The VP of Product Management provided a great intro into our business to the Data Warehouse team yesterday and I wanted to share what I can here. The specific statistics/data links were something I went digging around to provide concrete information.
- First, what does the advertising market look like?
http://adage.com/images/random/datacenter/2008/spendtrends08.pdf
Total Ad spend in 2007 is around $149Billion. With 49.22% ($64.43B) on TV in its various forms, 39.3% ($58.55B) on print (newspaper and magazines), 7.6% ($11.3B) on internet, 7.2% ($10.69B) on Radio, and the rest 2.7% ($4.02B) on Outdoors (which is dominated by ClearChannel).
Most of the online advertising dollars are spent on paid search (where Google dominates and we even use them ) and the rest on display ads. What I'll focus here on is display advertising since that's our business.
- So, what are all the different types of ads?
We deal with banner ads so different types of ads are defined by their sizes. These are the most common ones that we deal with:
- Leaderboard (728 x 90) - you'll see these at the top of the pages
- Medium Rectangle - "Med Rec" (300 x 250)
- Skyscraper (160 x 600 and 120 x 600) - you'll see these on the sizes of the pages
- Half Page (434 x 600)
You can read more about ad types here: http://www.articlesbase.com/online-promotion-articles/banner-advertising-different-type-of-banners-374815.html
- Next, what are buyers and sellers looking for?
Buyers are looking for ROI (return on investment) and that can be in the forms of increasing brand recognition, getting new leads and sales, and increasing influence.
Sellers in return are looking to continue to provide good user experience while also maximizing revenue. They additionally also want to increase their market share, show/prove to buyers their value and educate buyers, and protect their brand.
- So what happens after sellers and buyers come together
They start working on contract terms while buyers and sellers are both looking for best deals possible. They'll need to define the ad types, the volume, the budget, the pricing model, and the target audience. Pricing models include:
- Fixed price
- CPC - per click
- CPM - per 1000 impressions
- CPA - per action
Sellers need to come in knowing where they want the pricing to be at based on historical performance, ROI, and supply / volume. All of this is more of an art than science.
In terms of defining the target audience, there are different ways that buyers can define this. They can specify which site or channels they want. These are considered 'endemic content'. Other targets they can specify are: demographic (age, gender), geography (city/dma/state/zip code), interests (sports, travel, etc). One challenge for social network sites is that unlike traditional content sites, they don't have much content that's considered 'endemic content' so they can only leverage demographic and geographic data. They'll then also need to take the extra step of understanding the interests of their users.
- And finally, once it's all said and done, how does the sale get fulfilled?
Account execs, account managers and sales planners work with buyers/advertisers to get the sale defined and get the details on the creative assets. Once they get the creative assents then the campaign get created by campaign managers and added to the ad serving system. The ads then get served.
- What next?
Once campaings are served, it's then all about performance metrics: did the actual meet the advertiser asks, how many people viewed it, how many people clicked on it, what was the conversion rate, what kind of audience did it reach, etc?
Providing all this information back to the buyers gives them the knowledge to figure out their ROI and by providing more in depth knowledge about their audience, we add to their ROI. This in turn would drive them to come back and buy more ads.
Hope this helps answer some questions for those interested to jump in to this exciting business.
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