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Definition

An ad network is a company which has relationships with a large number of advertisers and publishers. Its main purpose is to be a medium for connecting the two entities together. Thus ad network will go out and buy impressions from the publishers and run campaigns for advertisers on those impressions. They share the payment received from the advertisers with the publishers.

How it works?

Most of the ad networks manage their advertiser and publishers using one or more ad servers. They setup each publisher site and sub-sections within that site in the ad server. They then manually classify these sub-sections of the site in a pre-defined list of channels. Generally there are about a few dozen channels. A few examples are – sports, health, finance, blogs, fitness, arts, entertainment etc. Once this setup is complete, the ad network exports out the publisher tags for the publishers to deploy on their web pages. Each section of the website might get a different publisher tag. As soon as the publisher tags are deployed on the website they are ready to do business.

On the advertiser front, the ad networks get creatives (banner, text or flash ads) from the advertisers to run the campaign. These creatives are uploaded in the corresponding advertiser space on the ad server. A campaign is then created by assigning a set of creatives to it and targeting it to a set of sites, sub-sections within a site or channels within a site. Other targeting parameters might also be set depending on the advertiser insertion order (IO). These might include things like – day part targeting, geo targeting, frequency capping per user etc. Once the targeting is setup the network is ready to roll.

As soon as the publishers start receiving traffic from their users, the publisher tags loads and makes a request to the ad server. The ad server checks to see if there is an eligible campaign for these impressions. If there is one then the ad from that campaign is displayed and recorded. If there is none, then a default ad is shown. If more than one campaign qualify for the impression some ad servers can perform an auction to get the best price for that impression.

Contextual and Behavioral are two very different types of targeting methodologies employed by ad servers and ad networks to deliver advertiser campaigns. Depending on who you ask about what they think is the best form of targeting you might get different answer.

Why is contextual targeting better?

People who support contextual targeting believe that the context of the page is a good indicator of what a user is interested in. Targeting based on this information is valuable and can provide lift in performance of advertiser campaign. The idea here is that if you show ads that are contextually relevant to the context of the page then the chances of a user clicking on them is higher compared to traditional methods. Companies and research firms have done tests to prove that this form of targeting indeed provides an improvement in campaign performance. Google’s adsense and adwords are example of such targeting and is supposed to be very successful.

Why is behavioral targeting better?

People who support behavioral targeting believe that context of a page is very momentary and does not provide accurate and enough information about the probability of a user to click on a given ad. They believe that one needs to ‘follow’ the user across the internet and ‘observe’ what they are looking at before you can tell what they might be interested in. Behavioral targeting claims that you can draw precise conclusions about the likely hood of a user clicking and converting on a given ad. They can make correlations between various user activities for a given period of time and the chance that a user is interested in a given advertised product.

Definition

Contextual targeting is a form of targeting that the ad servers use to target a user for showing ad units based on the context of the page they are viewing. This means that if the user is viewing a page with sports content on it, the ad that will be displayed on that page will be sports related. Targeting might be available at a finer level of granularity as well. An ad server might be able to target the ad based not only on the fact that it is about sports, but about the fact that it is about Super Bowl which falls under NFL which falls under Sports. Such type of targeting could be very valuable for an advertiser and they might be willing to pay top dollars for it.

An Example

Here is an example to illustrate the working of contextual targeting. Suppose you visit a news site and browse to its finance section. When you request a page from the finance section of the site, the page might have JavaScript embedded on it that might make a request to an ad server with some meta data information about the context of the page. This information could be about the URL of the page, its content, the section of the site where it is at etc. On the ad server there are targeting rules and associations that let an advertiser target their ad units to the various contextual information passed by the embedded JavaScript. There would be a targeting rule on the ad server, for example, for showing e-trade ads when the page is about personal finance or investing. When the JavaScript submits to the ad server information about the context of the page – in this case personal finance, an e-trade ad will show up.

Definition

Behavioral targeting is a form of targeting that ad server and ad networks use for targeting users based on their online behavior. Behavior of an online user is defined as his or her intent for information on the web. If I am browsing the web looking at reviews of a car, checking out the prices of latest cars and how different brands stack up against each other, then my intent is for purchasing a vehicle. Each of these intentions can be targeted and advertisers can run campaigns against them. Each intent, depending on its nature, has an expiry. For example, if I am researching cars on the web then my intent for purchasing one might be around 30 days. After which I am not a ‘hot’ target for auto advertising. On the other hand if I am researching a MP3 player like ipod or zune then that expiry time might be in a few days. Looking for air travel might be even shorter.

An Example

Consider for example you are looking to buy an SUV, you go to edmonds.com and research a couple - BMW X5, Acura MDX etc. Then you go to kbb.com and look up prices of some used luxury SUV. You cannot make up your mind so you decide you will sleep over the idea. Next morning you wake up and go to work and browse news at cnn.com. While you are reading an article your eye catches the attention of a flash ad of a Lincoln SUV running in the 300x250 pixel spot. You find it interesting that they are showing a SUV ad. Later, after lunch, you google a work related term and get to a site that has a discussion forum talking about it. You are reading a discussion thread and you notice that an Acura MDX ad shows up at the side bar on the screen. What do you think? Coincidence? I don’t think so!