Ad exchanges can be useful to both buyers (advertisers and agencies) and sellers (online publishers) because of the efficiencies they provide.
A supply-side platform on the publisher side interfaces to an ad exchange, which in turn interfaces to a demand-side platform (DSP) on the advertiser side.
This system allows advertisers to put online advertising before a selected target audience. Often, real-time bidding (RTB) is used to complete DSP transactions.
Agencies and Publishers alike are using it to buy Display Ad inventory via RTB exchanges.
Fundamentally a DSP is an intermediary between an agency and an ad exchange, and it can also add data from data providers.
Any number of keywords can me managed via various paid search providers. Software transmits changes to bids to the relevant channels automatically via API. The RTBs role is to determine the relevant optimum bid and to continuously adapt it.
Additional functions they provide:
- Keyword expansion
- Search query analysis
- Advertising copy suggestions
- Controlling of landing page
- Trademark protection
- Analysis through login area
The emphasis is on tracking, not only to measure clicks before a conversion but also the funnel as well as other channels such as display and affiliates.
Most RTB tools are based on pay per click CPC.
Targets figures are:
- Net profit
- Cost per lead (new customer acquisition)
- Cost per order (purchase)
The fundamental issues comparing the of RTB vs Direct, is essentially the difference between targeting audiences vs websites.
The main differences are:
- Buying ad impressions in bulk VS auctioning each impression
- Direct is good for brands that want to secure premium inventory (pop-ups).
- Direct has guaranteed volume of impressions from publishers. (RTB has no guaranteed volume !)
- Direct has huge overheads in planning, negotiating, executing, and reporting.
- RTB is a primarily programmatic process driven by algorithms and data and not emails-phonecalls-contracts.
- RTB is real time.
- Direct buys are always priced in CPM.
- With RTB you have effective CPM: eCPM
With RTB you have much smaller «minimum budgets» needed to play, compared to Direct buys.