Online banners are an es­tab­lished form of ad­vert­ising, but are they still relevant? With the ‘banner blindness’ phe­nomen­on, we could assume the answer is no. For a long time, display marketing was a rather neglected field, and busi­nesses tended to focus more on search engine ad­vert­ising (SEA). The most recent figures reveal that more money is being spent on digital ad­vert­ising than search ad­vert­ising. Thanks to new tech­no­logy, the tra­di­tion­al principle of display ad­vert­ising can shine in new splendour. Display ad­vert­ising is con­stantly de­vel­op­ing and real-time ad­vert­ising con­trib­utes greatly to it: thanks to high ef­fi­ciency, pinpoint targeting, and real-time auctions with real-time bidding, pub­lish­ers get the best price, and ad­vert­isers get the best ad­vert­ising space, which results in sig­ni­fic­antly less scat­ter­ing loss. But how does supply and demand come together and what potential do ad exchange mar­ket­places actually have? To answer this, we examine the different par­ti­cipants and re­la­tion­ships in real-time ad­vert­ising (RTA).

The de­vel­op­ment: from tra­di­tion­al display marketing to RTA

Tra­di­tion­al banner and display ad­vert­ising have played an important role in the online marketing mix for a long time, but over time, marketers have started to con­cen­trate more on per­form­ance-based formats (i.e. search engine marketing, affiliate marketing). Search engine ad­vert­ising in par­tic­u­lar once offered marketers many benefits compared to tra­di­tion­al banner marketing: efficient campaigns, better ROI (return on in­vest­ment), and more relevance for the user. There are also many providers and networks which offered easily man­age­able platforms.

But display ad­vert­ising is by no means old hat: thanks to real-time ad­vert­ising and real-time bidding, it’s possible to achieve the same ef­fect­ive­ness and relevance with classic banner ad­vert­ising as with SEA, for example. One problem with classic display banners is the re­l­at­ively high scat­ter­ing loss. Now, 20 years after the first ad­vert­ising banner was created, there are new tech­no­lo­gies available that can reduce the amount of loss through accurate analyses, custom business models, and real-time auctions.

Better targeting tech­niques

The aim of targeting is to customize your pro­mo­tion­al efforts to suit a target audience. This means that users are only shown ads for products or services that they could po­ten­tially find in­ter­est­ing.

Targeting was a lower priority in the early days of online ad­vert­ising. Ad banners were generally placed on them­at­ic­ally relevant sites (e.g. an ad for soccer boots on a soccer blog), but this en­vir­on­ment targeting was far from accurate. This resulted in a lot of scat­ter­ing loss since some companies’ ads were also being shown to those who weren’t in­ter­ested.

Better and more soph­ist­ic­ated targeting options gradually emerged. En­vir­on­ment targeting is still used, but socio-demo­graph­ic data is also included, which improves syn­chron­iz­a­tion. Ad­di­tion­al targeting tech­niques used in con­junc­tion with real-time ad­vert­ising include:

The options described above follow the user wherever they go online, and not just in a relevant en­vir­on­ment. This makes it possible to reach the target group and potential customers re­gard­less of their sur­round­ings. Targeting and ad­dress­ing in­di­vidu­al customers takes centre stage with real-time ad­vert­ising. Every ad im­pres­sion (i.e. every retrieval of an ad­vert­ise­ment) is connected with a user profile. The ad exchange mar­ket­place offers ad­vert­isers this exact profile in real time. All these processes are now automated so their ef­fect­ive­ness is hard to beat. Supply and demand come together at the touch of a button – manual price ne­go­ti­ations or lengthy ad­vert­ising and ad text exchanges aren’t required.

Real-time bidding as a technical basis

The real-time bidding process is required for the ef­fi­ciency described above, as it forms the technical basis. Many important com­pon­ents come into play at the ad auction. The most important include:

  • Visitor: when a user clicks on a site that is connected to the network, the real-time bidding process begins. The user’s profile, which has already been de­term­ined by the Data Man­age­ment Platform (see below), forms the basis for the ad relevance and also the relevance of the page im­pres­sion for the ad­vert­iser.
  • Publisher: blog or website operators can be pub­lish­ers. This means they offer space on their sites spe­cific­ally for ad­vert­ising purposes. By con­nect­ing to a network, ad­vert­isers are able to par­ti­cip­ate in the RTB process and place their ads.
  • Ad­vert­iser: busi­nesses or agencies can be ad­vert­isers – they buy ad­vert­ising inventory in order to target their adverts to specific groups.
  • Supply side platform (SSP):  SSPs are platforms that help web pub­lish­ers to manage their ad­vert­ising inventory. SSPs are generally bound to ad exchange platforms and attempt to sell ad im­pres­sions for as much as possible on behalf of their pub­lish­ing partners.
  • Demand Side Platform (DSP): Demand Side Platforms determine the demand depending on the offer from the supply side platform. Ad­vert­isers will find an interface for SSP and ad exchanges. Through the DSP, you can define campaigns and ads to fit the re­quire­ments of the target groups and take part in automatic bidding for ad­vert­ising inventory.
  • Data Man­age­ment Platform (DMP): Data Man­age­ment Platforms are used for col­lec­tion, struc­tur­ing, and supplying large data sets. The DMP operates in the back­ground, but is a major player in the entire process since the inclusion of data plays an important role for the eval­u­ation. The more the DSP knows about a user, the better it can judge whether an im­pres­sion is suitable for the ad­vert­iser and their campaigns. Besides user data, other factors such as time, weather, or content cat­egor­ies play a part. All data is con­sol­id­ated via the data man­age­ment platform; the DSP accesses this data and evaluates the offered ad im­pres­sions
  • Ad Exchange: the ad exchange is an online mar­ket­place where real-time bidding takes place. This is where SSP and DSP converge. The dif­fer­ence between this and a typical ad­vert­ising network is that a classic network can only offer bundled ad­vert­ising space for an un­deter­mined number of sites, but the ad exchange offers the ad­vert­iser concrete ad­vert­ising inventory (ad im­pres­sions).

Real-Time Bidding: the process

When a user visits a website with available ad­vert­ising spaces, DSPs and SSPs are activated. The SSP reacts within mil­li­seconds and sends a request to the attached DSP. Every important piece of in­form­a­tion and parameter such as the ad­vert­ising space, content cat­egor­ies, and the unique user ID is com­mu­nic­ated through the request. The DSP checks whether the ad is suitable for the user. To calculate this, processes are run in­tern­ally, which first compare the user profile with the specified target group para­met­ers and then selects the ap­pro­pri­ate campaign with the highest chance of success.

If all re­quire­ments are met, the DSP makes an offer for the ad­vert­ising space on the ad­vert­iser’s behalf. The SSP receives all the bids and the highest gets the contract – this ad­vert­iser’s ad will appear on the site. Users don’t notice this as the whole process is complete in less than 100 mil­li­seconds.

Reaching a market of millions with real-time ad­vert­ising

Real time ad­vert­ising is no longer a fad; a huge market has developed within just a few years. This is also evident when looking at the entire ad­vert­ising market. Massive growth has been predicted for the online ad­vert­ising market and positive de­vel­op­ments are down to real time ad­vert­ising as well as other sectors. New tech­no­lo­gies and options in the targeting sector enable even more efficient targeting through display ad­vert­ising. Ad­vert­isers now just need to make full use of these options.

Go to Main Menu