Online Advertising Ecosystem

This post is also available in: Russian

The Internet advertising market actively grows and develops. New opportunities and niches are constantly arising in it. Publishing ads on the web today usually involves much more than just a direct agreement between an advertiser and a publisher. To extract the most value out of the large diversity of additional services that are available on the advertising market you must work with other market players who specialize in helping you to promote your products and services in the most effective way. In this article we will try to classify them.

  1. Ad Networks are possibly the oldest and the most traditional players on this market. Their main function is to gather as much various high-quality publishers as possible and make it so that an advertiser doesn’t have to worry about searching for places to publish its ads anymore. An Ad Network can collect payments as a percent from advertisers’ budgets and/or publishers’ revenues.

    Ad Network’s main resources are places which can be used to publish ads. Networks can be divided into two classes by the availability of this resource. Tier-1 networks have a direct access to publishers and tier-2 networks mostly use tier-1 services to get to the publishers.

    Examples of popular ad networks include Google AdSense and TBN in Russia.

    Being among the founders of the online advertising market ad networks have strong positions on it. But recently their customers become more and more discontented with them because of comparatively high costs, low utilization and response rates.

  2. Ad Exchange is a further development of the idea of an ad network. They strive to give their customers more flexibility. Ad Exchange is similar to the stock exchange for the internet advertising. It enables advertisers to choose from ad networks or publishers based on various measures. It can be costs, performance metrics, target audiences, etc. Also, exchanges make it easier to enter the market for those companies that specialize in developing innovative ad formats or target audience extraction techniques.

    The most popular ad exchanges today are: DoubleClick Ad Exchange and AdRiver in Russia.

  3. Advertising agencies on the Internet advertising market became consultancies that help to find a way in the vast sea of available services, to plan and launch an advertising campaign in the most effective way.
  4. Ad Formats Companies develop their own unique ad formats that make a difference compared to traditional ones by offering interactive user experience or dynamic content, allowing to generate a bigger audience response, exploiting latest technologies. Present day tech allows to create a banner which changes its size while being interacted with, or embed multimedia, or include the whole Internet store inside a banner. A notable example of such company is vADz.

    One interesting trend in ad formats worth mentioning is dynamic ads. Such ads do not utilize ready made creatives but use a template which is filled with information about a specific product chosen dynamically based on the target audience data and the current web page context. The user sees the product which is potentially the most interesting to her. This approach causes a big increase in response rates. One of the companies that specializes on such offer is Tumri.

  5. Target audience data gathering companies help to deliver ads in the most precise way and increase response rates. Internet users are constantly without even knowing leave a lot of information about themselves on the web. This information can be extracted from user generated content, social networks, search requests, visited sites. However, this information is very diverse, comes from many different sources and is inconsistent and cannot be used by advertisers right away. Data gathering companies process this information to allow easy access to it by advertisers. Examples: Teracent, Rocket Fuel.

Today’s advertising market is fully developed and is very competitive in the area of ad networks and exchanges. Main trend there is consolidation and merging of players. Because of that the only way to enter the market left is to deliver new innovative services which would help to increase accuracy of advertisement targeting, response and conversion rates.

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