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How Do Digital Advertising Networks Work?
At the most basic level, ad networks pool inventory of unsold ads from publishers and sell it to advertisers. They earn money by taking a cut of ad revenue, sometimes marking-up inventory before selling it.
Ads are delivered to a publisher’s site by an ad network’s server via code on the publisher’s site that calls the ad. Performance is tracked via a tracking pixel from the ad network that the advertiser places on the conversion page(s) such as a thank you page on its site. The ad network’s ad server powers ads targeting, tracking and reporting on the campaign.
Unlike AdSense where advertisers and agencies manage bidding, targeting and optimization themselves, many ad networks manage campaigns on behalf of agencies and advertisers. In these cases, an ad network and buyer negotiate the terms of an ad buy such as audience targets, impressions (the number of times an ad is served) and average cost per impression (CPM). The ad network then executes the targeting, optimization and reporting on the campaign.
What Types Of Targeting Are Available?
Some ad networks categorize the sites in their network by the types of content they cover. High technology, clean technology, biotechnology, automotive, travel, beauty, fitness sites, for example, may be grouped into vertical channels and sold to advertisers that want to reach audiences interested in those topics. Some networks cater to specific verticals while others are open to nearly any type of site. Or ad networks may instead sell audience segments built on behavioral, interest, demographic and other data from publishers and third-party data providers.
There are also ad networks focused on low-priced inventory that give little to no transparency into where advertisers’ ads show up. These blind buys can offer scale on the cheap, and are typically bought by direct response advertisers who measure performance by CPA and are less concerned about brand safety.
Are All Advertising Networks Equal?
In short, no. Some networks are very selective about the type and quality of publishers allowed in the network, while others are decidedly less so.
More restrictive ad networks may have exclusive access to premium publisher inventory. In fact, groups of publishers have formed their own ad networks to control the types of inventory in the pool and maintain premium pricing.
Some networks will buy ad impressions in bulk from ad exchanges and re-sell them with a mark-up. Some ad networks also sell inventory from publishers on open exchanges. Another strategy is to syndicate ads sold through other ad networks.
Advertising Pricing and Advertising Formats
Ad networks started in the age of the desktop banner, but they now encompass all kinds of digital inventory, including mobile and video.
There are ad networks that specialize in one type of ad format or medium and others that sell just about anything. In addition to standard IAB ad units, some examples of other ad formats sold by ad networks are native display and video ads, in-image ads, content recommendations and in-text ads.
Many networks offer several pricing options such as:
- CPM – Cost-Per-Thousand impressions
- vCPM – viewable CPM
- CPC – Cost-Per-Click
- CPA – Cost-Per-Acquisition
- CPV – Cost-Per-View for Video
- Some buys are Fixed-Rate
- Other are Auction-Based (like AdSense)
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