The programmatic advertising industry has grown exponentially since its inception and is now generating more revenue than ever. It has given publishers and advertisers unprecedented access to one another, accelerating ad space buying and selling through automation. In 2021, global programmatic ad spending reached a whopping $418.4 billion and is projected to go over $493 billion by the end of 2022.
While this may be good news, independent publishers often need help accessing sufficient demand from advertisers to fill their ad units at desired CPMs. Limited resources, programmatic ad ops expertise, and lack of scale make it difficult for such publishers to compete with larger publishers.
In the absence of direct relationships with advertisers, independent publishers typically use a specific ad network to sell their inventory, which means they have limited access to global advertisers. This can also make it harder for them to control ads and access video or native formats.
The programmatic ecosystem is composed of numerous participants driving the growth of publisher ad revenue. Publishers have heard of SSPs (supply-side platforms), ad exchanges, ad networks, and DSPs, but they might still need to learn about the role of each intermediary.
This guide aims to help independent publishers cut through the fog that is the programmatic advertising supply chain. We will explain the role of each participant as they enable the selling of ad inventory, provide demand, and generate ad revenue.
Understanding the Programmatic Demand Ecosystem
The programmatic ad ecosystem is made up of many different players. You have the buyers, who are looking to buy suitable inventory at the best price possible; you have the sellers, who are trying to sell their inventory as effectively as possible; and then you have all the intermediaries that help connect buyers and sellers through technology.
Some key players help publishers sell their ad inventories by bringing demand efficiently, profitably, and scalable to generate ad revenue. But what does the term ‘demand’ mean? Let’s have a quick overview.
Defining Demand for Publishers
The first thing to know about demand is that it’s different than a term publishers hear frequently. It is a term used by AdTech companies to describe the level of interest advertisers have in specific inventories. The more demand for a publisher’s ad inventory, the higher the price they can charge.
There are different ways in which publishers can connect with advertisers to sell their inventory. Below are two types of demand for publishers.
Direct demand, as the name suggests, involves direct ad sales to buyers via the publisher’s in-house team or an online system (known as an ad server) from advertisers who want to buy directly from publishers rather than through an agency or network.
Indirect demand, on the other hand, means ad sales to buyers via ad networks, SSPs, and exchanges that serve as intermediaries between publishers and advertisers who want to buy ad inventories on the publisher’s website.
In the past, publishers used to sell all their ad inventory directly to advertisers. However, this is no longer the case in today’s digital world. Advertisers have many options available to them, and they can buy ads directly from individual publishers or through an ad exchange or a supply-side platform.
To maximize revenue, independent publishers need both direct and indirect demand for their ad inventory; this is where networks, SSPs, and exchanges come in. So, what is the difference between these? Let’s take a deeper look at them.
Ad Networks
Ad networks are online advertising platforms that act as an intermediary between publishers and advertisers. They combine multiple publishers’ inventory and offer them to advertisers in one place. It helps advertisers to find more relevant audiences for their ads while helping publishers to sell their inventory in bulk and get more revenue from their ads.
Ad networks usually charge fees based on CPM or CPC model (cost per thousand impressions or cost per click). Advertisers bid on specific keywords or categories through an auction process and pay the price they have bid for those keywords. An example of such an ad network is Google’s AdSense, which allows publishers to monetize their websites with Google ads.
Ad networks can be categorized into four types:
1. Premium ad networks
Premium ad networks help publishers to monetize their websites, apps, and other digital properties. The main goal of such ad networks is to provide access to high-quality advertisers (e.g., high-end cars, watches, jewelry, and luxury goods sellers) and increase the CPMs for publishers.
However, there’s a catch, as premium ad networks primarily work with enterprise publishers (e.g., The New York Times, The Wall Street Journal, etc.).
Related Read: Best CPM Ad Networks for Publishers in 2022
2. Vertical ad networks
A vertical ad network works by distributing ads based on a publisher’s content offerings and targeting keywords that relate to the niche being addressed by the publisher.
In other words, they are also known as niche-oriented ad networks and are more targeted than general-purpose ad networks. They often offer better CPMs than other ad networks because they offer high-intent audiences to advertisers.
Related Read: Impact of High-intent Audiences on Publisher’s CPM
3. Specialized ad networks
Specialized ad networks help publishers monetize their inventory in a specific channel (e.g., mobile app, video, native, etc.). One such example is Google’s AdMob which focuses on mobile app advertising. Furthermore, some ad networks offer different pricing models to bring demand.
Ad networks that focus on one type of inventory may be a better option for some. Still, these networks can be helpful if a publisher is looking to grow a specific channel or monetize an existing audience.
Related Read: Best Video Ad Networks for Publishers in 2022
4. Affiliate and performance ad networks
In an affiliate network, a publisher earns a commission for each sale from a site referral. For example, they get paid if they have links to Amazon products on their site and someone buys something through those links.
In a performance network, the publisher is paid when a user clicks on an ad or completes a conversion action. Such ad networks work on a cost-per-click (CPC) or cost-per-acquisition (CPA) model.
Publishers must work with multiple ad networks to maximize their CPMs and revenue. Unfortunately, since there are different ad networks, each with its advantages and disadvantages, publishers must spend a lot of time managing them.
This is where SSPs and exchanges come in. They provide an all-in-one platform allowing publishers to monetize their ad inventory and connect with advertisers.
Supply-side Platforms (SSPs)
Supply-side platforms (SSPs) are ad technology platforms that offer publishers a way to sell their inventory across multiple ad exchanges. SSPs serve as an intermediary between publishers and advertisers. They help publishers access more buyers across several different sources, including programmatic exchanges, direct-sold campaigns, and private marketplaces, enabling them to receive more competitive bids for their inventory.
The benefits of working with SSPs can be broken down into five main categories:
1. Increased yield: Using an SSP enables publishers to sell more inventory by increasing their coverage and improving fill rates.
2. Improved reporting and monitoring capabilities: SSPs provide detailed insights and data about monetizing web traffic, enabling publishers to decide where to invest their time and money.
3. Ad format diversification: Publishers who use an SSP can take advantage of different types of demand (e.g., video, native, etc.) available, helping them spread their reach over a more comprehensive number of buyers. This can reduce reliance on any single source.
4. More control over pricing: If you’re using an ad network, your ad prices could be higher or lower than industry standards, depending on various factors (e.g., ad placements, type of ad formats, etc.). With an SSP, you have more control over ad inventory prices which helps to improve ad fill rates.
5. Better targeting: Using an SSP helps publishers refine their target audiences by providing access to dozens of different data sets — including audience segmentation, location targeting, and more — that advertisers use when choosing where they want their ads placed online. An SSP helps match these data sets with the specific audiences across publisher sites that advertisers want to reach so that only their desired audience sees their ads when they visit pages on a site.
Supply-side platforms were initially designed as a mechanism for publishers to reach more advertisers. The platforms evolved into full-fledged marketplaces, becoming ad exchanges where publishers could sell their ad inventory directly to DSPs instead of connecting to buyers via different ad exchanges. So, what are ad exchanges, and how are they different from SSPs? Read on to find the answers to these questions.
Related Read: Best SSPs for Publishers in 2022
Ad Exchanges
Ad exchanges are advertising platforms that enable publishers and advertisers to connect through an automated bidding system. They help publishers maximize their ad revenue by offering access to their inventory to more advertisers while helping advertisers reach their target audiences more efficiently. Ad exchanges generally work as given below.
Publishers make their inventory available to the exchange and set a price for each ad unit. The inventory is then made available to buyers who want to purchase it. Advertisers may bid on particular ad slots using real-time bidding (RTB) to make purchases in real-time as soon as impressions are available.
The exchange matches advertisers with publishers based on price, location, audience, or other criteria specified by the buyer. The publisher gets paid when the ad is served and viewed by their reader; the advertiser pays when they buy the impression from the exchange.
The main difference between ad exchanges and supply-side platforms (SSPs) is their operation. Some consider ad exchanges to be similar to ad networks, but there are several differences between them:
1. An ad exchange aggregates ad inventories from multiple networks, SSPs, and vendors.
2. They charge fees to participate in their marketplace and an additional fee for buying inventory.
3. They connect publishers and buyers through a single call or an interface that allows publishers to upload inventory and enable bidding rather than going directly to each vendor or SSP.
Here are some of the benefits of using ad exchanges:
1. Higher CPMs and fill rates: Ad exchanges can help publishers get higher CPMs by enabling them to sell unsold inventory at a higher price than what they would get if they sold it directly through an ad network. This is because many buyers compete for ad units via the exchange, which drives up CPMs, fill rates, and ad revenue.
2. Potential increase in revenue: Similarly, if publishers have more buyers bidding on their inventory, they will likely get more bids and therefore make more money from ad exchanges than direct and indirect sales.
3. Control over ad inventory pricing: Publishers decide how much they want to charge for each impression, which means they are not subject to ad networks dictating how much they pay for every impression served on their website.
Related Read: Best Ad Exchanges for Publishers in 2022
Maximizing Efficiency in the Programmatic Ecosystem
Publishers have the potential to benefit from programmatic advertising revenue. But in today’s digital age, it can be hard to attract quality, brand-safe advertisers, and publishers are left with selling their inventory at low CPMs just to get a sale. The good news is that modern technologies allow publishers to significantly improve revenue by filling this demand gap.
This scenario requires a new approach – an enhanced offering that not only provides publishers with the opportunity to capitalize on the hidden rules of the market but also how they can collaborate with advertisers to bring better demand – demand that commands higher CPMs and ultimately more revenue.
Related Read: How Header Bidding Brings More Demand and Higher CPMs
Talk to us, If you’d like to learn more about how Automatad can help you fill the right demand.
