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The complex digital advertising ecosystem explained## Everything you need to know to maximize the revenue of your digitalinventoryIt used to be that advertising meant newspaper ads and flyers. In today’sdigital world, advertising has reached new levels.Advertising has evolved into a global marketplace and now requires manyrelationships that extend further than the typical publisher/advertiser bondwe’ve all become familiar with.But no matter how complicated and complex this global industry may become, therelationships between publisher and advertiser (and everyone in between) arecrucial in keeping up with changing practices.Download our Premium Resource – Digital marketing planning spreadsheetThis Microsoft Excel spreadsheet has been created to help you create a cleareracquisition plan to improve leads and sales. The spreadsheet will enable youto create a budget for the year ahead to define and then optimize yourinvestment in search marketing, display advertising, affiliate marketing andonline PR.Access the### Advertising relationships before the digital ageDuring most of the 20th century, there were only two sides to an advertisingtransaction: the publisher and the advertiser. A newspaper, for example, wasproduced by a publisher and had an audience that read its content daily. Anadvertiser would pay the publisher an agreed amount of money to put theircontent in front of that audience.As a result, publishers had a new source of income that allowed them todiscount subscriptions or give out their product for free to build a largerreader base. This process has been used in television and radio commercialsand now it’s used in the online advertisements you see each day on differentwebsites and social media platforms.Within the last century, advertising has made significant adjustments toaccommodate new technologies and, as a result, the process of advertising hasbecome much more complex.### Digital advertising changes the gameIn the past, advertisers couldn’t accurately measure how their newspaper adswere performing. Additionally, the information accessible for television andradio didn’t come close to the digital analytics we have today.With the current information available, advertisers accurately measure thead’s effectiveness and performance, which gives them the opportunity to reachprospective customers in an affordable manner.This, unfortunately, has a negative effect on the publisher.Publishers looking to sell available ad inventory are impacted by theabundance of information advertisers have at their fingertips. With analytics,advertisers determine how to respond to ad performances, which could mean adecrease in the demand for publisher ad slots, particularly if ads aren’tperforming as expected.### Ad networks – digital advertising’s middlemanThe number of advertising opportunities available online is nearly infinitewith some targeting a general popular and others specializing in nicheaudiences. Most advertisers want to reach several target audiences and thus,need several different advertising opportunities. Managing these differentopportunities, ensuring content is accurate, it runs, and paying each partnercould be a huge amount of work.This is where ad networks come in.Ad networks are companies that take on multiple advertisers, also known asbuyers, and direct them to publishers that have ad inventory that correlateswith their content. They facilitate several activities on both ends of thetransaction including keeping track of available ad inventory and negotiatingthe costs. As a publisher, partnering with several ad networks will expand thenumber of buyers your inventory is open to – creating more competition foryour ad slots.If you are an advertiser, working with an ad network opens up the line ofcommunication needed to contact the publishers you strive to work with.Ad networks strive to maintain transparency and trustworthiness withpublishers and advertisers. New technologies, built by ad network companieslike PulsePoint and OpenX, allow for better tracking and impression reporting.Choosing the right ad network partners is crucial for publishers’ success.Transparency, correct reporting, international payment regulations and on-timepayments are all concerns for publishers selling their inventory into adnetworks. It’s not that ad networks are maliciously neglecting any of theseareas but things can fall through the cracks when they are managing thousandsof publisher accounts on their platform.When it comes to payments, ad networks need to have their processesstreamlined to keep publishers happy and relationships long term. This iswhere automating accounts payable through accounting software like Quickbookscan facilitate on-time and early payments to publishers on behalf of these adnetworks to continue to build trust and positive relationships.### Ad exchanges cater to a massive marketAd exchanges are online platforms where the transaction between the publisherand advertiser takes place – with the assistance of the ad network thatconnected the two together.When on ad exchange websites, advertisers bid against their competition forinventory in real-time.Purchasing ad inventory has evolved into a bidding transaction since theindustry went online. With the number of options and buyers available at onetime, bidding is the best way to sell ad inventory for what it’s worth at thatmoment.### Demand-side and supply-side platformsNot only are ad networks available to streamline the advertising process, butboth publishers and advertisers have their own facilitators as well.Advertisers have Demand-Side Platforms (DSP) that help them buildrelationships with ad networks and exchanges, increasing their chances offinding the right publishers for their content.On the other hand, Supply-Side Platforms (SSP) help publishers push adinventory on ad exchanges and are a huge help for publishers who receivemillions of impressions each day.Bottom line, the facilitators (ad networks/exchanges) also need their ownfacilitators (DSPs and SSPs).The larger this industry becomes – the more relationships are needed to keepthings running smoothly.### The foundation of digital advertisingAt the end of the day, the relationship between publishers and advertisers iswhat matters most. The advertising marketplace continues to grow online,making it necessary to create more roles to keep both publishers andadvertisers connected.It may seem more difficult the larger this industry gets, but digitaladvertising continues to move forward. Through all the automated processes,online platforms and facilitators, publishers and advertisers are able to stayconnected.Fortunately, everyone in this industry now has the chance to connect withanyone.This market is only getting bigger and it will take more to succeed. All ofthese relationships are vital, so no matter how small of a role one may have,it’s crucial to the end result.While this industry can be hard to understand, the ecosystem of digitalmarketing is intricate and worth all its while.Matt Shealyis the President ofChamberofCommerce.com. As a seasoned entrepreneur,Matt’s focus is to help businesses leverage the internet and technology to growexponentially.