Digital advertising one on one course number two digital advertising ecosystem. But we'll cover in this course our publishers and publisher direct buys, and Ad Exchange who they are, what they are, what makes them special, and ad network, same thing, who they are, what are they DSPs, and ssps. And of course, how they all work together. Before we get started, I just want to show you guys a loom escape. You may have seen this before. It is essentially a big mix match of all the different types of ad networks and publishers and properties and buyers and sellers and everything you can imagine in digital ecosystem.

This is a kind of a medium sized one. There are some that are more complicated, some that are less complicated. You by no means need to memorize any of this. I just wanted to show you guys how particular publishers are categorize how they're lumped together and show you just how complicated the space actually is. So for the first part publisher direct This is pretty Much of the most simple form of advertising online, you go to a publisher such as some that we have here is ESPN, Mashable huffpo, New York Times thrillist. And you say I want to do a buy with a particular site, you go directly to them and execute that buy.

So these are really good for endemic content sponsorships, and big events, home pages, and making sure that your ad is going to run around premium content. So put simply, if you want to target people who are fans of sports, you can go to ESPN, if you want to target the news, you can go to New York Times can't get any simpler than that advertising exchanges. Ad exchanges, buy and sell remnant inventory remnant means ads that have not been sold in another form. So for example, ESPN, Nashville, New York Times which we just showed, maybe they haven't sold all their ads for a given month. They have more inventory that they could sell, but their sales team couldn't move it for whatever reason, they could then go to an exchange and say, I want you to open this up to your potential advertisers. If you find somebody who's interested in this ad unit, you can sell it to them.

And Ad Exchange doesn't own any of the inventory that they sell. They are just a technology that connects the buyers and the sellers. So advertisers go to an exchange and set everything up on a bid. And the ads are bought and sold on what's called real time bidding or RTB, that means that an advertiser ahead of time says I want to target somebody, and I'm willing to pay a certain amount of money for it. So maybe they are targeted sports, right? So I want you to go out and find every sports related article or website you can find and I'm willing to bid up to $2 to get that impression $2 way more than you ever would bid, but that's just an example.

So they have multiple advertisers. So it's a double click, for example, goes out and they find sports content on ESPN. That is remnant inventory. They could say, Okay, how many people do we have how many advertisers Do we have that are interested in buying a sports related audience, and they might go out and find three and one bit $1 one bid $1 50. And the third bed bid $2. Obviously, the highest bid will win.

But they don't have to pay the full amount. It's called a second price auction, which means that the advertiser the bid $2, will actually only end up paying $1 51 one cent more than the second highest bidder. So this is great for a number of things, both the exchanges and for the advertisers. For the advertiser, it gives you high reach and efficient by across multiple websites, you don't have to go directly to every single sports site, you can just say, we want to find sports content, everywhere you've got it and we want to buy that. And it's great for the exchange because they don't have to own the inventory. They only sell it once they know that they have a better and they do have a bit of a margin the markup on those ads, so they're getting a margin every time something is bought and sold, but they're not buying anything up front and then Having to sell it by a certain date.

Advertising networks, advertising networks are similar to exchanges and a little bit more popular for direct advertisers. They are a collection of sites. And that can range from a handful or a couple to thousands. Some of them have a focus, such as focusing on mobile or focusing on video. And they own a certain amount of the inventory that they sell. They don't necessarily own all of it.

Sometimes they do, sometimes they don't. So we have a couple of examples here, ranging from small, medium, large, two mobile specific platform and a video specific platform. So starting with defy defy is a handful of a few sites. They own all their inventory. And it's nice because it's very targeted. It's like teen stuff.

It's really entertainment and video focus. So if you want to go to defy you can run across multiple sites, and do one bio defy media instead of running across it. Within the faults underneath their umbrella, but they will only run ads within their particular those handful of sites that they own. Collective, on the other hand, is a network of thousands of websites. And they own a certain percentage of that inventory, they will go to websites at the beginning of the month and say, we want to buy up front, maybe 10% 20% 50%, a certain amount of your inventory, they'll buy it all up front for the end of the month, then they'll take that and sell it to advertisers at an increased rate. And that increase rate is their margin.

The attraction here is that because they are buying the inventory ahead of time, they can guarantee what kind of placement it's going to be, they can guarantee that it's going to be a premium ad that is going to be above the fold that is going to run on a certain web page with certain content. Whereas the Ad Exchange that we just talked about, they don't necessarily know what that ad is going to look like until they actually buy it. So with a network, you can get a little bit more premium, but you still get that reach and efficiency. So the advantage here is reaching efficiency like we just met But you have a little bit of more premium factor, then a lot of these get very similar. So you have to find a way to differentiate yourself. And that's why you have some focus on a particular subset.

So bright roll, for example, they say we're going to focus on video. And we're going to be a network for video and we're going to do video better than anybody else. That's their pitch millennials the same way. But from mobile, I said, we're going to be mobile, we're only going to be mobile, but we're going to build the best damn mobile product that you can possibly imagine. And that's a way for them to stand out among the crowd. DSPs and ssps DSP is a demand side platform.

SSP is a supply side platform. They are two sides of the same coin. So a demand side platform is what you would go to if you're an advertiser, if you say we want to find a particular audience, I want to target males 25 to 35, who have a household income of 75 k plus and who are interested in sports, the DSP will go out there and use their technology and their software and all the targeted data ability to find that audience and serve your ad when that audience is found. And SSP is if you are a publisher or website and you want to monetize some of your inventory, you can go to an SSP, plug into their platform, and they'll essentially connect you to the advertiser. So the advantage here is that they have the highest reach with the ability to purchase ads from any exchange or network.

And they you know, utilize a number of data inputs such as dmps, or third party data attributes that focus on the most targeted audience at the best possible rate. So this sounds probably very similar to what we just talked about. The difference being here is really technology. The DSPs saw that what was going on with exchanges and networks was similar but not great. They're all kind of the same. And DSP said, we can buy across all of you guys buy across every exchange in every network, and we'll use the best Tech possible to find the audience and to target that audience.

So their whole thing here is tech. And the reason why rocket fuel gets an advertiser instead of data Zoo or media map or turn is and how well they sell that technology to the advertiser how well they prove that out. Trading desks, so, a trading desk is something that is owned by a holding company, such as IPG, Omnicom or WP. If you are unfamiliar with a holding company, these are large holding companies that own a number of different advertising, networks and advertising agencies. So IPG for example, owns McCann, and if anybody is a fan of Batman, you'll know that McCann was brought up a lot. IPG is a company that owns so trading desk is an internal buyer of media for these agencies.

So they serve a number of different purposes. One they centralized programmatic bind to one partner instead of multiple. So if you are working at an ad agency and you want to place a digital buy, the idea is that instead of going to a DSP and an ad network or multiple ad networks or multiple exchanges, you just go to your trading desk and if you're at IPG go Kadri on if you're an omni comm you go to Acura and if you're a web, you go to Zacks, and the trading desk will say we'll do all of that heavy lifting and all that work managing multiple partners, you just have one buy with us. That being the case, they should be able to get the best rate due to having access to the most inventory. Ideally, if you can buy across every DSP in every network, you can just wait until you find the best possible price and buy it then because you're going to have access to so much inventory.

And the third and most important part of why these were founded is to increase agency profit by keeping margins in house. So agencies generally make money commission if you're a media agency, in the past, it used to be 10 to 15% of whatever you spent in media would go to the agency as a fee. So if your media budget for the year was 100 million dollars, a media agency would get $10 million. That was good and great. However, in the past few years, competition has increased dramatically. And to stay competitive, a lot of agencies have cut their rates.

So now those fees that were at 10% are sometimes down to 2% or less. And as you can imagine, if it takes an entire team to SAP $100 million account, and you're only making $2 million dollars a year and you have 15 people working for you, you're not going to be very profitable. So they're looking for ways to increase their profits without rage raising their commission. One option is a trading desk. If they can have the media go through an internal partner instead of going to an external DSP or ad network, then the holding company will keep that margin instead of the margin. Going outside.

So it becomes a tricky subject. advertisers who work with an agency who have a trading desk often have to sign an agreement saying we understand how this works, we understand where the profits are going to and we are okay with that. For the most part, many advertisers are okay. And their mind they're saying, as long as you're still getting me the best rate and the best performance and my ads are doing as well or better than they were with anybody else. I don't care if you're making a few extra bucks on the side. I care about performance and what you're getting for me.

But not every advertiser is on board. However, the trading desks are growing, they're becoming a bigger part of the advertising space and certainly not going anywhere anytime soon.