appears. After all,
just one ad placed next to inappropriate content has the potential to ruin a brand’s
reputation - whether that’s in the mind of a single user, or at scale.

However, brand safety is also becoming increasingly difficult to safeguard as the

automation of trading increases - it’s becoming more complex for advertisers to
know exactly where their advertising is showing up.

Many are turning to verification tools to check that ads are appearing in appropriate
contexts. For example, many DSPs have built-in blacklists of sites that brands don’t
want to advertise on.

Now, these systems aren’t foolproof. And what constitutes ‘inappropriate’ content
will vary - from sites that don’t align with a particular brand’s values, to legal
restrictions such as advertising alcohol to underage users. This means that these
tools need to accommodate a huge range of standards.

There are more robust technology solutions on offer that can better take into
account the wider context of a site’s content, however these do still require some
human involvement.

So, ad verification tools are an incredibly important part of the ad tech ecosystem,
especially as viewability, ad fraud, and brand safety prove pressing issues for both
advertisers and publishers.

However, there is one more issue we need to look at, and that’s ad blocking…

Now, this is pretty different from the types of technology we’ve already talked about,
as this isn’t used by advertisers or publishers… but by users themselves...

‘Ad blockers’ are downloadable pieces of software that prevent ads or auto-playing
videos from displaying, and are available on both desktop and mobile devices. As
ads have grown in number - and with some becoming more intrusive - the use of ad
blockers has increased. In fact, they’re currently estimated to impact around 25% of
all ads served.

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These services are especially popular among Millenials; but also in emerging
markets or in areas where bandwidth is expensive or substandard.

Whilst it isn’t a technology directly within their control, ad blocking is something

both advertisers and publishers need to be aware of, as it can present a number of
issues for advertising...

Obviously, ads aren’t going to be very effective if they can’t be seen. But beyond
that, if publishers charge for all ads regardless of whether they were blocked or not,
advertisers may be wasting money on ads that were never displayed... and it can be
difficult to obtain accurate impression numbers because the blockers are obstructing
tracking scripts. However, if the publisher does recognise blocked ads and therefore
doesn’t charge for blocked impressions, campaigns that are paid for on an
impression basis can take longer to fulfil, which can lead to higher inventory
prices overall.

For publishers, solutions to the ad blocking challenge tend to centre around

presenting various options to users, such as persuading them to disable the blocker,
offering subscriptions to ad-free content, or simply refusing access when ad
blockers are installed. On the other hand, for advertisers, solutions focus on creating
better ad experiences so users are less inclined to download blockers.

Whilst the decision to download and use an ad blocker does ultimately lie with the
user, it doesn’t mean it’s an issue that can be ignored.

For many users, opting for an ad blocker is a reaction to intrusive, irrelevant or

otherwise unwanted advertising online… but there are steps that both advertisers
and publishers can take to try and address this.

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