8 Things I Didn’t Know About Online Display Advertising

Not long ago, I took an opportunity beyond my PPC background to explore the mystical display advertising industry.  While continuing to manage PPC campaigns, I ventured into display with little knowledge of what I was getting into.  What I found was a fragmented, complex industry with endless and exciting advertising opportunities.  Here are a few things I now know about the online display industry:


1. Multiple ways to run online display advertising

Search Engine Marketing

In search, Google and Bing are the major avenues for PPC advertising.  Both of their advertising programs have a display network that is easily tapped into through their platform.

Direct Buy from Publisher

In this case, the advertiser contacts the publisher directly in order to purchase advertising space on their sites. During this process, a CPM (cost per thousand impressions) rate is negotiated and you’re guaranteed a number of delivered impressions.

Ad Exchanges/Networks/DSPs

This is where it gets exciting.  For a broader reach, ad exchanges, networks and DSPs have aggregated sites into their own networks or groups of networks.  For example, from one network, an advertiser could have access to a huge portion of the internet population.  The management of these types of buys can vary quite a bit. A managed network buy is when the campaign is managed by the network’s account managers. This can also be set up with a DSP. Another is managing campaigns through self-service platforms, similar to using a UI like AdWords.

2. Campaign Minimums

There’s virtually no barrier to entry when advertising on Google or Bing, so the idea of minimums as high as $25K per month, seemed a bit steep.  These monthly spend minimums vary from platform to platform. They also vary for each publisher if you’re going that route. There are several platforms and publishers that do not require minimums but may not offer as many options for targeting and will not be premium inventory.

3. More acronyms. DMP, DSP, RTB, RON…

As if there aren’t enough acronyms in PPC, I learned a few more.

DMP: Data Management Platform (data collectors and aggregators)

DSP: Demand Side Platform (platform for advertisers to plug into multiple ad networks)

RTB: Real Time Bidding (auction environment)

RON: Run of Network (without targeting, ads can show across an entire network or multiple networks)

4. It’s an auction! As a search marketer, that’s great news.

With a background in PPC, the auction makes sense. Real time bidding is relatively new for display.  Just like PPC the auction takes place in a fraction of a second. The CPM bids from multiple advertisers are communicated through various ad exchanges, networks or DSPs to the publisher.  The ad with the winning bid takes the ad space on the page.

5. The ads need a server?

Ok, this is way different from PPC.  An ad server is required to essentially “host” the ads (banners, videos, etc.) before they are sent to the site they will appear on.  Most DSPs, Exchanges and Networks have their own internal ad server.  When running on multiple networks, a centralized ad server can be used to send the ads to each site when they are “called.” An ad server is generally not required for smaller scale direct to publisher buys.

6. The difference between 1st party data and 3rd party data

1st party data

Data collected by the advertiser, owned by the advertiser (internal data)

3rd party data

Data collected by data exchanges/aggregators that can be sold to advertisers to use as demographic/psychographic data.

More than just these definitions, I’ve also learned that terminology might vary when you’re talking to different networks, but they could mean the same thing! It seems that this tactic is used to differentiate one network from another, but in turn contributes to the perceived fragmentation of the industry.

7. Complexity of a View Conversion

In search, a user clicks on an ad, lands on a page and either bounces or converts. In display, a user can do that, too. But what if they see the ad, then later navigate to the website and convert? That’s a view conversion, but does it count? How long after they saw the ad did they convert? Did they really see the ad or was it below the fold? I think you see where this is going. It begins a new set of questions that don’t really apply to PPC.

During the conversion tracking set up, the advertiser can set parameters for how to attribute conversions.  A standard practice is to set a 30 day conversion window for a click conversion and a 7 day window for a view conversion.  It’s important to include view conversions in your reporting because you’ll find that click conversions are not as common as they are in search.

8. Secret Sauce: The Algorithm.

There’s no shortage of inventory in display advertising, which makes finding the right inventory challenging. I found that many of the DSPs have a proprietary algorithm to help find the best inventory and users based on your parameters.

For example, I might use a cost per acquisition goal for optimizing. The algorithm takes into account countless factors and actually adjusts my CPM bids up or down for each placement based on how likely that user would be to convert at my specified CPA.  Some call this predictive modeling or predictive RON.  The strength of a DSP or network’s algorithm can set them apart from others.

In cases where RTB is not used (direct publisher buys and some managed network buys), optimization is achieved different ways.  Based on initial performance, budgets can  be shifted to run a certain ad size or a particular demographic segment more frequently to capitalize on higher quality inventory to the advertiser.

These 8 things only scratch the surface of the online display advertising industry.  Hopefully this can better equip you to break into the huge opportunities that lie in this rapidly evolving advertising channel.

What was surprising to you about the display industry?

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