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The Display Advertising Ecosystem:

The More You Know,The More Youll GrowLearn how to navigate the complex landscape o online display advertising and

choose the right approach to meet your marketing objectives.

March 2010


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Table o Contents

Abstract 3

Playing the Display Field 3

An Advertisers Basic Choices 4

What Do Advertising Agencies Provide? 4

How Can I Work Directly With Publishers? 5

How Do Ad Networks Work? 6

Whats an Ad Exchange? 7

How Do Ad Technology Platorms Fit In? 8

An Advertisers Checklist 11

Start Display Today 12


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Abstract

Display advertising is well into its second decade o existenceand in that time, it has become much more eective

and accessible. Yet many marketers have still not successully integrated it into their marketing programs. Why? One

reason is that the display advertising ecosystem has become incredibly complex, and many advertisers just dont

know where to start.

This white paper will expand your knowledge o the display advertising ecosystemand ensure a better return on

advertising spend (ROAS). Armed with this inormation, you can decide how to build a new program or improve an

existing one.

Advertisers have more choices than ever when it comes to placing display ads. They can hire an agency,

use a publishers services directly, tap into an ad network or ad exchange, and more. But the choices can be

overwhelmingand that conusion can lead to lost opportunities, budget, and time. Mike Cassidy, president o ad

network Undertone Networks recently said, The lines are completely blurring between client, publisher, supplier,

and network. I Clearly, there has never been a better time to understand the display advertising ecosystem and to

learn which aspects can best deliver on your objectives.

This paper will give advertisers a better understanding o best practices or creating and placing ads, including a

discussion o the role and inner workings o networks, exchanges, technology platorms, publishers, and agencies.

The paper will explain how each oering and provider works, its pitalls and benets, and some best-use case

scenarios.

Ater reading this paper, advertisers will be more condent in choosing the right display advertising approach to

meet their objectives.

Playing the Display Field

Knowing which elements o the display advertising ecosystem to leverage isnt simple. Advertisers with very large

budgets can tap into the expertise o large, sophisticated digital agencies like Digitas, Mindshare, PhD or Universal

McCann Interactive (just to name a ew o the leaders). Even with this expert help, the choices are many and the

decisions complex. For advertisers who arent large enough to aord these experienced proessionals, nding the

right solution can end up being a ull time job. Because there are usually several applicable options or a given

company, marketers should know how to play the eld to get the best return on advertising spend.

Since no two campaigns are the same, advertisers may need to tap several o these options over the course o a

year or even simultaneously. For each display ad channel, there are dozens o possible vendors. Many analysts and

industry experts have created market maps to capture some o the categories and players in the market, such as in

Figure 1 below, adapted rom Gridley and Company LLC.

The technology progression around display over the last teen years has been swit. Players in the market have

worked hard to make running display campaigns more eective and creating display ads easier and aster. A

key part o this technology evolution has been the introduction o more streamlined, simpler to use, and yet still

sophisticated advertising technology platorms. With the lower costs and reduced management requirements o

these platorms, smaller businesses are now empowered to tap into display advertising or the rst time, while large

businesses have been able to make their campaigns more ecient and eective. We will discuss these in more detail

below.

Rich Karpinski o Advertising Age recently summarized the changing display ad ecosystem: Large publishers

are looking more like ad networks. Publisher-side brokers are moving rom being yield optimizers to becoming

exchanges in their own right. And ad networksat least those o the 400 or so likely to surviveare ocused on

targeting and brand saety. Ad exchanges are moving rom basic bid-matching to real-time allocation. Agencies are

making perhaps the boldest move, aggregating impressions and data or clientsand themselves. II

The benets o display have been proven, making it an essential part o a marketers toolkit . And the category

is poised or its next phase o major growth. Analyst Imran Khan o J.P. Morgan recently predicted that display

spending will surge by 10.5 percent this year ater a 5 percent dip last year, with display CPMs rising by 5 percent. Iii


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Should I use an advertising agency or not?

Should I buy directly from media publishers and/or through an intermediary to reach my

intended audience?

If I want to buy through an intermediary, should I look to ad networks or ad exchanges?

Should I pay for technology solutions or platforms to help me or my agency manage my

campaigns?

With display here to stay, its time or marketers to polish their approach and execute the ull potential o their

programs using todays best solutions.

An Advertisers Basic Choices

Albert Einstein once said, Everything should be made as simple as possible, but not simpler. In the spirit o this

sage advice, here is a short list o an advertisers basic choices or executing display advertising:

In the sections that ollow, we oer an overview o each major component o the ecosystem as well as some key

elements to consider when answering these questions or your business

What Do Advertising Agencies Provide?

Agencies can provide companies with a broad spectrum o advertising services, rom creative to media, strategy to

tactical execution, across both oine and online media channels.

Some ad agencies specialize in digital specically (sometimes called interactive agencies), and provide clients with

search, display, social media, e-mail marketing, and other online marketing services. Many o these are now part o

larger, global agencies that also have very broad and deep expertise in oine media and creative services.

One o the key benets o the large, diversied agencies is that they can oer so many dierent marketing services

under one roo, streamlining costs and management, while ensuring a common, coordinated strategic underpinning

to both media and creative executions. In the digital space specically, large agencies can oer expertise on display

advertising across the entire ecosystem, employing dierent tools and technologies that t their clients needs.

Figure 1

The display

advertising

ecosystem is

increasingly complex.

What is the best

approach or

diferent types and

sizes o advertisers?

(adapted rom

Gridley and Company,

LLC)


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Historically, display advertising has been the domain o very large advertisers and the largest, most sophisticated

digital agencies who serve them. According to Nielsons AdRelevance division, over 85% o the total US spending on

display advertising in 2007 came rom the top 1000 largest display advertisers, and the vast majority o the largest

advertisers use the top digital agencies. This is not surprising given the historic complexity o managing display. For

smaller advertisers, the upront and xed costs o managing display have simply been too great to enter the market.

However, with the advent o more streamlined ad technology platorms (see below), smaller, more regionally ocused

traditional agencies can now oer online display advertising. These technologies help them streamline the creative

development, placement, and management process or clients with smaller budgets. Smaller advertisers can nowchoose to either manage their display advertising in house, or look to a digitally savvy agency whose core business is

Are my budgets large enough to ensure Im an attractive client and will thus get

great service rom one o the top-tier digital agencies?

Does my agency provide both media and creative services, and if so, what are the fees

or each?

Is my agency an expert in digital media and specically online display?

Does my agency utilize best of breed technologies to cost eectively manage

the logistics o my campaign, and also measure and drive eective ROI perormance?

When deciding whether to work with an agency, advertisers should consider the

ollowing:

How Can I Work Directly With Publishers?

Simply put, publishers are Web sites that oer advertising space to advertisers. The sale o ad space can be done

directly through an in-house sales orce or a sel-service technology, or indirectly via ad networks or ad exchanges.

Most large publishers have experienced sales and service teams or large advertisers, to help ensure that campaigns

are managed eectively. In some cases, they can also oer creative development services. They oten use either

homegrown or commercially available ad serving/inventory management technology to help make this eort moreecient. However, because these technologies and teams can be expensive to employ, they typically require advertisers

to spend monthly minimums in the many thousands or tens o thousands to get this ull service.

Some o the most orward-thinking large publishers like Yahoo!, ESPN.com, Google, Facebook, and Pandora have

introduced new technology platorms that enable smaller advertisers to eectively run campaigns on both their

own sites and their aliated partner sites (e.g., the Yahoo! Network). Whether homegrown or licensed rom an ad

technology platorm company like AdReady, these systems enable many more advertisers to get exposure to their

valuable audiences.

In general, smaller publishers cannot aord to invest in in-house sales and service teams, so they outsource this sales

function by having ad networks and/or ad exchanges sell their inventory. We discuss this in more detail below, but the

major implication o this or advertisers is that in order to reach a very broad and diverse audience (or in some cases a

very specic, niche audience that spends time on smaller Web sites), going direct to publishers may not be an eective

option.

Lastly, whether small or large, publishers have two basic ways in which they sell their inventorywith and without

delivery guarantees. In general, inventory with delivery guarantees tends to be at higher price points and has larger

minimums, while inventory without delivery guarantees tends to be sold on a perormance basis (either cost per click or

cost per action).


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How Do Ad Networks Work?

An ad network aggregates inventory across multiple publishers, large and small, and sells it to advertisers. To place

display ads, an advertiser typically needs to purchase a run o network (RON) package or a run o category package

and can typically apply some dierent targeting mechanisms to urther rene their buy. These are broad purchases o

ad space across networks or categories, respectively. The network then serves or delivers banners rom its ad server.

Ad networks get a lot o their ad space rom publishers who sell their remaining, or remnant, inventory in bulk.

Some smaller publishers sell most or all o their inventory through these larger networks. This mix o inventory gives

advertisers many options or targeting ads to specic audiences.

Are my budgets large enough to meet the minimum spend requirements for the

publishers that provide content to the audiences who I want to reachwhether

via guaranteed inventory buys or not?

Do I already have ad creative? Do I have enough ad creative to try dierent oers

and messages, to test which ones work the best? I not, will my target publisher

build these or me?

Can my target publisher reach the breadth and/or depth of audience I need them to

on their own? Or do I need many dierent publishers to reach my objectives? I the

latter, how can I manage the complexity o working with multiple inventory providers

at once? (see Platorms below)

Can my target publisher oer the sophistication that I need in terms of various

targeting options (e.g., geographic, demographic, re-targeting, behavioral, etc.)

and optimization capabilities to ensure that my best perorming creative and media

placements get the bulk o my spending?

How will I know if my ads are working? Does my target publisher provide ROIreporting that will accurately refect perormance against my advertising objectives?

When deciding whether to go directly to publishers, advertisers should consider the

ollowing:

Representative Networks: These networks provide advertisers will ull details on where

their ads will be placed. Advertisers like this because there are no surprises as to where

their ads may appear. Because this level o detail is shared, representative networks can

be expensive, suitable mostly to companies with large budgets.

Blind Networks: Advertisers working with more restricted budgets oten turn to blind

networks. In exchange or good prices, advertisers must relinquish control over where

their ads will run. The aordable prices are made possible through large bulk buys o

a publishers remnant inventory. Many o these networks oer targeting technologies as

described next.

Targeted Networks: Targeted ad networks take advantage o targeting technologies like

behavioral or contextual targeting. Advertisers like these types o networks because they

utilize multiple anonymous data sets to enhance the value o the ad space they purchase.

Networks can be broken down into three main types:


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Ad networks provide advertisers with a mix o pricing options. These include CPM, CPC, and CPA. CPM reers to cost

per thousand impressions, CPC reers to pay-per-click, and CPA reers to cost-per-action. In a CPA pricing model, the

advertiser only pays or the action they want. This might be by click, impression, sale, coupon download, lead-gen orm

submission, etc.

Many ad networks are known to have high ad spend minimums, similar to publishers (described above), so i you

dont have $10K to $15K to spend per month, they arent an option. Also similar to publishers, most ad networks dont

typically provide creative services, so companies must develop their ads elsewhere. This can cost $3K to $10K+ or each

ad series created.

Lastly, the ad network business model essentially sources inventory at a low price, and sells it at as high a price

as possible. Theres nothing wrong with this quintessentially capitalistic model. However, it highlights the need or

advertisers to ensure that they have an independent mechanism in place that enables solid management o ROI, so that

the relationship is a win-win or all parties.

There are hundreds o ad networks in the display ecosystem today, many o which have high quality audiences

and valuable, sophisticated targeting technologies. However, there are many others that have little o eitherso an

advertiser must careully research providers, and also have solid technology in place to eectively measure and manage

perormance.

Are my budgets large enough to meet minimum spend requirements?

Do I already have ad creative? Do I have enough ad creative to try dierent oers and

messages, to test which ones work the best? I not, will my target ad network build these

or me?

Does my target ad network oer the sophistication that I need in terms of

various optimization capabilities to ensure that my best-perorming creative and media

placements get the bulk o my spending?

How will I know if my ads are working? Does my target ad network provide ROI reporting

that will accurately refect perormance against my advertising objectives?

When deciding to buy rom ad networks, advertisers should consider the ollowing:

Ad exchanges are technology platorms that connect advertisers with publishers in an auction environment. A

successor to ad networks, ad exchanges require buyers to bid against each other or ad inventory and generally have

more sophisticated technology in place to match buyers and sellers at market clearing prices.

Exchanges are becoming increasingly popular because they can be a good source o cost-eective inventory, i

managed well. Similar to ad networks, many oer targeting options and dierent pricing models. And, because o their

bidded pricing model and more automated systems, many have lower spending minimums than publishers or ad

networks.

Some o their drawbacks are also similar to those o publishers and networks. For example, most require that you have

your own ad creative already built and ready to run. They also vary in terms o their ROI reporting. Though some have

nice reporting technology, it is critical to realize that they can only report on what you run through their systemso i

you have other publishers, networks, or exchanges on your media plan, then youll need some mechanism to pull all o

this ROI data together, to cross-compare and understand your best advertising investments holistically.

One nal actor to be aware o is the business model o each ad exchange provider. Some maintain a neutral position

in the market, making their revenue by keeping a small ee or each transaction that they enable between buyer and

seller. As opposed to the ad network model, this approach allows an advertiser to know how much o their budget is

Whats an Ad Exchange?


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The ability to centrally manage buying and tracking activities across all sources of media

(publishers, networks, and exchanges)

Apples-to-apples measurement of ad performance across all sources of media

Analytics and optimization capabilities to understand and take action on moving more

budget to the sites and media placements that perorm the best

In general, the key benets o media-ocused ad technology platorms are:

The ability to create new display banners very inexpensively, so advertisers can test multiple

oers, messages, and creative concepts in order to nd those that perorm best

Apples-to-apples measurement of ad performance across all dierent creative treatments

Analytics and optimization capabilities to understand and take action on moving more

budget to the creative assets that perorm the best

In general, the key benets o creative-ocused ad technology platorms are:

Ad technology platorms come in all shapes and sizes, but generally unction to streamline an advertisers ability to

create, place, and manage display ads. Platorms can be advertiser-acing or work behind the scenes at a publisher site

or advertising agency.

Some specialize in the creative side o the equation, providing mechanisms to iterate and optimize banner creative.

Some specialize in the media side o the equation, providing an interace to eciently buy media across many dierent

publishers, networks, and/or exchanges. And a few, like AdReady, provide both creative and media solutions to

enable the end-to-end management o campaigns in one place. These ully eatured platorms like AdReady now help

marketers o all sizes quickly and eectively launch and manage display campaigns.

How Do Ad Technology Platorms Fit In?

going directly to the intermediary. Other providers are less clear about whether they make their money rom arbitrage

or transaction ees. Either model can be acceptable, but the buyer should know which it is or each provider, so that it

is clear what drives their motivations.

O course, ad platorms that address both

creative and media aspects o display

advertising deliver both sets o benets

above.

Highlights o the AdReady platorm

include:

Scalable access to top media

sourcesFrom Yahoo! to Google, Facebook, ESPN,

and countless other top publishers,

networks and exchanges, advertisers have

streamlined access to valuable audiences

through a robust and easy-to-use interace.Figure 2

Scalable access to top media

sources


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Nearly zero-cost creative development and iteration

Through a library o pre-created and customizable templates, as well as sotware that automatically re-sizes ads into the

top seven standard IAB sizes (both .sw and .gi), advertisers can create and customize ads with colors, logos, images,

and text in minutes. This library o more than 800 display ad templates also has historic perormance data on each

template. Whether advertisers use these templates or bring their own creative into the platorm, creative development

costs can go rom thousands o dollars per ad, across multiple sizes, down to literally minutes o non-technical time at no

cost. (See Fig. 4)

Figure 3

Screenshot o AdReadys media buying platorm.


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Centralized reporting and auto-optimization to ensure efective ROI

The reporting system enables quick and easy access to impressions, clicks, conversion, and cost data across all media

sources and creative assets running through the platorm. In addition, auto-optimization algorithms help advertisers

make improvements to their ads in real-time. (See Fig. 5)

Figure 4

Screenshot o AdReadys creative library and customization tools.


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Figure 5

Screenshot o AdReadys Recommendation Window

Do I want to advertise on more than just one source of media?

Do I want to ensure accurate, apples-to-apples reporting of my full campaign performance?

Do I expect that Ill want to optimize my media placements and ad creatives to drive

continual perormance improvements?

Do I already have ad creative? Do I have enough ad creative to try dierent oers and

messages, to test which ones work the best?

When deciding to use an advertising technology platorm, advertisers should consider the

ollowing:


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My goals are: (brand / awareness vs. performance / DR)

My yearly/quarterly budget is:

My specic target audience is:

I need X type of reporting to measure success:

I have X current display ads already created:

I have had success placing display ads through the following providers (and why):

I faced challenges when placing display ads through the following providers (and why):

New to display:

How much of my overall display budget do I spend on testing / set up costs?

Can this be optimized?

Is my ROAS similar or better than my competition?

Am I delivering the right messages to the right target audiences?

How can I have a more targeted ( personable) conversation with my prospective clients?

Experienced with display:

An Advertisers Checklist

As detailed above, there are numerous possibilities or running display ads rom the various providers in the ecosystem.

Beore engaging any o these players, advertisers should ll out the ollowing checklists:

Filling out this checklist will enable an advertiser to better match their needs against the current oerings provided

by networks, exchanges, platorms, publishers, and agencies. (For a ree consultation, e-mail your answers to sales@

adready.com.)


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Start Display Today

As described throughout this white paper, the display advertising ecosystem has exploded with growth and

opportunitybut it has also gotten increasingly complex.

While this rapidly changing landscape has let many advertisers eeling overwhelmed, it has also paved the way or a

greater number o advertisers to begin running display ads. The number o providers has ueled competitive innovation,

resulting in better, aster, and more results-driven display services. Display has essentially become an advertisers

market, where providers are continually upping their game to win advertisers business.

Ad platorms are rising in popularity because they are simpliying the best oerings rom all o the providers in the

ecosystem into a single, easy to manage platorm. Want the reach o ad networks? Platorms can do that. Like the

fexibility o buys in an ad exchange? Platorms can do that too. Want to ocus your ad spend on tier one publisher

networks? That comes standard with platorms. Want to do all three? Platorms will manage all o these eorts in a

single ramework.

To nd out i an advertising platorm is the right t or you, visit AdReady.com/premium. For a list o agencies and

publishers oering AdReadys powerul display technology, contact [email protected] .

To learn more about launching display ads in conjunction with your search campaign, go to www.adready.com.

Copyright 2010 AdReady. All rights reserved. V.1, 01/10

AdReady is a registered trademark o AdReady, Inc., registered in the U.S. All product and company names mentioned herein may be trademarks o theirrespective owners in the U.S. and other countries.

I. Advertising Age, What to Expect From the Next Gen o Digital Display. April 20, 2009. Rich Karpinski, http://adage.com/

adnetworkexchangeguide09/article?article_id=135998

II.Karpinski.

III. Mediaweek, Analyst: Online Display Ads to Surge. January 4, 2010. Mike Shields, http://www.mediaweek.com/mw/content_display/news/

digital-downloads/metrics/e3ia2c230303d144bc6bd9215ac3de5d3 IV. MediaPost, Study Confrms Display Ads, Paid Search Work in Concert.

May 11, 2009. Laurie Sullivan, (http://www.mediapost.com/publications/?a=Articles.showArticle&art_aid=105740)

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