The art of an Ad Network

In the last 30 days, we have heard a roar of realization that Online advertising is a thing to consider even more seriously. The fact is that Pakistan’s internet penetration has crossed 40% mark and is still growing. The Advertisers, Publishers and Media Agencies are exploring possibilities for growing the revenues on their respective tables.

In the midst, some conventional media agencies who were just drizzling their media spend on digital are considering a shower, not only to leverage performance marketing, but also in finding the untapped capability of Digital Media spaces to influence users like it has been done through TV & Print for years. An agency recently asked me that if they get to pay only a fraction of CPM to spend through an Ad Network on websites (let’s say $0.15 CPM), then why Premium Publishers ask higher CPMs. This led me to explain my observations which I also rechecked with multiple experiments.

Here’s what I could explain.

An Ad Network buys impressions in Bulk from a large variety of websites. Some websites have the most sophisticated systems of selling their inventories such as Ad Exchanges, multiple SSPs/demand sources and techniques like Waterfall, Header Bidding or Server Side bidding, which gives heavy competition to every impression being bid on. Some have only an Adsense account with limited functions to control and compete the buying of inventory, some websites don’t even have an ad system in place, yet advertising gets served on their platforms for free, such as amateur blogs, created by millions of users to write.

Here’s what happens, A large publisher is most probably using an Ad Exchange, which allows them to connect multiple demand sources and ad networks. Previously an impression was filled by only one Ad Network (let’s say Adsense/Google Ads - GDN) without competition. Once they plug their inventory into an Ad Exchange, they acquire multiple demand sources and now every impression is individually sold in auctions - the highest bidder wins the auction and serves the legitimate impression. While this process allows publishers to improve revenue with the help of competition, it restricts premium advertisers from winning valuable advertising spaces when they try to bid too low to reduce cost. Even if they win, it is because they have paid the demanded money to appear or, the impression being bid had no competition at that moment (probably few millisecond). However, still they have to go through the competition and beat every bidder. These publishers tend to play along with their price floors on almost everyday basis to maximize their yield and revenue.

So, Why does an ad network show you the lowest buying cost.

Let’s assume a campaign using an Ad Network, an advertiser is serving ads to every website that is part of this network. Considering the methods and controls that a premium publisher uses in contrast with smaller websites - we build a table and see how it might have bought impressions at the lowest possible cost. To do so, let’s divide the landscape in two categories of Websites. Premium/Large Publishers with a large user base, Smaller/less known websites with smaller user base, and all the other web spaces, such as parked domains, unpopular gaming apps, small blogs, sales pages, landing pages and the likes.

This way you have acquired an average lower CPM, and a specific CPC based on this buying. You, not only, might have missed some white listed publishers’ major share of reach from them, but might have shown your ad adjacent to some objectionable content on smaller blogs and the like.

Does Programmatic Advertising solves the requirement for being premium?

It does! however, it does it through programmatic guaranteed, preferred deals or PMP. A campaign running in open exchange faces similar and even bigger problems. You must have heard about ad fraud - domain spoofing & many others. Another thing is that how DSPs and SSP charge an advertiser. There is a lack of clarity on who (SSP, DSP, Publisher) was given how much share of a dollar that was spent through Open Exchange in programmatic. Only this has given rise to increasing popularity of Programmatic Guaranteed, Preferred deal etc. - In short - Human to Human interaction to maintain clarity and transparency at every stage.

As a Buyer, you are not doing anything wrong. But if your entire objective is to reduce the cost, then it is easily possible by reducing the quality of your campaign and a compromise on Brand Image. For performance driven campaigns, an ad network is still quite useful along with some other vertical networks/tools like Criteo, Adrolll etc. but, no one in the world is using Ad Networks to buy Reach, Awareness and Brand building, even if they offer these objectives.