Nature is a beautiful thing. All plants and animals, large and small, depend on each other to keep the world turning. However, if one piece of the puzzle goes missing, the whole ecosystem may crumble.
Much like its natural counterpart, the online advertising ecosystem is a network of different parts, each with a necessary function.
Online advertising begins with the brand. For our purposes, brands are companies, people, or organizations that try to promote a new product or service. They rely on the rest of the ecosystem to get their messages to the customer.
Brands have two options when it comes to putting out an ad: they can go directly to a publisher or work with an agency. An agency manages the brand’s advertising messages from start to finish, including planning, creating, and distributing ad campaigns.
Agencies interact with the rest of the ecosystem on the brand’s behalf, giving brands much needed time to focus their energy on other issues.
Within an agency, the trading desk is responsible for online media buying. It serves as an intermediary between agencies, demand side platforms, ad exchanges, and ad networks, streamlining the media buying process. Generally, trading desks specialize in programmatic and audience buying.
Demand Side Platform (DSP)
Created as a response to technology’s evolving relationship with ad buying, Demand Side Platforms (DSPs) are software programs that automate online ad inventory and buying. DSPs work on the advertiser side of the ecosystem, helping agencies manage multiple accounts and campaigns through one platform.
Agencies who work with multiple clients at a time use DSPs to easily navigate ad exchanges and networks.
This digital marketplace compiles ad space inventory from a variety of publishers, eliminating the need for agencies to directly negotiate with them. Advertisers can purchase inventory from multiple publishers through an exchange, letting them shop around for the best deals. Most exchange transactions center around real-time bidding and programmatic buying.
Similar to an ad exchange, an ad network aggregates publisher inventory and sells it to advertisers for a profit. Many ad networks prepackage their available inventory, offering buyers specific bundles of ad space based on audience segmentation, like age groups, geographic locations, and behaviors.
Supply Side Platform (SSP)
The counterpart to a DSP, a Supply Side Platform (SSP) operates on the publishers’ end. Publishers can oversee their entire ad space inventory with this software.
Through market analysis, SSPs suggest the best prices for ad space, making sure that publishers set their prices right and get the most bang for their buck.
In digital advertising, publishers are your typical website operators, partners, or affiliates. They own the sites, and in turn, the ad space. A publisher’s site popularity, audience viewership, and content quality can all affect ad space pricing. Better performing sites usually sell ad space at a premium.
Ultimately, the goal of advertising is to reach the customer. These are the people who buy goods and services from a brand. They probably won’t be prompted to do so unless they’re persuaded in some way, which is where online advertising comes in.
If all goes well, then a digital ad should get customers to click, generating revenue for the publisher and hopefully the brand, too.
For all you visual learners out there, save and print out this handy infographic. Use it as a quick reference the next time you cross paths with the online advertising ecosystem.