Everyone should know their ABC’s. But when it comes to understanding the complex adtech landscape, it can be mind-boggling if you’re not up to speed on some of the basic terminology. That’s why we’ve prepared this ultimate guide to help you.
When you go to start an online advertising campaign, you will be using creatives to attract customers. A creative may include sound, video, animation as well as traditional text. The size and form, both of which are regulated by International Advertising Bureau (IAB) standards, as well as the type of action it promotes (clicking, downloading, filling-in information) influence the cost and the success of your campaign.
2. DMP – Data Management Platform
Information is king. But because the internet is so vast and the information about its users constantly changes depending on their latest actions, advertisers need a powerful tool to analyse and take advantage of this information.
A DMP is such a tool. It is designed to handle massive amounts of data based on 1st-, 2nd- and 3rd-party sources about pages that users view, content they interact with, purchases they make, as well as information about their interests and demographics. However, most importantly, a DMP has the ability to sort and classify this information to create distinct user profile lists (known as audiences or segments) and then integrate with other platforms (DSP and SSP) in order to help you reach the appropriate audience with your campaign. In today’s digital world, you shouldn’t be without a DMP.
3. DSP – Demand Side Platform
Now—how do you use the information in your DMP? Well, it needs to connect with a DSP. Why? Because a DSP is like your stockbroker when you go to buy ad space online. The cool thing is that a DSP allows you to connect with a wide range of global inventory sources (publishers who have ad space for sale), analyze what they have to offer you (based on the info from your DMP) and make a wise choice of where to spend your money.
4. SSP – Supply Side Platform
Of course, publishers also need a tool to efficiently manage and sell their inventory of ad space—which is where an SSP comes in. A supply-side platform connects publishers with multiple Ad Exchanges and allows them to connect with advertisers whose audience profiles fit their inventories. This helps streamline the media-selling process and guarantees publishers a greater yield on their ad-space inventory.
5. Ad Exchange
Everyone’s heard of the stock market right?—a place where brokers and traders buy and sell shares and commodities. Well, think of an ad exchange as a kind of stock market for the online ad industry. In essence, it is the place where DSP’s and SSP’s meet up to trade (see RTB below)–much like what happens on Wall Street. Of course, as in the real world, they need a common “language” in order to understand each other, which is why an RTB protocol (OpenRTB is one example) is used to facilitate the process.
6. RTB – Real-time Bidding
And when DSP’s and SSP’s get together, an amazing thing happens! A lightening quick bidding process takes place—something called Real-Time Bidding. When the SSP offers its inventory for sale through the ad exchange, the DSP decides whether or not to bid on it and how much to pay for the ad space available. Thanks to the information provided by the DMP, the DSP knows which ad space is optimal for each advertiser’s audience and can bid accordingly.
Every time a user visits a website, the publisher’s SSP offers the impression of the banner that will be displayed to the user for sale through the ad exchange. How long does this take? Hardly any time at all—the entire bidding process takes place in the blink of an eye (less than 300 milliseconds) and the creative is placed in the space that has been purchased instantaneously when the user loads a web page.
7. Ad Server
If an Ad Exchange is the Wall Street of AdTech, an Ad Server is the warehouse where the commodities (in this case, ads) are stored, inventoried and eventually distributed. After the real-time bidding process is complete, ads are distributed to be viewed by consumers. An ad server also gathers and reports all manner of data (number of impressions/clicks/conversions) on the advertising campaigns involving the ads in its possession.
8. CPM – Cost per Mille (thousand) Impressions
So your ad goes online—and you pay for it. But how much? One pricing model is based on the number of times your creative is loaded on page (known as an impression). Because the actual cost-per-single-impression is very, very small (sometimes as small as $.0015), the rate advertisers pay is figured in cost-per-thousands. (This is the only model in which a DSP is used to bid for ad inventory.)
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9. CPC – Cost Per Click
Clicking is serious. And when someone clicks on your ad, consciously, deliberately it indicates they are at least somewhat seriously interested in what you have to offer. (Unless, of course, a mobile user accidentally clicks on an ad because their fingers were too big!) CPC rates minimize the risk for advertisers since you only pay when someone actually clicks on your ad, but rates can go quite high—up to as much as $20 per click or more, especially when targeting high-demand audiences or popular phrases on Google.
10. CPCV – Cost per Completed View
If your ad includes a video or animation, you may pay a “Cost per Completed View” rate. But only if a user watches the sequence to the end. One area of concern with both CPM and CPCV models is ensuring that users actually viewed an ad (viewable impression). See the related post below for more information.
11. CPA – Cost per Action
This covers a range of other options depending on the content of your ad, including Cost per Download (CPD) and Cost per Install (CPI). The big advantage of the CPA model is that it completely eliminates the risk to the advertiser since he or she only pays for actual effects.
The CPA rate is often used in affiliate marketing, a model in which publishers (known as affiliates) take all the risk on themselves since they generate revenue based solely based on the rate at which users take an action on the advertiser’s website or ad. While it is riskier for publishers, this model can also provide greater revenue for those affiliates whose traffic best matches the advertiser’s target audience. It also encourages publishers to sell their inventory to a closely targeted audience which is likely to be attracted by the creatives they see.
12. CTR – Click-Through Rate
This is a very important number to know—how often do people do something with your ad compared to how often they see it. If you’ve got a compelling ad and a good product you should be able to convince your target audience to click on it and this will be reflected in the CTR. When the number goes up, you know you’re doing something right and your advertising campaign is well on its way to success.
13. Retargeting platforms
Because advertising campaigns have a much higher rate of success when targeted to relevant audiences, retargeting platforms are being used more and more to direct ad content at users who have previously visited the advertiser’s website.
14. Verification services
Once your ad campaign is underway, the work doesn’t stop. Part of the job continues as the creatives are placed and consumers begin to be exposed to them. Verification services use technology to track the websites the ads were placed, where the ads were viewed geographically as well as what percentage of the ads were actually viewable and what other ad content was displayed around the ad in question. All of this information can then be used to detect fraud, ensure brand safety and further optimize your campaign, bringing it closer to its most relevant audience and so ensure greater success.
Want to learn more about how AdTech can boost your online advertising campaign? Our development team has years of experience in building successful DSP and DMP solutions for a range of clients. Contact us now!
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