Taxonomy of Species in The Programmatic Ecosystem

Taxonomy of Species in The Programmatic Ecosystem: Definitions of Main Roles in Programmatic Advertising

This blog post is intended to provide a high-level summary of the main roles within the programmatic advertising ecosystem. Many people are familiar with the Display Advertising Lumascape (Fig 1.), which is produced by New York based investment bank, Luma Partners LLC, that specialises in the digital media market. The Lumascape emphasises how crowded the market it, however, what all these companies do is a mystery to many.

Luma Display
Figure 1. Display Lumascape Source: LUMA Partners LLC. (2016)

The arrows in the Lumascape indicate the main supplier and customer relationships. Given the large number of roles in the market, and businesses in each role, it is necessary to simplify the structure of the market for ease of understanding. This is outlined visually in Fig 2. where the essential roles from the Lumascape are extracted and simplified. It should be noted that the principals in the market are the Advertiser on one side and the Publisher on the other. Other participants are intermediaries of some description or other. For this reason these principals will be described first, with the others described in alphabetical order.

Roles

Advertisers. In most cases Advertisers are the owners of businesses that sell the goods and services that use advertising in an attempt to influence existing and potential customers. An example of an Advertiser would be Unilever. Unilever is a major global advertiser with tens of different consumer brands. There are Advertisers that use advertising to influence people to do things other than buy goods and services. For example a charity may use advertising to recruit donors. Many, though not all, Advertisers use Media Agencies (Agencies) to plan and but their advertising media.

Agencies. Media Agencies are responsible for and in control of all the main aspects and activities of buying advertising media for their clients: Advertisers. This includes planning which media is to be bought for each campaign and at what range of prices. The purpose of buying advertising media is to use it to run advertising campaigns, which are in turn, intended to influence existing and potential customers of the Advertiser. An example of an Agency would be Publicis Media, which is part of Publicis Groupe.

Publishers. Publishers are the businesses whose websites or mobile apps are used as display advertising media. Advertising is often the only or primary source of revenue for Publishers. Some Publishers charge a subscription for access to their site and/or app, though this is relatively uncommon. However, even if a Publisher charges a subscription they often supplement this subscription revenue with advertising revenue.

An example of a publisher would be the Guardian News and Media Limited and with its respective site http://www.theguardian.com/uk. However it should also be noted that Google is also a Publisher, because it provides pages of content, such as search results and services such as email. Facebook and other social media sites are also publishers since they provide pages of content.

Ad Exchanges. Ad Exchanges are where ad media is sold on the open market, i.e. Open Auctions. Ad Exchanges are run on an entirely real-time-bidding (RTB) basis. It should be noted that Ad Exchanges rely, to a very large extent, on a cookie matching. If there is no match of profile between Ad Exchange and DSP, then the DSP simple does not bid. “Ad exchanges are increasingly becoming a default link between supply and demand side” for many small to medium sized publishers. (Kruševskaja, 2015).

Many exchanges exist as standalone businesses, such as Criteo which specialises in retargeting for advertisers or SpotXchange which specialises in selling video ads for publishers. All SSPs also have Ad Exchanges as part of their technology platform, for example AdUnity and Rubicon both have exchanges.

Ad Networks. Ad Networks are businesses that aggregate numerous websites in order to sell the ad media of these websites to Agencies at scale. Prior to the advent of programmatic advertising this aggregation was a benefit to Agencies since it saved them time, effort and cost in dealing with many different smaller Publishers. With the arrival of programmatic advertising Agencies can access the same ad media of ad networks via Ad Exchanges. Ad Networks now tend to offer specific types of audiences at scale, for example an ad network could specialise in music sites and hence be able to offer an audience interested in music.

An example of an Ad Network would be Exoclick. The biggest Ad Network in the world is Google’s Display Network that includes sites such as YouTube, Gmail and Google Finance.

Data Brokers. Data brokers (sometimes also known as Data Aggregators) are companies that collect and aggregate information from a wide range of sources to create detailed profiles of individuals’ devices (Kruševskaja, 2015). The business model of Data Brokers is to acquire, aggregate, process and sell audience data at scale.

Data brokers often also combine their huge volumes of data with a Database Management Platform (DMP) that Advertisers/Agencies, DSPs and even Publishers can use to create audience segments to buy or sell. Examples of Data Brokers are companies such as Lotame, and Krux Digital.

Data Brokers also use cookies to identify devices and by extension the people using them. For a Data Broker each cookie is meant to represent a person. Data Brokers are able to acquire these cookies because they have contracted with large ecommerce websites (such as an airline website) or Publisher websites (such as news website) to allow them to put their Tag into their sites. Websites that work with a Data Broker in this way are called Data Providers.

The Data Brokers Tag that is put into Data Providers website would typically instruct the visitor’s browser to load a 1×1 pixel image file from the Data Brokers server so that there is a direct contact between Internet user browser and Data Brokers. The Data Brokers then places a cookie on the browser. This cookie is stored on the Data Brokers database. Since a Data Broker will work with many different Data Providers over time the Data Broker will build a profile of the cookie/device/person. This profile will, at least in in part, be based on the browsing history of the Cookie/device/Internet user. If the device visits many websites relating to sports, it will be inferred the Internet user using the device is interested in sport. However, it should be noted that geographic location data (derived from IP address), device type, day, time and duration of visits among other things will be collected, stored and analysed by the Data Broker.

Data Brokers also access other types of data, such as Census data, house price data and other public or private data sources to overlay onto the data they have collected from Data Providers. Sometimes Data Brokers conduct their own surveys. All this additional data is used to both benchmark existing data sets as well as to make a variety of inferences relating to the interests, purchase intent and wealth of the Internet users behind the Cookies.

Demand-Side Platforms (DSPs). DSPs are technology platforms that are used by media buyers to buy ad media programmatically. An Agency will use a DSP to buy on behalf of its client. Some DSPs are owned by Agencies and some are independent businesses. For example, the DSP Xaxis is owned by WPP. DSPs are typically connected many SSPs and Ad Exchanges. The more SSPs and Ad Exchanges a DSP is connected to the greater the variety of websites and apps it can buy from.

End-to-End Platforms. “End-to-End Platform” is not a common industry term, but it is a useful way to describe technologies and businesses that both buy ad media from Publishers and sell ad media to Agencies or Advertisers. The business model of an End-to-End Platform is to arbitrage between the lower sale price of the Publisher and the higher buying price of an Agency. Many End-to-End Platforms specialise in retargeting campaigns for ecommerce businesses. Examples of such companies/businesses are AdRoll, Criteo, Google Double Click and PulsePoint. See Blog Post on End-to-End platforms.

Supply-Side Platforms (SSPs). SSPs are technology platforms “that allow publishers to connect their ad inventory to the demand side of the market, by calling multiple ad exchanges, demand-side platforms and networks at once.” (Kruševskaja, 2015). SSPs are far more complex than Ad Exchanges as an SSP will allow a publisher to connect to multiple DSPs, and Exchanges as well as be able to run Automated Guaranteed deals, Unreserved Fixed Rate deals and Invitation-Only Auctions. Many SSPs also include an ad server so Publishers can also sell on a traditional, site-based basis if they wish (i.e. IO basis). The fundamental concept behind using an SSP is that it opens a wide number of selling options to Publishers, so that they can maximise the yield from their ad inventory. There are many SSPs on the market, such as AdUnity and Rubicon Project.

 

References:

Kruševskaja D. (2015) Observing and Optimising Online ad Assignments, New Brunswick Rutgers, The State University of New Jersey. Available from: https://rucore.libraries.rutgers.edu/rutgers-lib/48548/

Author: AdUnity

+10 years together in computer tehnology development