Google Ad Exchange guide: Understanding Google Display Ads and ad manager

Hello friends, hope you guys are doing great. So today we’ll be understanding the Google Display advertising ecosystem in very much detail. So display advertising ecosystem can be very much complicated and people throw in a lot of technical jargon. So especially when they talk about ad networks, ad agencies, DSPs, and SSPS.

So I’ll help you clarify the technical jargon and I hope at the end of this article you’ll understand all these technical concepts in very much detail. Also, this is sort of a prequel to Google Ad Exchange. So before starting Google Ad Exchange, I want you to understand the display advertising ecosystem. Holistically so various concepts of the Google Ad Exchange become automatically clear to you if you understand the display advertising ecosystem as a whole. So we’ll learn that and then we’ll proceed toward learning Google Ad Exchange.

With that said, let’s jump into the article. To understand the Google Display advertising ecosystem, you must clearly understand the two key players in the Google Display advertising ecosystem. That’s an advertiser. And second is the publisher. So an advertiser is a brand company who has a lot of money and he’s willing to spend its advertising budget to achieve its advertising goals to increase revenue.

So they want to spend a little budget on advertising, and through advertising, they want to increase the sales on their website using digital channels. So this is all about advertisers. Similarly, publishers are typically the website’s owners who want to help advertisers achieve their advertising KPIs, and they offer them ad inventory on their websites to do that. So they show their ads, and advertisers’ ads on their websites, and in turn, they charge them a certain amount based on CPM. So what is CPM?

CPM simply implies the cost of 1000 impressions. So M implies a mile. And mile is an abbreviation for 1000 impressions. So if you typically consider one impression, its cost is relatively less and it falls into decimal places when it comes to a dollar. So to understand or to ease this process, buying and selling of ad inventory was typically done and is still typically done in the forms of CP.

Han so now that we understand these two key players, let’s understand how these two key players used to interact with each other. So the interaction between the advertiser and the publisher was direct. So what do I mean by that? I mean that typically an advertiser’s marketing team used to try to find a relevant publisher by reaching out to them. So this conversation could either be initiated by a publisher’s sales team or advertisers’ marketing team.

However, as you must have realized, it depends upon their relevant sales and marketing teams. And it was a very difficult task for both advertisers for advertisers to find relevant publishers and for publishers to find high-paying advertisers. So ad agencies were a company or a group of people that identified this as a business opportunity and they created ad agencies. So what ad agencies did is ad agencies were intermediate between advertisers and publishers. So they simply knew a lot of publishers and they simply knew a lot of advertisers.

So they held by actually connecting these two parties and in charge of like on the behalf of connecting these two parties they charged them a commission. So they charged a commission of the revenue or a certain percentage of the revenue from both advertisers to publishers. However, as this interaction happened directly and the rates of CPMs were quite high, people opted to go for ad agencies as well. So they were absolutely fine in paying those higher commissions because ads, as I’ve told you earlier, it was relatively difficult for both of them to know each other. So ad agencies now also exist in this market still and typically all advertisers or all big advertisers and big publishers still use them as an important way to sell high-paying ads.

With ad agencies coming into the picture, publishers also started realizing they can start monetizing their websites and as a result, a lot of publishers started coming into the market. So there was a relatively high increase in the supply of ad inventory and there was a problem with unfilled impressions. So what do we mean by unfilled impressions? Unfilled impressions are simply inventory that you are not able to sell or inventory that is unmonetized. So to solve that problem, another group of companies, people identified this as a business opportunity.

And what they did was they applied technology. They aggregated demand from the publishers and sold packaged inventory to the advertisers. So this set of companies was called the ad networks. So ad networks is a very common term that you must have learned. In the ad tech but not many people know what was the exact problem that it was trying to solve.

So Ad Network was the first form of, you would say, sort of programmatic advertising. So people again throw in terms like programmatic a lot. So programmatic simply means an automated way of buying and selling ads. So Ad Network was the first way, the first set of companies I can say that started automatically buying and selling ads. So they were one of the first people to go ahead and invent programmatic advertising.

Now, if you consider it typical in today’s market when people use programmatic advertising they are simply referring to programmatic buying via DSP so I’ll explain the DSPs to you in a later subject ad networks boomed a lot, and as a result today as well. You might see hundreds or even thousands of ad networks and publishers often get confused about which ad network should they go for. But with ad networks as well there was a certain problem so now I will consider problems separately for advertisers and publishers advertisers with them with ad networks had a problem that there was a possibility of buying duplicate ad inventory. So with ad networks advertiser was not sure where their ads were particularly seen so they might buy in the same publisher’s inventory via two or three particular ad networks and there was no control in which they might control on which sites their ads might show. So there wasn’t a way to whitelist or blacklist certain sites in the ad network.

Also, I would say the second problem was that advertisers had a limited amount of settings targeting that they could play with in the pad network. So typical settings that a DSP has, and now I’m again using DSP, don’t worry, I’ll cover it later. So typical setting that nowadays DSP has was not present at that particular time in an ad network. So the settings were limited and the control was limited and advertisers were not sure where their ads would be shown. Now, on the publisher’s end, there were a separate set of problems the first set of problems was that the publishers there was still a problem with unfilled inventory and how ad networks weren’t filling the complete inventory.

So when the interaction went in with a particular like directly with the ad agency or direct contact so if there is an ad it shows 100% however, when this interaction goes in via an ad network, there’s a possibility that ads might show or ads might not show. So a typical fill rate of an ad network might range anywhere between ten to 15, 5% to anywhere between 80% to 90%. So what to do with the remaining unfilled inventory? So to resolve that problem, there was something called a passback system was created, and if any of you guys have used pass backs and you must be aware that how much of a mess the passback tags are. So pass back tags simply had two major problems.

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