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The history of Advertising TechnologyClearcode B&B event
8th May 2015
Maciej Zawadziński
WHAT IS AD TECH?
What is ad tech?
• Software solutions for online advertising:
• delivery, targeting & control,
• data collection and decision making,
• measurement and analytics,
• ad delivery across different channels: Web, Mobile, Video/TV, Online Radio, IoT, VR etc.
What is ad tech?
• What’s so exciting about ad tech?
• Reach: ad delivery to 3+ bln internet users,
• Scale: tera-, peta-, zeta-… of data,
• Performance & High-availability,
• Data science: making smart decision based on the data,
• Google, Yahoo, AOL, Oracle, Facebook, Twitter and other tech giants - they all rely on ad tech!
1993
The first banner ad
• New concept - special sections on the site to display banners
• Oct 27, 1993
• Publisher: hotwired.com (Wired Magazine)
• Advertiser: AT&T
• CTR 44% (sic!)
The first landing page
It was very simple!
• Advertiser had a direct relationship with the Publisher,
• HTML placement (468x60 pixels) with GIF format image.
1994
Cookies
• Lou Montulli and John Giannandrea invent cookies while working at Netscape Communications,
• Use case - “a way of distinguishing online shoppers”,
• Implemented in Netscape and Mosaic browsers,
• Cookies become inseparable element of ad tech in the following years that enable advertisers to track users’ behaviour online.
Web browsers 94’ - 09’
1995
JavaScript
• Invented at Netscape Communications,
• Shipped in Netscape 2.0 released in September 1995,
• Introduced pop ups & pop unders to online advertising.
• Similarly to cookies, JavaScript is widely adopted by the advertising technology in the following years.
WebConnect
• World’s first ad network (in 1995 they syndicated 160 sites),
• Placed ads on network of sites that signed up,
• Pricing based on the website audience profile (Site Price Index),
• Introduced “frequency capping” to prevent “banner fatigue” as well as banner rotation,
• In ’96 advertiser’s panel with statistics of the campaign: impressions, clicks, responses/sales (conversions) - developed in CGI/Pearl.
WebConnect’s ICS system
Ad network
• Advertiser can buy more inventory from many Publishers through an intermediary and centralize the reporting for the campaign.
• Advertiser buys a “package” of impressions and pay in CPM model.
1996
DoubleClick
• an ad network,
• an ad server for publishers’ direct sales,
• measures impressions, clicks, spent, ROI etc.
• CPM pricing model,
• used cookies which tracked user’s history in order to serve ads relevant to them,
• its competition, WebConnect opted out of using cookies because “it violates the users’ privacy”.
DoubleClick website ‘97
Ad server
Ad serverPublisher’s website
Ad network
Direct deal
Browser/User
• Direct deals - inventory sold by the Publisher’s sales team,
• Ad networks - fill the remaining inventory (but for some Publishers this become the only or the largest rev stream).
1997
Privacy & cookies
• Cookies were discussed in two U.S. Federal Trade Commission hearings,
• RFC 2109 specification released - HTTP State Management Mechanism (Cookies)
• third-party cookies were either not allowed at all, or at least not enabled by default
• recommendation NOT FOLLOWED by Netscape and IE
RFC 2109
1998-2000 aka
Dot Com Bubble
Popup/Popunder explosion
• intention - increase revenue from advertising while banner ads effectiveness (measured in CTRs) decreases,
• major browsers add popup blocking functionality from early 2000s, IE adds this functionality in 2004.
PPC advertising
• Bill Gross at Overture (earlier Goto.com) invented PPM model (Paid Placement Model),
• Today it is called PPC (Pay Per Click),
• Introduced auction model for advertisers - the higher your bid, the higher your listing,
• CPCs in ’98 - up to $1/click.
• Overture monetized large portals such as Altavista, MSN and Yahoo,
• In 2003 the company was acquired by Yahoo!
The Dot Com Bust
• startups spend substantial amounts on advertising until bubble bust,
• many startups go out of the business, including ad tech companies,
• other ad tech companies had to scale back, DoubleClick and Overture survive.
2000-2005
AdWords
• launched in 2000,
• used CPM pricing model up to 2002,
• introduced CPC pricing in 2002 - Google focused not only on the highest bid, but also on relevance.
• As of 2013, 85% of Google’s revenue are from AdWords,
• CPCs go as high as $200/click.
AdSense
• Applied Semantics - created AdSense contextual advertising technology in 2002,
• Acquired by Google in April 2003,
• Google launches AdSense network, enabling publishers to monetize their content with PPC ads.
Original AdSense press release
AdSense in mid 2004
Ad networks & piggybacking
Publisher
Ad network 1
load an ad
no ad -‐ fallback to ad network 2
no ad -‐ fallback to ad network 3
Ad network 2
Ad network 3
• Early-mid 2000s:
• piggybacking becomes commonly used to fill remnant inventory,
• endless redirects cause some ads not to load at all,
• ad networks’ struggle with “liquidity” problem - their inventory is either under-filled (not enough campaigns) or over-filled (too many campaigns)
2005
Early “ad exchanges” launch
• AdECN, RightMedia, AdBrite, ADSDAQ
• For ad networks to address “liquidity” problem,
• Every impression is matched against campaigns in the system,
• Highest bidder win (no real-time bidding protocol yet),
• Members - mainly ad networks,
• “Exchange” charges a flat transaction fee for every impression
Early “ad exchanges”
Publisher
Ad network 1
load an ad
Ad exchange
no campaign -‐ send to exchange
Advertiser
Ad network 1not enough inventory -‐ get from exchange (50%)
Ad exchange
insertion order (campaign)
Publisher
own inventory (50%)
under-filledover-filled
manual / API campaign targeting i.e. US traffic from MacOS on tech sites
301 redirect / one-way
return an ad
2006
Mobile ad networks
• AdMob - text links on featured phones,
• soon followed by other players,
• this was before smartphones era - first iPhone released a year later, in 2007.
2007
Facebook Advertising
• Facebook introduces “Facebook Ads”, “Facebook Insights” and “Beacon”,
• Beacon relies on a code installed on third party partner websites that collects the information about user activity and broadcasts to the user feed (by default!),
• Beacon raised a lot of privacy controversy and was shut down in 2009 after class-action lawsuit (Facebook paid $9.5M fine)
Facebook Beacon
3 key acquisitions
• AdECN by Microsoft
• MS switched from AdECN to AppNexus for its real-time bidding needs 3 years after acquiring it
• RightMedia by Yahoo!
• DoubleClick by Google
2008-today
Rise of RTB APIs
RTB APIs
Publisher
Advertiser
DSP 2
Ad exchange 2
insertion order (campaign)
< 100 ms
Ad exchange 1
SSP/ad network
DSP 3DSP 1
load ad return ad
$1.10 $1.15
$1.15
More inventory sources traded in RTB
• Display banners,
• Native advertising,
• Video and advertising,
• Digital radio and Digital TV advertising,
• …
Advertiser's budget
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Media Agency Trading Desk DSP 3rd Party DataAd Exchange Ad Network/SSP Publisher
U.S. ad spend by quarter
RTB spend
Future
Future
• RTB evolution - new instruments futures, forwards etc. (like in finance),
• IoT - Internet of Things, VR - Virtual Reality,
• Need for more transparency, privacy and openness!
• Let’s be a part of it ;-)
