The Nuts And Bolts of Advertising Online

The Wall Street Journal recently reported that 56 percent of advertisers cited “a lack of reliable measurement data” as the primary reason why they won’t spend any money to promote products online. But online ad measurement has come a long way since its inception, and some would say that it’s now more accurately tracked and easily administered than any other form of advertising.

So why is it that companies are still afraid to advertise online? Here’s my three theories:

  1. A lack of understanding of exactly how the online ad serving process works.
  2. Ignorance of newly established metrics and capabilities for online ad measurement.
  3. Bad experiences with online advertising in the past.

As with anything else, fear and ignorance go hand in hand. But to the credit of the marketing decision makers — it’s tough to keep up. The online world is moving at the speed of light — so much so, that even people on the front lines have a hard time following major changes: @Home buys Excite, Yahoo buys Broadcast.com, Microsoft buys Link Exchange, and so on. As an online media buyer, I might find myself buying the same ad space from a new vendor every month.

This rapid rate of change, combined with the fact that everyone in the industry is busy trying to memorize the latest techno-speak and three-letter acronyms, makes for a lot of confused, uninformed decision makers at the corporate level. As salespeople, we need to remember to slow down to let everyone else play, too.

So the following three-part series will assume this mission: To educate the non-professional layman on how online advertising works, how it can be tracked, and what methods are being used to fully leverage the current technology.

For those of you who’ve been kicking around a few years, this piece may seem too simplistic to be of much value to you. But consider it a good link to forward to those neophyte clients you are attempting to pitch.

First Steps First

The first step toward building trust in any technology is to understand how it works. With online advertising, it’s a whole new ball game, because multiple advertisers can theoretically occupy the same space at the same time.

For instance, with magazine advertising, an ad on a particular page remains there forever. With TV or radio, each advertiser is given a specific time slot. But with online advertising, when and where an ad is served can vary greatly according to several other factors, such as the site traffic, the number of other advertisers in that space, and the number of impressions that were purchased.

So how does the site know when to fill the ad space with a banner? Or to phrase the question differently, how does ad serving work?

Look to Your Browser

Ever wonder what all those messages at the bottom left corner of your browser mean? For example, “Contacting Site X,” “Site X Contacted, Waiting for Reply,” “X% complete,” and “Done”? They actually do mean something, and they can tell you a lot about how a banner ad is served.

Here’s what’s really taking place behind the scenes:

“Contacting Site X”: This happens right after you type in a URL and hit return. Or right after you click on a banner. Or right after you click on a link. In all of these cases, you are being transported to the next stop in cyberspace. It’s similar to dialing someone’s phone number and waiting for them to pick up on the other end.

“Site X contacted, waiting for reply”: This means you’ve arrived at your stop. They’ve picked up the phone. But they still haven’t said “hello.” Just like the “click” when a telephone is answered, someone might respond — or the line could be busy, disconnected, or down, or you could get forwarded to an answering machine.

“X% Complete”: Ahhh ! They said “hello”! Shortly after you arrive at the site, the page begins loading. It quickly scrambles to put together all of the little pieces that make up the final product you see.

It’s kind of like one of those George Jetson phones where you see the person on the other end, except this time you caught them getting out of the shower. But instead of clothes, the site looks desperately for images and content to cover itself. The images probably come from a folder called “images,” on the site’s server. Other elements like text and layout come from the HTML code.

In the midst of the process of covering itself, the web site “calls” to fill up all of its banner spaces. The banners that fill the spaces can come from one of two places, either from the site’s own server, or from an entirely different server.

Either way, the server is called and it knows exactly which ad to send because the site requested it specifically, like an individual phone number. This entire process takes place in a fraction of a second.

“Done”: All of the site content has been gathered and is fully loaded. The process is complete. In many cases, a web surfer will be long gone before ever reaching this step of the process. That’s why it’s so crucial that the ad get there first, before the rest of the page does.

Rinse, Repeat

That still doesn’t explain how several different ad banners rotate on the same site in the same space. When a site sets up its advertising for the month, it has a certain amount of inventory. This inventory is usually based on the number of people that visit the site. To maximize the use of that inventory, the site is given an ad schedule.

For each particular ad space it has to fill, it may be instructed to call up 10 different banners from 10 different advertisers, in a certain order. This order is determined by weight, meaning the more money spent on advertising, the more often an ad will show up.

For example: Widgets.com has 10,000 impressions of banner inventory available in its Sporting Goods section. Advertiser A buys 5,000 impressions. The weight assigned is 5/10, or 50 percent. So one out of every two banners in this section will be called up from Advertiser A.

Advertiser B buys 2,500 impressions, or 25 percent. One out of every four banners in this section will come from Advertiser B.

No one buys the remaining 2,500 impressions. So let’s say the remaining 25 percent of inventory is discounted, and sold as a part of an untargeted ROS deal. ROS, or “Run-of-site,” means that the banner runs across the “Sporting Goods” section and all of the other sections of Widgets.com.

Here’s how the rotation would work:

  • Banner 1: Advertiser A
  • Banner 2: Advertiser B
  • Banner 3: Advertiser A
  • Banner 4: ROS inventory

Each time the page is requested, the ads “refresh.” Of course, this process can get much more complex — with cost-per-click advertising, multiple advertisers, each advertiser rotating 10 different creatives, and so on. But that is the basic concept of online ad serving.

Tune in next Thursday for Part 2 of the “In Laymen’s Terms” series: “The Metrics and Capabilities of Online Ad Measurement.”

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