The Job of Ad Ops

From Visually.

Programmatic Post-Bid

What is Post-Bid?

Post-bid allows a publisher’s demand sources to compete in one auction based on price after the ad server has declined to choose a direct-sold or exchange-based line item.

Post-bid is the configuration scenario where a publisher loads and runs Prebid.js in a winning line item’s creative. In a post-bid setup, demand sources compete after the ad server has chosen the post-bid line item. Compare this to:

• header bidding, where demand sources compete before the ad server has seen the impression.
• a mediation solution, where post-bid demand sources don’t run in a daisy chain; they all compete in one single line item based on price.

This diagram summarizes the post-bid scenario:

Steps:

1. The webpage sends an impression to the ad server.
2. The ad server chooses a winning line item among ‘class 1’ (direct-sold ads), exchanges, and the post-bid line items. In the case shown here, the post-bid line item wins.
3. The post-bid line item’s creative is served to the page. The creative runs an auction for the bidders using prebid.js, which then displays the highest price creative in that creative’s ad slot.

Why Post-Bid?

The main reasons we have seen publishers opt for post-bid (instead of header bidding) are:

1. A post-bid setup does not need engineering resources.

The post-bid creative is just a 3rd party tag. Once it’s served to the page, prebid.js runs an auction across all demand sources. The only technical work is to insert the tag Ids into the 3rd party tag’s JSON config for the demand sources. It’s trivial work.

2. A post-bid setup adds no latency to standard ad delivery.

Because post-bid is just a 3rd party tag, the ad server receives the impressions as soon as the page loads. The post-bid setup does not affect other ad spend. Post-bid actually reduces latency compared to a daisy chain mediation setup, because in post-bid all demand sources are requested concurrently, instead of in a waterfall.

Additionally, post-bid does not need as many line items, so initial setup is easier than header bidding.

Disadvantages of Post-Bid

We’ve listed the advantages of post-bid over header bidding in the previous section. The disadvantages include:

1. No dynamic allocation across all demand sources.

The bid price on the post-bid line item is static (based on historical price). It thus has the typical problems of a 3rd party tag line item. Due to this downside, the post-bid setup cannot make header bidding demand partners compete on an even footing with other types of demand.

2. Prebid.js is loaded for each ad unit chosen for Post-Bid.

If there are multiple ad units on a page that fall into the post-bid scenario, each creative loads and runs Prebid.js separately. This can cause more work for the browser (or device) as it loads the code multiple times and runs separate auctions. However, since this activity takes place after the ad calls, content is generally already loaded.

3. Reporting is harder.

In the ad server’s post-bid line item report, you’d only get an aggregated report of all demand sources. You may need to rely on a 3rd party reporting service to record which demand partner wins how much inventory.

Passback Ad Tag

How do I setup a passback ad tag?



When you serve multiple ads from different ad servers and ad networks, some vendors might not have any available or suitable ads to display. It could be that they do not have any premium ads or have any ads that meet your ad targeting criteria. In this case, there are several choices:
Display a public service ad (i.e. a PSA ad)
Display a vendor's default ad or a place-holder ad
Display a passback ad tag, or a fallback or backup ad tag, of your choice

Most likely, you want the third option because it gives you more control and the best chance of capturing any residual ad revenue.

In our ad server, you can create an additional zone and link appropriate ads to this new zone. You then send this zone's ad tag to the ad network to be used as the passback, or backup, ad tag. This ad tag will be called when there is no available ad to serve from this vendor or when an impression cannot be filled. It is a very flexible setup. You can have a chain of many vendors with different priorities. This allows you to utilize multiple ad networks together and capture the highest revenue from each one.

Example: One Ad Partner

You have an ad partner that can only fill 80% of the impressions you sent to them. 20% of the time, you want to display ads from other ad networks and from your own advertisers. Here is how to create the backup zone and get its ad tag:
Create a zone (eg: Backup-20)
Create one or more ads
Link the ad(s) to the zone above
Give the zone's ad tag to the ad partner so they can put it as a backup ad tag in their adserver
This zone's ad tag will be called when your ad partner cannot fill the impression
You can manage, change, switch ads from within your account in our ad server without the need to update the ad tag

Example: Multiple Ad Partners
You have 3 ad tags from ad networks: A, B, and C. Ad network A is a premium network but it has limited impressions and also certain country restrictions. You have a zone ABC that rotates A, B and C with ad A having the highest serving priority. When ad network A does not have any premium ads to display, it gives you an option to enter an ad tag for default/fallback/passback.

In this case, you can setup a new zone BC and link ad B and ad C to this new zone. You then generate BC zone's serving code and paste this ad tag into ad network A as the passback ad tag. If A does not have an available ad, it will call the passback tag and display an ad from ad network B or C.
Fill Rate Tracking

You can track filled and unfilled/passback impressions to calculate the fill rate. To do this, you would generate the event tracking pixel URL for the ad/zone and place it into the suitable location within the third-party ad server or ad tag.

Depending on the ad exchange, ad network or ad server, its ad tag might support filled impression tracking by allowing you to enter a pixel URL into the third-party ad tag. This pixel URL will be called when an impression is filled and not passed back to another tier.

On the other hand, some other ad servers/exchanges provide a section where you can enter your a passback/default ad tag and here you can paste the passback/unfilled tracking pixel URL together with the secondary/passback zone's serving code in this area
Flexible Passback via a Redirect Zone

If you have multiple tiers of ad network tags and do not want to manually update the passback ad tag with all of your ad network accounts, you can use a redirect zone. Instructions to setup a redirect zone:
Create a new zone (eg: "Ad Network ABC Passback")
Set its secondary zone to be a Tier 2 zone
Do not link any ad to this zone (i.e. leave it empty)
Get the serving code for this zone and paste it into "Ad Network ABC" as the passback tag
When you need to change the tier order from "Tier 1 to Tier 2" to "Tier 1 to Tier 3", you would only need to update the secondary zone setting within AdSpeed for the zone "Ad Network ABC Passback" from "Tier 2" to "Tier 3". You do not have to update the passback tag within "Ad Network ABC".

How it works:
When "Ad Network ABC" does not have any available ad, it will call the passback tag
The passback tag calls this zone "Ad Network ABC Passback", which is empty
Therefore, it will look into the secondary zone for an ad there. This secondary zone could be a "Tier 2" or "Tier 3" zone, depending on your setting for this zone in AdSpeed.

What is a Header Bidder Wrapper and How Does it Work?

What is a header bidding wrapper?

A wrapper, also referred to as a container or a framework, is a technology used to manage all the header bidding partners a media owner wants to utilize. This technology organizes buyers and sets rules for the programmatic auction. This minimizes the added code and complexity introduced with each new header bidding partner. Header bidding wrappers are necessary for media owners wanting to maximize the number of demand sources competing for an impression opportunity. Using a wrapper ensures that all partners have their bid requests triggered at the same time.  Additionally, wrappers include a universal timeout setting to manage how long the browser waits for bidders to respond.

How does it work?

1. Page loads, player loads, the header bidding wrapper code loads with each header bidding partners’(HBPs) code and fires the opportunity to all HBPs’ servers.
2. HBPs respond with their respective bids.
3. The wrapper then takes those responses and mediates the results to DoubleClick for Publishers (DFP).
4. HBC code on page modifies the Master Video Tag (MVT) with Key Value Pairs (KVPs) that instruct DFP on which line item to trigger.
5. DFP sends the corresponding line item to the player, which plays the ad.

Different Deals versus public (RTB) auctions

Preferred deals offer the following advantages over regular RTB buying on public exchanges:

• Unique inventory: Preferred deals help buyers gain first-look access to unique inventory they wouldn't normally be able to buy in the open exchange.
  Buyers can also customize which inventory sources to purchase inventory from. The buyer can work closely with the publisher so that they can unlock specific sets of unique inventory (for example, more above the fold inventory). This point is dependent on the system controls and the publisher's ability and willingness to segment out their inventory.
• Improve yield for publishers: Preferred deals can help publishers capture incremental spends at higher rates.
• Holistic view of inventory: Buyers can gain a more holistic view of key publisher partnerships when managing them programmatically, and are able to analyze and compare the direct-based buys with the programmatic buys.

Additionally, private auctions allow publisher first-party data to be integrated with programmatic buying.

Preferred deals versus buying reserved inventory

Preferred deals offer the following advantages over buying served inventory:

• More flexibility: If a deal is not performing well, budgets can be re-allocated more quickly than with a direct or reserve buy. This makes it easier to make sure that spend is flowing towards top-performing inventory.
• Powerful targeting: Accessing the inventory programmatically provides more targeting controls, including: audience (third-party data integration), geo, dayparting, language, frequency and pacing controls.
• Efficiency gains: Going programmatic provides workflow efficiency gains. The nature of direct/reserved buys involves paperwork, and ongoing negotiations and budget adjustments. When buying programmatically, once a preferred deal is set up for an advertiser, subsequent campaigns can reuse the deal, assuming the terms of the deal remain the same. Marketplace streamlines and centralizes the back-and-forth negotiation between advertiser and publisher.

Header Bidding vs Waterfall: How the Two Revenue Optimisation Hacks Differ

What is a Waterfall?
Waterfall setup, quite simply, works like this: A ladder of networks and/or exchanges, arranged top to bottom in order of performance to the publisher – based on the networks’ past record in terms of yield (eCPM), fill rate, latency, and more.


The impression(s) is passed from network to network, from the top-down, until it is sold.


This process of redirecting an impression from one SSP/exchange/network to the next and so on until it is sold is called daisy chaining. Yes, waterfall and daisy-chaining are the same.





It’s a matter of prioritization. As you move down the waterfall, the CPM price floors decrease, but there’s also less access to the best inventory for advertisers to bid on. The process theoretically ensured that no inventory was left unsold and fetched a publisher the best price it could.


Theoretically.
So, What’s Wrong with the Waterfall?


First of all, the passback, which is what happens when no one wants the impression at the floor price painstakingly set up by the publisher.


It means that the impression, after making its way across all the demand sources in a waterfall, will be eventually returned to a fallback ad server – typically Google AdSense or Google AdX (for their high fill rates and usually acceptable yields), or run some in-house ads.





This volleying around means high latency (ad loading times). It also sets up the scene for the next big problem. Here’s an excerpt from Adexchanger’s sell sider column explaining the issue:


Publishers daisy-chain supply-side platforms (SSPs). They send an impression to their preferred SSP with a relatively high floor price, then if the impression doesn’t clear, they redirect it to a second SSP with a slightly lower floor price, and repeat the process until AdSense clears the impression at pennies. This (Waterfall) is essentially differentiating demand based entirely on the buyers being unaware that they could buy the same inventory cheaper. This is the ugliest secret in programmatic.


— Ari Paparo, CEO, Beeswax


Then there’s the question of maximizing yield. In a waterfall setup, the bidding for inventory stops when price floor is met. Let’s say that happened at exchange/network 3.


Now, if an advertiser were willing to pay a higher price but was bidding only through exchange/network 4 or 5 (but not 3), too bad. The inventory is sold to a higher priority (and lower yield) buyer.


There’s also a lot of tinkering required to set up the sequence in a way that minimizes latency and produces the best yield, continuously.
That’s Where Header Bidding Comes In


This sequencing of networks and/or exchanges goes away with header bidding. Quite simply, the inventory is up for sale — a “notification” goes out to multiple demand sources (SSPs, networks, or exchanges) simultaneously. Publisher’s ad server collects the bids.


The Demand Source that puts out the highest bid (after conducting a second price auction amongst its own buyers) wins, gets congratulated by publisher’s ad server, and sends the winning buyer’s creative across to be served on impressions bought.


This is also called advanced bidding or pre-bidding. The impression itself is not carried around, just the notification that it’s up for sale (as soon as a visitor loads a web page). The original wrapper tag is named prebid.js after the concept.


Here’s how it works:





Publisher gets to select how many demand sources to plug in (again, keeping fill rate, yield, and latency in mind). The process requires a JavaScript wrapper to work that goes into a webpage’s header tag.


Now, a lot of vendors have come up with their own bidders and adaptors, but here are the five most popular ones, along with number of websites that use them:





When everyone bids at the same time, the value of inventory increases proportionately with the number of demand partners. Publishers typically see 20-50% uplift in yields thanks to header bidding. This is why client side header bidding wrapper really took off in 2016.


That brings us to the next part.

The Online Advertising Value Chain

This is a simplistic view of the industry, but it does enable us to understand where the key players sit; on the demand side of the value chain, there are advertisers, and their agencies; and on the supply side, publishers, and ad networks (and/or ad exchanges).



What’s the product?
Before I get onto the content of the boxes in the above diagram, though, we should be clear about what’s in the arrows; that is, what’s traded in this market? What’s the actual product, here?

The answer is advertising inventory. There are no very good definitions of advertising inventory out their on the Internet (Dave Chaffey offers one of the better ones), so I offer my own definition:


Advertising inventory is the supply of opportunities to display advertising in a particular medium.

Most people would use the term “ad impression” instead of “opportunity to display” – the reason I haven’t is because I don’t like to offer a definition of a term which contains another term that you may need to go and look up. The most common definition of ad impression is this:


An ad impression is a single viewing of a single ad by a single individual.

(Another reason I didn’t use it is because it fails to capture the increasing complexity in ad inventory as online advertising evolves. For example, if you’re serving video ads, and the user watched half of your 30-second pre-roll ad, was that an ad impression?)

In our value chain above, it’s the Publishers who are the creators of advertising inventory. By building websites or software apps or video games or e-mails which are seen by lots of people, and inserting ads into these environments, publishers create a constant stream of ad inventory which, of course, they are looking to sell to advertisers. Agencies and Networks merely help the process along.

Online ad inventory is a very interesting type of good (to use the economics term). It has an incredibly short shelf life (measured in milliseconds as a page loads), but its supply is only indirectly under the control of publishers; external factors (such as a very newsworthy event) can dramatically impact the amount of inventory that a publisher has to offer. As a result, inventory prediction is a major task for publishers; I’ll be returning to this topic in a future installment.
Calculating ad inventory

Another useful way of understanding ad inventory is to look at a simple example of how it’s calculated. Imagine a pretty straightforward website (this blog, for example), showing pretty simple ads, with no fancy auto-refresh stuff going on (i.e. once a page is loaded, the ads don’t change, so for each page impression, you get one batch of ads). How much ad inventory is created?

The answer to this is dependent on two variables – the number of page impressions on the site, and the average number of ads per page. So, for example, if my blog generated a million page impressions per month (I wish), and had an average of 5 ads per page, then the total ad inventory (if you’re just using a simple ad impression model) is 5 x 1m = 5m ad impressions per month.
The Players

Now that we understand what’s being traded, let’s take a brief look at the major players in the value chain, and then I’ll let you get back to whatever it was you were doing before you started reading this post.

The Publisher

We’ve already covered this guy. He’s the one with the site, or the game, or the mobile portal, who is creating ad inventory and wants to sell it to advertisers to provide income for his business. Publishers are interested in maximizing revenues, but also at minimizing risk – they hate to have unsold inventory (that is, ad space with no ads in it) so they employ a number of tactics to ensure that at least something gets shown in an ad unit that they can get a little money for.

Larger publishers have their own sales teams who maintain direct relationships with advertisers and their agencies, cutting deals for big blocks of advertising inventory over expensive lunches in chic Greenwich Village restaurants. But this model only works for big publishers selling to big advertisers. Small publishers can’t afford to maintain their own sales force, and even if they did, they’d never get through the doors of Ford, or CapitalOne, because they don’t have enough inventory to be of interest on their own account. So these guys sell their ad inventory through Ad Networks.

One other kind of publisher it’s worth calling out here is the search engine – i.e. Google, Yahoo and Microsoft. These search engines are the creators of huge amounts of ad inventory that is sold directly to advertisers and agencies, as well as running significant ad networks (see below).

The Ad Network

Ad Networks are essentially outsourced sales houses for publisher inventory. An ad network strikes deals with lots of publishers for their inventory and then aggregates this inventory and sells it on to advertisers and agencies. There are over 300 ad networks in existence today – a breathtakingly large number which is sure to fall soon.

An ad network’s value proposition to publishers is that it can sell inventory that the publisher can’t sell itself – either because the publisher is small (and so doesn’t have its own sales force), or, in the case of larger publishers, the inventory is of too low-value to merit direct selling. This kind of inventory is called remnant inventory.

The network’s value to an advertiser is that the advertiser can appear on lots of sites across the Internet (potentially thousands) without having to establish direct relationships with those publishers individually.

At bottom, the Ad Network business model is to buy inventory cheaply and sell it on at a higher price. There are a variety of ways of doing this, some of which I’ve covered before. One of the most promising is to add value to the ad inventory by adding targeting data (so that the impression can be sold for a higher price). I’ll cover this in a future installment.

Networks come in all shapes and sizes. There are ‘premium’ networks which work with remnant inven
tory for large publishers; there are vertical networks which focus on a particular industry or technology (such as video); and, at the bottom end, there are contextual networks which provide an auction-based marketplace for selling keyword-based ads on small sites. You may have heard of the #1 network in this space – it’s called Google AdSense.

The Advertiser

Advertisers also come in all shapes and sizes, of course. The big name advertisers – the folk we’ve all heard of – will have significant internal marketing departments, and will also likely retain the services of an agency to help them manage their marketing. Their marketing objectives will likely be a mix of brand marketing (raising general awareness) and direct response marketing (getting someone to actually buy something online now).

Smaller online advertisers are almost always focused on direct-response – getting someone to click and buy, or possibly call up. By and large, these folk can’t afford to retain an agency to do their marketing for them, so they tend to go straight to certain ad networks or publishers to buy their ads. Again, the #1 in this space is our friend Google, with AdWords (the advertiser-facing side of the AdSense network).

Advertisers are motivated by getting the best ROI on their ad investment; but amongst larger advertisers some other curious motivations creep in, like wanting to make sure that a committed ad budget for a quarter actually gets spent (so that budget isn’t cut the following quarter). This drives the behavior of ad agencies, to an extent.

The Agency

Last but by no means least, the media agency is an essential intermediary in the advertising value chain. Ad agencies usually do one of two things (or both, such as is the case with our own Avenue A|Razorfish): they create ads (anything from designing an animated banner to filming a 30-second TV ad) – known as the creative business – and they buy the media (i.e. the ad inventory) to display the ads (known as the media business). Whilst the creative side is cooler, the part of ad agencies that is relevant here is the media business.

A media agency, then, is one that buys media on behalf of its advertiser client. The advertiser typically says “I have x million dollars this quarter for online, and this campaign I want to run. Buy me the best media to reach my target audience”. It’s then the media agency’s job to plan a media buy that will deliver the best return for the advertiser.

At the small-business end of the spectrum, the ‘media agency’ morphs into small SEM (Search Engine Marketing) shops who are good at buying Google AdWords, and maybe have some SEO (Search Engine Optimization) skills to boot to boost a company’s natural search rankings.

Media agencies’ motivation is driven by getting as much media under their control as possible, since they’re paid (particularly at the high-end) with a cut (usually something like 15%) of the advertiser’s media budget. They also don’t want to under-spend on the budget they’ve been given, as this can annoy their client (see above).

Media buying is a manual, labor-intensive process right now, and one I’ll come back to. Improvements to technology will mean that agencies (especially larger ones) will have to do some pretty fancy footwork to continue to add value for their advertiser clients.

That’s it for now. in future installments, I shall be looking at the key players in a bit more detail, and looking at some of the interesting economics which underpin the industry. In the meantime, if you have a comment, or something you’d like me to cover, leave a comment.