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Data-Driven Advertising

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Welcome to Data Driven Advertising—the simplified resource on how data is used to serve ads to people’s web browsers, where that data comes from, and how it moves through the ecosystem. It’s data about data—helping marketers reach their goals, and consumers get the most from their online experiences.

In addition to this site, the Data Council works on other initiatives.

This site is meant to be a resource for marketers for illustrative purposes only, in order to provides a simplified view of the data ecosystem through a common lens. There are many variations and nuances in how companies work together that are not presented here. Although the IAB strives to maintain the most up to date information available, we recognize the ecosystem changes in near-real time. Therefore, certain aspects of this content may become outdated or irrelevant, and therefore does not claim to represent a complete and accurate view of the entire data ecosystem. For more information on data practices, it is recommended you discuss options with your partners.

Consumer Perspective

An advertising-supported web enables consumers to enjoy a more relevant and useful advertising experience, allows advertisers to better able to reach their desired audience, and enables publishers to share their content and services for free with their audiences. This model is the foundation of a vibrant ecosystem that has helped the advertising industry and the Internet flourish.

For consumers, understanding why an ad is being presented and how it got there is important, but not frequently clear.

Not only do we as consumers wonder why advertisers seem to know very particular information about our likes, we also wonder what people are doing with the information that we do share.

Generally, the Advertising Industry relies solely on non-personally identifiable information that it collects through a computer’s browsing experience, so they don’t actually know identity of individual consumers.

Many consumers do not realize that the web data collection capabilities are much more limited and less granular in nature than more traditional offline practices. For example, for many years offline companies have been analyzing our shopping behavior across retail through the use of data captured through our credit card spending. Yet, the idea that data is captured online feels more personal even though it is not personally identifiable, and instead used for anonymous and browser-based targeting.

Meet the Audience

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Meet Pete, our consumer persona. He’s 25, single, and up-and-coming at a top Washington D.C. accounting firm. He’s also a striker on his club’s soccer team.

Which is why, with the club championships coming up, he was at soccer practice when his college alma mater played a game on Saturday.

So like most of us, Pete hits the computer to catch up on what he missed. He searches, then visits a few major sports sites and blogs.

Getting to Know You

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While Pete hasn’t actually clicked an ad yet, the targeting systems advertisers use may know from context and anynonomyzed data that his computer’s browser has been used by a college sports fan, since the search engines, blogs and sites Pete visited categorize him in the segment of young male sports fans. Sites and search engines serve ads based on search results and the sites we visit to user segments, which involves aggregating interests of multiple anonymous individuals. So what happens is this: a Data Provider cookies Pete’s computer, while an Agency (2) works to build a segment of young sports fans. This helps them accurately serve an ad, both to Pete’s computer and to others in the newly created segment, for their clients, the Advertisers (1). Pete then receives more relevant advertising for him rather than, for instance, advertisements for senior retirees.

How’d That Ad Get There?

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After a good weekend, and before he heads into the office, Pete hops onto his home computer to catch up on the financial world. While he browses a financial news site, he gets an athletic shoe ad served to him.

On behalf of its advertiser, the Acme Agency acquired browsing data, in the form of cookies, from sites and search engines, then purchased that cookie on the financial news site. That’s how Pete received an ad that was relevant to him.

Connecting the Dots with Data

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Finished with his financial news site, Pete moves on to his favorite financial blog site. And he gets another ad for hot new athletic shoes, including the hottest soccer cleats.

So how does this happen? Pete’s favorite blog isn’t even one of the more highly trafficked sites on the web. How would the shoe company know about this site and that Pete visits it regularly?

Like this: the Acme Agency (2) had already put the young male sports fan segment into their own Demand Side Platform, or DSP, (3) which is then plugged into the Ad Exchange (4). The DSP is looking to buy an ad impression that will enable it to present an advertisement to young sports enthusiasts, a market segment or audience to which Pete belongs.

Where Ads Find a Home

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Now let’s look at this from the other side: that of the content Publisher (7) and its Network (6). The small publisher network, which sells ad space for small blogs, is the rep for Pete’s favorite financial blog.

The Network uses a Supply Side Platform, or SSP, (5) to represent inventory on the Ad Exchange (4), which is just one of many business models used by Ad Exchanges. The SSP tries to find the best price for the Publisher, in this case, Pete’s finance blog.

So to recap, the SSP (5) represents the publisher (7) and tries to get the publisher the best value, while the DSP (3) represents the advertiser (1) and its agency (2) and tries to get them the best value.

How Ad Exchanges Do the Math

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The Ad Exchange (4) makes the connection between the DSP (3) and the SSP (5). Since the DSP wants the best placement for the Advertiser (1) and Agency (2), it may bid $5 for the ad impression. But there are other advertisers and agencies bidding for the same placement. Agency A is bidding $2 for it and Agency B is bidding $3.

So let’s look behind the scenes at the financial blog. Pete’s blog is asking a minimum of $3 for the impression. In the traditional sequential model, since Agency B bid $3 they could have grabbed the impression because they were first in line. But remember, the Acme Agency had bid $5. Using newer Real Time Bidding, or RTB technology, the exchange scans all of the offers and, seeing that Acme offered $5, pairs them with the financial blog, thus maximizing the value for the blog.

Everybody Wins

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Seeing a second ad for sports footwear is the clincher for Pete. He clicks on the ad for more info.

In the end, the advertiser is successful and Pete will be sporting a new pair of kicks for the championship game next weekend.

Agency/Advertiser

Getting an ad in front of the right person at the right time when they are in the mindset for it is every marketer’s quest. The digital canvas makes this quest more achievable every day by connecting information together to better understand audience preferences. As data capture and analysis becomes more sophisticated, marketers are able to utilize an increasingly broad set of near-real-time information to place relevant ads in front of relevant people. With consumer privacy a top priority for the Industry collectively, agencies and advertisers partner to combine anonymous data sets that help to enhance their advertising targeting capabilities all the while maintaining strict control over what information is shared.

Meet the Advertiser and the Agency

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The Acme Agency has clients worldwide with high profiles and high expectations, including a prestige travel company. As you’d expect, the agency’s goal is to capture its client’s ideal audience and, ultimately, drive them to the travel company’s website to book that dream vacation.

The Agency (1) has to reach 1 million users for its Advertiser (2), the travel company, but doesn’t have enough unique users in its database. It needs help. But from where?

Who Needs a Data Aggregator?

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The answer is “an Agency like Acme.” First, what it is: a Data Aggregator (10) begins by gathering data from the desired segment across various networks. From there, third-party data companies overlay more specific information, like geographic location, purchase history, age and other key information to help to narrow the segment to its most ideal.

Once the Data Aggregator has the right segment for the Agency’s client, (1 and 2)—that is, the segment with the necessary shared attitudes to meet the advertiser’s requirements—the agency buys the segment.

What’s Done with the Data?

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Next, the Acme Agency puts that affluent travel segment into its own Demand Side Platform, or DSP, (3) which is then plugged into the Ad Exchange (4). The DSP cookie-matches the segment purchased from the Data Aggregator, using existing cookies to match the audience to the ad—at the best price, of course.

The Acme Agency then takes a mixed approach: making an ad buy while also spending money directly with its own DSP.

Spending Wisely

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The campaign begins with a very contextual buy on a few high-end, large travel sites (the Publishers) (7). Then, the agency buys space on a travel Network (6). Finally, they use their DSP (3) to find the best audience using the Ad Exchange. Why? Because using a DSP takes less manpower, since it’s completely automated and was built specifically to find the best audience. The disadvantage of the DSP, however, is that the agency and the advertiser won’t typically know which sites the ads will run on.

The Perfect Match

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On the other side, the Publisher (7) has put its available inventory into the Ad Exchange (4). The Agency’s travel client now looks for the best match at the lowest cost; it could be a travel site, or any other site that overlaps with the specific segment.

So publishers A, B, and C (7) have all put their inventory into the Ad Exchange (4).

The travel site is looking to spend $2 on an impression that will ensure its ad is served to its specific audience, the affluent traveler.

Publisher A has a higher-priced offer from a mortgage broker, so the placement goes to the broker. Publisher B also has a higher-priced offer, so that placement goes to a shoe company. But Publisher C matches both price and audience, so the travel site’s ad is placed there.

What’s In It For Them?

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By using the Ad Exchange, the Publisher is able to maximize some of its less-prominent inventory, which traditionally it might have had trouble selling.

And the match has been made: the ad has been served to the right audience at the right price. What’s more, the publisher, the agency and its advertiser are each able to gather more data.

The DMP Makes Ads Smarter

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But before we check back in with the Agency, what happens with this new data that’s been captured? The answer lies with the Data Management Platform, or DMP. (11)

DMPs continuously manage the data to optimize business for Agencies and Advertisers, while making sure the audience is getting served the most relevant ads.

The Acme Agency (2), the Data Aggregator (10) and the Publisher (7) all capture and maintain these data points using cookies, overlays, and more. The point? To use the data in the future: refining, optimizing, retargeting, reporting and analyzing it to improve an ad campaign or further refine a segment.

Everybody Wins

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So the Agency did its job, excellently, on behalf of its client, whose ads are now reaching their best audience. The Publisher happily accepts more relevant advertising for their audience. And those users now get—and click on—a relevant ad, thanks to an advertising process based on relevance. It’s the start of many dream vacations.

AdChoices

In 2009, the Digital Advertising Alliance (DAA) was formed. It is a consortium of leading national advertising and marketing trade groups that together deliver effective, self-regulatory solutions to online consumer issues.

Meet the Audience

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This is Laura, a retired grandmother who uses the web as a way to stay connected to her two daughters and their kids, all living in different states. (Her grandson Kyle likes to tell people his grandma “surfs.”)

Laura’s about to discover an innovation in online advertising—one that lets consumers feel more comfortable while surfing the web.

Enter AdChoices

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In 2009, some of the largest digital advertising associations came together to create the Self-Regulatory Program for Online Behavioral Advertising. The program lets advertisers show that they’re adhering to industry standards, and helps consumers—using AdChoices —become more aware and in control of how their personal information is used on the web.

Because the program is self-regulated, some of the largest portals such as AOL, Google, MSN and Yahoo! have created their own programs. Therefore the experience a consumer has on the web when they engage with an ad’s privacy notice might vary in nature.

What Choice Do You Have?

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Keeping the varying depths of the ad notice programs in mind, let’s get back to Laura and her site browsing.

Lately, Laura has been surfing local news sites for real estate listings in the neighborhoods near her oldest daughter, Claire. With another child on the way, Claire’s family needs a bigger home.

Today, though, Laura is surfing the web for herself, catching up on her own local news, when she comes across an ad that surprises and confuses her. It’s from a hotel in Claire’s town, with an offer for a discounted stay.

Her first thought: how could the hotel know she had been looking at websites that relate to its town? The website she’s on now isn’t at all related. Somehow, she guesses, they know what she’s been researching.

While wondering where this ad came from, Laura notices an icon in it—one she’s been seeing more and more of lately—labeled AdChoices.

At this point, choices sound good to Laura; curious, she clicks the icon.

Where did the icon come from? It was delivered it automatically into the ad, as a way to give consumers a one-click option to get more information.

The Full Story

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Having clicked through, Laura is shown clearly outlined information on the discount ad she’s seeing and the hotel that sent it to her.

The AdChoices icon, also known as the Advertising Option Icon (which has its own video on the DAA’s website here) is all about transparency and control. Whenever you see the Icon, you ll know two things: (1) You can find out when information about your online interests is being gathered or used to customize the Web ads you see, and (2) you can choose whether to continue seeing these types of ads.

So Laura, and you, are in control of when the right ads find you. For more information about the DAA, and to better understand your AdChoices, visit the DAA’s site, www.youradchoices.com

Advertising Ecosystem

The digital environment that connects websites that live on the Internet together, and with people, is done with such precision that to map it out for people makes it looks like something bright, blinking and living, and straight out of a sci-fi movie. To simplify a complex advertising ecosystem, explore the data ecosystem that contains the information that is used to deliver personalized and relevant experiences to consumers.

This simplified view of the ecosystem accounts for typical roles played by these entities. However, business models may defer and/or overlap with those of other entities. When making business decisions, it is important to ask your partners to disclose their business practices.

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  1. Advertiser – A person, organization or company that places free or paid promotions of a specific product, service or event in a public medium to attract potential new or repeat customers.
  2. Agency – An organization that, on behalf of clients, plans marketing and advertising campaigns, drafts and produces advertisements, places advertisements in the media. In interactive advertising, agencies often use third party technology (ad servers) and may place advertisements with publishers, ad networks and other industry participants.
  3. DSP – Demand Side Platforms provide centralized (aggregated) media buying from multiple sources including ad exchanges, ad networks and sell side platforms, often leveraging real time bidding capabilities of said sources. While there is some similarity between a DSP and an ad network, DSP’s are differentiated from ad networks in that they do not provide standard campaign management services, publisher services nor direct publisher relationships.
  4. Exchange – Ad exchanges provide a sales channel to publishers and ad networks, as well as aggregated inventory to advertisers. They bring a technology platform that facilitates automated auction-based pricing and buying in real-time. Ad exchanges’ business models and practices may include features that are similar to those offered by ad networks.
  5. SSP – Sell Side Platforms provide outsourced media selling and ad network management services for publishers. Sell-side platform and ad networks business models and practices are similar. Sell-side platforms are typically differentiated from ad networks in not providing services for advertisers. Demand Side Platforms and Ad Networks often buy from Sell Side Platforms.
  6. Network – Ad networks provide an outsourced sales capability for publishers and a means to aggregate inventory and audiences from numerous sources in a single buying opportunity for media buyers. Ad networks may provide specific technologies to enhance value to both publishers and advertisers, including unique targeting capabilities, creative generation, and optimization. Ad networks’ business models and practices may include features that are similar to those offered by ad exchanges.
  7. Publisher – A person or company that makes content (in any form) available for consumption, for free or for sale.
  8. Data – Any information collected.
  9. Data – Any information collected.
  10. Data Aggregators – An organization that collects and compiles data from individual sites to sell to others.
  11. Third Parties – Data that did not originate from either the publisher or advertiser. Typically this is used to enhance ad targeting. For example, demographic data from a third party might be used to help determine which auto ad (make/model) to display on an auto site.
  12. Consumer – Consumers are not personally identifiable to the ecosystem. Instead, a limited amount of anonymous data, or non-personally identifiable data, is passed between the browser and the publisher to help the publisher identify a machine that has connected to its website via the use of a browser-based cookie.

Videos

Key Terms

  • Agency – An organization that, on behalf of clients, plans marketing and advertising campaigns, drafts and produces advertisements, places advertisements in the media. In interactive advertising, agencies often use third party technology (ad servers) and may place advertisements with publishers, ad networks and other industry participants.
  • Advertiser – A person, organization or company that places free or paid promotions of a specific product, service or event in a public medium to attract potential new or repeat customers.
  • Segment – A set of users who share one or more similar attributes.
  • Cookie – A small text file sent by a website’s server to be stored on the user’s web-enabled device that is returned unchanged by the user’s device to the server on subsequent interactions. The cookie enables the website domain to associate data with that device and distinguish requests from different devices. Cookies often store behavioral information.
  • DSP – Demand Side Platforms provide centralized (aggregated) media buying from multiple sources including ad exchanges, ad networks and sell side platforms, often leveraging real time bidding capabilities of said sources. While there is some similarity between a DSP and an ad network, DSP’s are differentiated from ad networks in that they do not provide standard campaign management services, publisher services nor direct publisher relationships.
  • Ad Exchange – Ad exchanges provide a sales channel to publishers and ad networks, as well as aggregated inventory to advertisers. They bring a technology platform that facilitates automated auction-based pricing and buying in real-time. Ad exchanges’ business models and practices may include features that are similar to those offered by ad networks.
  • Publisher – A person or company that makes content (in any form) available for consumption, for free or for sale.
  • Network – Ad networks provide an outsourced sales capability for publishers and a means to aggregate inventory and audiences from numerous sources in a single buying opportunity for media buyers. Ad networks may provide specific technologies to enhance value to both publishers and advertisers, including unique targeting capabilities, creative generation, and optimization. Ad networks’ business models and practices may include features that are similar to those offered by ad exchanges.
  • SSP – Sell Side Platforms provide outsourced media selling and ad network management services for publishers. Sell-side platform and ad networks business models and practices are similar. Sell-side platforms are typically differentiated from ad networks in not providing services for advertisers. Demand Side Platforms and Ad Networks often buy from Sell Side Platforms.
  • RTB – Real-time bidding is an online advertising buying technology used by ad exchanges, servers and buyers is similar to auctions, but differs in that it allows dynamic bidding, instead of static or fixed average rate bidding, at the impression level.
  • Data Aggregator – An organization that collects and compiles data from individual sites to sell to others.
  • Overlay – An overlay ad is a promotional message that is inserted on top of another media item.
  • DMP – A DMP is a centralized data management platform that allows you to create target audiences based on a combination of in-depth first-party and third-party audience data; accurately target campaigns to these audiences across third-party ad networks and exchanges; and measure with accuracy which campaigns performed the best across segments and channels to refine media buys and ad creative over time.

About this Site

The “Data Driven Advertising” website was developed out of the IAB Data Council’s marketer and agency education initiative. The IAB Data Council is dedicated to demystifying data usage and control in the interactive advertising marketplace. The council objective is to enable revenue growth through the establishment of quality, transparency, accountability and consumer protection in data usage.

This site is meant to be an evolving resource for interactive advertising professionals. Should you have any suggestions that can improve the site, or additional resources that should be considered for inclusion, please email your suggestions to [email protected]

IAB Committees, Councils, and Working Groups are comprised of representatives from IAB Member Companies. If you’re an IAB member and would like to participate, or would just like to learn more, please email [email protected] or phone (212) 380-4715.