When we talk about ad monetization, we’re referring to generating revenue through what the ad tech world calls “digital assets.” These digital assets are websites, blogs, and apps — all of which advertisers use to continuously target their audiences to attract and retain loyal customers or clients.  

You probably have many questions if you’re new to the ad publishing world. In this article, we will answer those questions by telling you everything you need to know about ad monetization, how it works, and how to get started.

What Is Ad Monetization?

The quick and simple definition of ad monetization is inserting ads into specific spaces throughout the various digital assets (which, as previously mentioned, refer to websites, apps, and blogs). The goal is to make these ads visible to incoming visitors and users and collect a certain amount of revenue per advertiser from each ad.

Of course, depending on the digital asset you’re using, there are different standards for ad placement and what counts as a view or user engagement. As a publisher, your responsibility isn’t just to ensure that ads are placed accordingly. 

This means creating a seamless and functional platform that offers value to users. The same goes for running a website. It’s not as simple as creating a website and posting content on a common theme. That content must be valuable to users, and the website must cater to the user experience (UX) while implementing search engine optimization (SEO) best practices to ensure your site can easily be found. Of course, that’s a topic for another day.

The bottom line: ad monetization requires placing ads in spaces where they’ll be seen effectively to earn revenue from advertisers. To ensure a higher revenue stream, your digital asset must cater to the UX and garner plenty of user traffic.

Advertisements as a Primary Income

When discussing advertisements as a primary income, we’re talking about a category of digital assets that cater solely to earning an income based on publishing ads. For instance, a website dedicated to providing editorial content to its visitors to place ads would be an example of a digital asset that caters to a primary income.  

It should be noted that creating a website full of editorial content to generate ad revenue should settle on a specific niche. For example, a website dedicated to reviewing beauty products will attract a particular demographic, as well as specific advertisers, targeting said demographic. 

If you create a website without a specific area of focus, you won’t garner much interest from potential visitors because they’ll be confused about what you offer. This would also make advertiser targeting less precise because they wouldn’t be able to hone in on a specific demographic for all users of your site.

Advertisements as a Supplemental Income

When we talk about advertisements as supplemental income, the category of digital assets we’re referring to typically belongs to specific businesses. These digital assets, such as websites and apps, support the business and its functions. The advertisements are used to provide additional income next to their products or services. 

Some examples of this would include an eCommerce website that sells certain products, an app that charges for purchases or a subscription for use, or even a restaurant that uses an app to allow for easier ordering and reservation making. 

More on Ad Monetization Via Apps

Ad monetization is pretty clear in its definition. However, what’s seldom expanded upon is app monetization using advertisements. When we talk about app monetization, we’re referring to the free apps that developers create and use ads to generate revenue from said free apps.

App monetization (using ads) comes in two forms:

In-App Purchases

For many free apps, ad monetization is a primary source of revenue. While the app itself may be free, not all of its features are free, which leaves the potential for a subscription or additional one-time payments to unlock certain features. This is referred to as in-app purchases (IAPs).

It’s a popular method among game developers, offering certain free games while advertising for extra content or more game features such as resources, lives, etc. Unlike other forms of ad monetization, these ads come specifically from the app developer to encourage users to make IAPs.

In-App Advertisements

The second method of ad monetization is one that you’re likely more familiar with. In-app advertisements (IAAs) expose the app’s users to third-party advertisements. Therefore, monetization depends on the ad networks that link to the developers and app businesses on behalf of the advertisers — which caters directly to the supply and demand of ad inventory.

Using in-app advertisements is significantly easier and much less expensive for acquiring new users because this also refers to the use of free apps. Additionally, IAAs allow apps to monetize every user, not just the small population of those willing to pay for the extra features.

Remember that when using the IAA method, you’ll need to ensure that the ads being served are relevant to the specific audience using the app. You’ll also need to ensure that the ads are being served in formats that minimize user disruption so it doesn’t negatively impact user experience. 

Types of Deals for Publishers

When it comes to the buying and selling ad space, everything today is mostly automated. Programmatic advertising has completely changed how advertisers and publishers buy into digital ad space, as it’s a much quicker and more efficient way of purchasing this ad space compared to waterfall bidding. It’s also a better solution for effectively displaying ads to the intended audiences.

Programmatic advertising utilizes multiple technologies (i.e., SSPs, DSPs, ad exchanges, ad servers, etc.) to deliver ads seamlessly and contextually. However, ad buying and selling still maintain human involvement. For example, in direct ad sales, personal interaction (via those who work for ad agencies) is needed to conduct negotiations.

Let’s expand on programmatic advertising and direct sales.

Programmatic Advertising

As mentioned above, programmatic advertising revolves around automation within the ad bidding ecosystem. It’s also an umbrella term for four specific types of auctions:

1. Open Auctions

Open Auctions (also referred to as open marketplaces) are arguably the most traditional method used within the programmatic auction ecosystem. Officially, “open auction” is the term used for real-time bidding where all the players in said ecosystem can participate simultaneously. 

This means publishers can offer their ad inventories in the participating ad exchange networks with a minimum cost per thousand impressions (CPM – cost per mille) price attached. Advertisers can then bid on the available inventory, ensuring the highest bids win.

2. Private Auctions

Private auctions are programmatic auctions in which publishers can limit the participants. In other words, they get to choose which advertisers can see and bid on their inventory, and the primary players involved include the publisher and their selected advertisers, demand-side platforms (DSPs), networks, and agencies. 

These private deals offer a certain level of exclusivity, as they prioritize publisher and advertiser relationships. They also allow the selected group of advertisers to bid on the available (usually premium) inventory before it’s made available to the open marketplace. Private auctions also allow publishers to set a minimum effective cost per thousand (eCPM).

3. Preferred Deals

Preferred deals refer to the type of programmatic auctions that allow publishers to sell their premium inventories at a fixed eCPM cost to a selected group of advertisers — directly. This means the auction atmosphere is limited, and advertisers can bid in real-time at either the fixed eCPM price or above. However, advertisers are only allowed to bid once, which means once their bid is placed, they won’t be eligible to bid again on the same impression in an open auction.

Preferred deals give publishers with much more control over the environment as well as their revenue. This type of programmatic auction also benefits advertisers by allowing them access to more exclusive inventory with straightforward pricing and a sustainable volume of ad impressions.

4. Programmatic Guaranteed

Programmatic guaranteed (also referred to as programmatic direct) is a non-auction method characterized by pricing agreements in large columns. In this scenario, publishers and advertisers deal directly to agree on the pricing, which allows publishers to regulate their inventory prices while also allowing advertisers to buy more premium inventory directly.

Direct Sales

Direct sale refers to the process of negotiations with publishers/advertisers and completing the communication by agreeing on a price and volume of ad inventory.

Agencies typically use this process, as it requires much more time and money than other auction deals. Additionally, impressions are sold to specific clients who want their ads seen in specific contexts on websites, platforms, and apps and are willing to pay higher prices for the guaranteed placement of their advertisements.  

Direct sales also call for ad inventory to be sold off at a fixed CPM rate determined during negotiation. This is precisely what guarantees the inventory for the clients while also guaranteeing a level of predictability, as the paid exchange is predetermined, as is the ad delivery. Overall, the primary benefit of direct sales for publishers is the ability to garner much higher CPMs than usual. 

What Is the Programmatic Advertising Ecosystem Made Up Of?

Throughout this article, we’ve mentioned all the “players” within the programmatic advertising ecosystem. By players, we mean the participants within a given auction. 

Here’s the breakdown of who you can expect to participate in a programmatic auction at any time.

Supply-Side Platforms (SSPs)

SSPs are programmatic monetization platforms publishers utilize to sell their advertising spots across their digital assets. More specifically, SSPs connect with ad exchanges and demand-side platforms to enable advertisers to bid on various inventories.

SSPs enable publishers to manage all of their automated ad sales and associated processes, such as selling ad space, ad optimizing, analyzing ad campaigns, and creating the best ads for their monetization strategies. One of the greatest benefits of using an SSP is that it cuts out the middlemen, such as sales managers, for negotiations because they link directly to the ad exchanges and automatically evaluate the ad space for sale. The ad space is then auctioned off to the highest bidder, garnering the best possible price.

Demand-Side Platforms (DSPs)

DSPs are programmatic monetization platforms that companies, ad networks, and even agencies use to buy ad space from publishers and ad exchanges. DSPs help advertisers by prioritizing their requirements based on their target audiences and pricing, as well as their overall campaign goals. They also automatically assess the available ad inventory to ensure it meets the specified criteria to ensure optimal ad spaces that are also cost-efficient.

Ad Servers

Ad servers are platforms on which advertisers host their creative assets. These creative assets include banner ads, native ads, videos, etc. They also cater to data storage to ensure the distribution of these creatives can be carried out within milliseconds once an impression is sold. 

This allows advertisers to use ad servers to track and measure the performance of their ads via reporting and ad management tools. Ad servers also benefit publishers, allowing them to connect to multiple demand partners, monitor their ad campaigns, and set priorities for ad delivery.

Ad Networks

An ad network, short for advertising network, is a platform or service that connects advertisers and publishers in order to facilitate the buying and selling of advertising space. It acts as an intermediary between advertisers wanting to display their ads and publishers with available ad inventory on their websites, mobile apps, or other digital platforms.

The primary function of an ad network is to aggregate ad inventory from multiple publishers and offer it to advertisers, making it easier for them to reach a broader audience across various websites or applications. Ad networks provide tools and technology to manage ad campaigns, target specific audiences, and track the performance of ads.

Ad Exchanges

An ad exchange is a digital marketplace that enables the buying and selling of online advertising inventory in a real-time auction-based environment. It acts as a platform where publishers can offer their available ad space, and advertisers can bid on that inventory to display their ads. Ad exchanges provide a transparent and efficient marketplace for the automated buying and selling of digital advertising.

Agency Trading Desks (ATDs)

An agency trading desk is a specialized unit within an advertising or media buying agency focusing on programmatic advertising and media buying. It operates as a central hub or platform where advertisers can access and manage their programmatic advertising campaigns across various ad exchanges, demand-side platforms (DSPs), and other digital advertising sources.

The primary role of an agency trading desk is to leverage technology and data to execute programmatic advertising strategies on behalf of their clients.

Data Management Platforms (DMPs)

A data management platform (DMP) is a technology platform that collects, stores, organizes, and analyzes large amounts of data from various sources to create unified and actionable audience profiles. It gives marketers and advertisers a centralized system for managing and leveraging data to enhance their targeting, personalization, and campaign optimization efforts.

Getting Started with Ad Monetization

Now that you know how ad monetization works and what’s involved, you’re probably ready to see what you need to do to get started. 

The first step in ad monetization is to build a website or app with a specific audience in mind. As mentioned earlier in this article, you’ll need to cater to the user experience. So, make sure whatever content you’re putting out is attractive and valuable to potential visitors and users. 

Next, you’ll want to determine which ad tech tools will be most useful. We suggest starting with the basics — signing up with a major ad server like Google AdSense. It’s a good idea to start with AdSense if you’re a newbie and working up to Google Ad Manager. These incredibly intuitive tools offer plenty of support to allow you to follow step-by-step instructions to learn your way around the ad tech world. 

As you grow in your ad publishing endeavors, the next step would be to find ways to optimize your ad stack to increase your ad revenue. The best way to do this is by working with an ad monetization solution like Freestar. Get started today to see how we can help you and your site! 

The post What Is Ad Monetization and How Does It Work? first appeared on Freestar.

In this article, we will explore header bidding, how it works, and the benefits and limitations of this technique. We will also take a closer look at server-side header bidding (SSHB), a variation of header bidding that is gaining popularity in the industry.

What is header bidding?

Header bidding is a programmatic advertising technique that allows publishers to offer their ad inventory to multiple ad exchanges simultaneously before making ad calls to their ad server. In traditional ad serving, publishers prioritize ad networks or exchanges and make calls to them one at a time, often resulting in lower bids and reduced revenue. With header bidding, publishers can invite multiple demand partners to bid on ad inventory simultaneously, resulting in increased competition and potentially higher ad revenue. This technique is called “header” bidding because the code is placed in the head of a web page’s HTML code.

Header bidding replaced waterfall bidding because it is a more efficient and effective method of programmatic advertising. In waterfall bidding, publishers prioritize ad networks or exchanges and make ad calls to them one at a time, in sequential order. However, this can result in lower bids and reduced revenue for publishers as the system is based on the estimated value of the demand sources rather than the bids, so the one with the highest bid may be behind others with a higher estimated value. For example, in a given auction, if the third-highest estimated value demand partner has the highest bid, the first two would need to go unfilled for the publisher to access that highest bid.

Benefits of Header Bidding

The main benefits of header bidding include the following:

1. Increased revenue: Header bidding helps publishers achieve higher revenue by creating a competitive environment for their ad inventory. By enabling multiple demand sources to bid on the same inventory simultaneously, header bidding ensures that the highest-paying ad is selected for display.
2. Improved fill rates: Header bidding promotes adding new demand sources and allowing multiple demand sources to compete for the same inventory. This means that publishers are more likely to fill their inventory with relevant ads, leading to higher overall fill rates.
3. Greater control: With header bidding, publishers have more control over their ad inventory and can decide which demand sources to work with. This helps them optimize their revenue and ensure they work with the most effective partners.
4. Reduced delay: Unlike traditional waterfall ad buying, header bidding significantly reduces delays between an ad request and the ad being served. This improves the user experience, reduces page load times, and helps publishers avoid losing visitors due to slow loading times.
5. Increased transparency: Header bidding provides greater transparency for publishers and demand sources. Publishers can see which demand sources are bidding on their inventory and at what price, while demand sources can see the inventory being offered and make informed decisions about whether to bid on it. This transparency helps to build trust between publishers and demand sources and improves overall industry accountability.

Limitations of header bidding

While header bidding offers many benefits, limitations and challenges are also associated with this advertising technique. Some of the main limitations of header bidding include the following:

1. Technical complexity: Implementing header bidding can be technically complex, requiring changes to the publisher’s ad server and website code. This can be challenging for smaller publishers or those without a dedicated tech team.
2. Higher data usage: Header bidding requires additional data to be sent back and forth between the publisher and demand sources, which can increase data usage and costs.
3. Ad blocker issues: Header bidding can be vulnerable to ad blockers, which can block the header bidding code from running, leading to lost revenue for publishers.

Overall, while header bidding offers many benefits, it is essential for publishers to carefully consider the potential limitations and challenges before implementing this advertising technique.

How does header bidding work?

Header bidding is a programmatic advertising technique that allows multiple demand sources to bid on the same ad inventory in real time. Here’s how it works:

1. The publisher’s website initiates the header bidding process: Instead of immediately calling the ad server, the publisher’s website initiates the header bidding process by sending requests to multiple demand sources (such as ad networks, exchanges, or SSPs) to bid on the ad inventory.
2. Demand sources bid on the ad inventory: The demand sources receive the request and submit their bids in real time. These bids include information about the ad creative and the bid price.  
3. The highest bid is selected: The bids are evaluated in real time, and the highest bid is selected. The winning demand source’s ad creative is then sent back to the publisher’s website, along with any tracking or targeting information.
4. The ad is displayed on the website: The publisher’s website receives the ad creative and displays it on the page, where the user can see it.
5. Steps 1-4 are repeated for each ad slot: This process happens asynchronously for each ad slot on the page, allowing multiple demand sources to bid on each slot and ensuring that the highest-paying ad is displayed.

Overall, header bidding enables publishers to offer their ad inventory to multiple demand sources simultaneously, creating a more competitive environment that can increase revenue, improve fill rates, and provide greater control over their ad inventory.

The process described above is an example of client-side header bidding (CSHB), but there is also a server-side implementation.

What is server-side header bidding?

Server-side header bidding (SSHB) is a programmatic advertising technique involving the header bidding process on an external server rather than on the user’s browser. Unlike traditional header bidding, where the bidding process occurs on the user’s device, SSHB moves the bidding process to an external server, which can help reduce latency and improve page load times.

In SSHB, the publisher’s browser sends a request to an external server that hosts the header bidding solution. This server sends bid requests to multiple demand sources, including ad networks, exchanges, and SSPs. The demand sources receive the bid request and submit their bids in real time, with the highest bid being selected. The external (Prebid) server sends the winning bid/creative to the publisher’s ad server (GAM in most cases), which determines the winner and serves the winning creative. 

SSHB can offer many benefits over traditional client-side header bidding, including reduced latency, improved page load times, and the ability to handle high traffic levels more efficiently.

Getting Started with Header Bidding

Getting started with header bidding can be a complex process, but there are some basic steps that website publishers can follow to implement this advertising technique:

1. Evaluate the potential benefits: Before getting started with header bidding, publishers should evaluate the potential benefits of this advertising technique for their website, including increased revenue, improved fill rates, and greater control over their ad inventory.
2. Choose a header bidding solution: There are many header bidding solutions available, ranging from free and open-source solutions like Prebid to commercial platforms. Publishers should evaluate the different options and choose a solution that best meets their needs.
3. Implement the header bidding code: Once a header bidding solution has been selected, publishers must integrate it on their website. 
4. Configure the header bidding settings: Publishers will also need to configure the settings for their header bidding implementation, including which demand sources to work with, what bid floor to set, and how to handle ad timeouts.
5. Monitor and optimize performance: After implementing header bidding, publishers should monitor their performance and optimize their settings to improve revenue and fill rates. This may involve adjusting bid floors, adding or removing demand sources, and monitoring ad quality issues.
6. Consider working with a header bidding partner: Publishers may want to work with a header bidding partner like Freestar to help manage their implementation and optimize their performance. These partners can provide additional expertise and support to help publishers achieve the best results from their header bidding efforts. It’s important to note that these partners usually have requirements to work with them, such as monthly pageviews or recurring ad revenue. 

Working with Freestar

Are you experiencing low ad yield? Lack of transparency? Need to optimize demand? Freestar’s header bidding solution enables publishers to open up their ad inventory for bidding by multiple demand partners in real time. But that’s just the start; we’ve built numerous optimization features to maximize yield.

Freestar offers publishers the best ad stack:

• Industry expertise – Industry experts and machine learning to maximize your revenue
• Robust reporting – Robust, unified dashboard with real-time metrics
• High-quality demand – We have over 30+ premium demand partners
• Easy implementation – Hassle-free implementation to make installation easy
• Lightweight Code – Lightweight code with user experience in mind
• Innovative ad products – An innovative and evolving suite of ad products

If you’re interested in maximizing your header bidding and ad monetization, don’t hesitate to contact our team to find out how we can help. Get started today! 

In Conclusion

Header bidding has become an essential part of the programmatic advertising ecosystem, enabling publishers to increase their revenue and gain greater control over their ad inventory. By creating a more competitive environment, header bidding ensures that publishers can get the most value out of their ad space while providing advertisers greater access to high-quality inventory. 

With the introduction of server-side header bidding, the benefits of this technique are only set to increase, offering faster page load times and improved efficiency. As the advertising industry continues to evolve, header bidding will likely remain a vital part of the programmatic landscape, providing publishers and advertisers with the tools they need to succeed in an increasingly complex ecosystem.

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