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How does online advertising work?

When I type in the URL bar www.publisherwebsite.com, what happens from the initial request until my page is fully displayed?

My guesses, observation and researchs brings the following elements :

  • One initial request is made, asking for the html code. This code contains different ressources that will be requested by the browser.
  • Among the ressources requested, there is 3rd party code (e.g. urchin.js), that will load trackers in the page to profile the user (for behavioural advertising purposes)
  • Publisher will sell on an "ad exchange" spaces for advertisement
  • In the meantime, trackers previously loaded will bid to get the space and display their ad.
  • The highest offer get the spot, and pay the second highest offer + 1ct. Then the publisher will send a redirect code to trigger the request on the advertiser server.

Then it leads me to a few questions to get the complete picture :

  • How can the publisher put "on hold" the redirecting request so that the bidding can occur?
  • Does a tracker needs to be loaded on the page to bid?
  • What happens if there is nobody to bid?
  • Do content delivery networks have a role here?
  • Did I miss something important?
  • If a publisher uses an advertising network like adsense or chikita, then he has no control as to the ads that are displayed. The publisher also has a choice to sell space to advertisers in person without using these networks but it takes more work. I haven't tried it myself tho. – Mike Jun 29 '16 at 5:15
  • Oh so the advertising spots are reserved from the beginning by the ad exchange? – Richard Jun 29 '16 at 5:26
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Online advertising works in two different ways depending on if you are hosting the advertising on your site yourself or if you are using an online advertising network such as Google AdSense. I will focus on AdSense as that is the most common method of online advertising at this time.

What happens is you register as a publisher of the advertising materials on your website and receive the code to embed the advertisements on your site. Once your site has been approved and keyword checked to target advertising to the content on your site you will begin to see advertisements show up and will get paid based on the advertising networks model which will either be impression based (number of times the ads where seen) or click based (number of times the ads where clicked on) or both.

Now from the advertisers side what happens is an advertiser comes up with an advertisement they want to publish and the keywords to do with the advertisement. Now most advertising networks use something similar to a blind auction for ad purchasing in the sense that you specify how much you are willing to pay per click, how much per impression, and the upper budget limits for the campaign. The advertising network then takes care of when to show the advertisement and how often based on your configurations.

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It varies. The flow you outline is mostly right for a common setup, but that's not the only setup.

How can the publisher put "on hold" the redirecting request so that the bidding can occur?

A page can have several adverts (ad-units) which can be managed differently. For each ad-unit, there will only be one system controlling what goes there, usually a sell-side platform (SSP), possibly run by the publisher themselves. The SSP will take a moment to collect bids then make a decision.

It sends details of the winning bid to the ad-unit. That may include the advert itself, or a redirect to fetch the advert. Redirects are common with video ads, and where the winning bid came from another ad-exchange. If it's a redirect, the ad-unit now fetches the right content.

Does a tracker needs to be loaded on the page to bid?

No. Tracking is a separate part of the adtech ecosystem. They're often linked, but you can have adverts without tracking, and tracking without adverts. Sell-side platforms pass on user and page details to potential buyers. The bidders often come from a separate system (a demand side platform, or DSP) and have no tracker or direct link to the page.

What happens if there is nobody to bid?

The ad-server will usually have a set of fallback adverts to show.

Do content delivery networks have a role here?

Not really. An advert could be hosted on a CDN, and the ad-unit and tracker scripts will usually be on a CDN, but that's not relevant.

Other setups are where the publisher takes more control of the advert. E.g. newspapers will have dedicated sales teams who "manually" sell high-value advertising, and this doesn't go through bidding.

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