In the early days of advertising, all an advertiser did was advertise its brand to a user. This could happen through billboards, posters, tv, radio, etc. Advertisers will always be interested in promoting their products and services to users. As the internet and digital media became more and more popular, traditional mediums of advertising such as TV and magazines were getting left behind. Digital media has become a powerhouse in reaching potential customers, and is still growing to this day. However, digital media has brought in an entire web of complexity with its arrival that is the ad tech ecosystem. In the ad tech ecosystem, there are many steps to for an advertiser to reach the end user. Along these steps, there can be a slew of bad actors, fee markups, and implementation errors. Below is an illustration of the steps an potential impression can take before it reaches the user.
Advertiser
These are the brands that are promoting their products and services. All they want to do is to get their message across to the user.
Ad Agency
Ad agencies manage the planning, buying, and placement of ads for brands. They usually charge a fee for this service, whether it be a percentage fee or a fixed amount. Sometimes ad agencies will outsource the creative creation to a creative agency, whereas sometimes this will be done in house.
Data Management Platform (DMP)
DMPs are used to house both first and third party data in an anonymous fashion. Agencies/DSPs tap into DMPs in order to make powerful data driven decisions when it comes to planning and buying ad inventory.
Trade Desk
Larger agencies will usually have a trade desk. Trade desks are the digital trading arms of these agencies, and they specialize in both buying digital media inventory and tracking the performance of bought inventory.
Demand Side Platform (DSP)
A real time buying and bidding engine that makes calculated bids and buys on behalf of the advertiser/agency. Make decisions such as how much to bid, when to bid, and what users to target.
Ad Servers
Ad servers store the ad creatives and will serve the requested ad creative in the requested publisher slot at the requested time. Ad servers plug into DSPs and sometimes ad networks.
Ad Exchange
Ad exchanges can be considered as large boiling pots of inventory and buyers, where buyers and sellers can conduct split second decisions on buying and selling inventory.
Supply Side Platform (SSP)
The DSP equivalent for publishers. SSPs aggregate publisher inventory and sell it to the highest bidders in order to maximize revenue for publishers.
Ad Networks
Ad networks aggregate unsold inventory from publishers and typically resell it to SSPs or in ad exchanges. Ad networks are slowly falling out of favor as they generally sell the same inventory at a markup.
Publishers
Publishers are the owners of ad space, the content creators. Any website, blog, or area of the web which generates visitors can be considered a publisher. They have advertising space on their websites, and they want to cash in by selling ad space to advertisers.
Although this is a traditional path from advertiser to publisher, there can be many others. The only constant is that the path will always start with the advertiser and end with the publisher. Publishers can sell direct to advertisers/agencies, advertisers can utilize DSPs directly without the help of an agency, and advertisers can even go straight to an ad exchange.
Because the industry is so fragmented and there are so many layers, only around 40% of the advertiser ad spend actually goes to the publisher. Each layer is taking their own share of the sale, and the publisher is left with less than half of what was intended for them.
In a fragmented industry, it’s important to understand what each layer of ad tech does and how they interact with one another.
Sources
- https://www.martechadvisor.com/articles/ads/the-beginners-guide-to-the-programmatic-adtech-ecosystem-explained-in-an-interactive-graphic/#
- https://www.spotx.tv/resources/blog/spotxer/unpacking-the-ad-tech-ecosystem-dsps-ssps-ad-servers-and-more/
- https://medium.com/metax-publication/the-ad-tech-landscape-today-existing-problems-as-we-see-them-b6f4054eba2c
- https://marketingland.com/demystifying-display-advertising-landscape-178291
- https://www.emarketer.com/content/five-charts-explaining-the-ad-tech-tax
I have a lot of plants and fish and a pet lizard and Venus flytraps. I have a whole ecosystem in my room, like a running waterfall and different lights and sensors set on digital timers.
— Chris Pratt
Simply Ad Tech 