DST19600 - The Online Advertising Industry

This section provides a basic overview of the online advertising industry to help illustrate the various services involved in delivering advertising online.

The value chain broadly involves advertisers and media agencies buying advertising from publishers as well as search and social media services. In some cases, the advertiser will contract directly with the publisher. In other cases, there may be one or more intermediaries involved in the process.

Direct advertising

Many of the social media services, internet search engines and online marketplaces which monetise their services through displaying advertising to users have developed digital platforms to facilitate the sale of ad impressions to advertisers. These platforms usually include a suite of tools which allow advertisers to customise their advertising campaigns, for instance by selecting the target audience, the preferred form of advertising and setting budgets.

These digital platforms enable the advertiser to purchase ad inventory directly from the group providing the digital service activity. As these services have matured, some platforms allow advertisers to purchase advertising inventory from third party publishers (who typically use other advertising services provided by the group).

This direct advertising still forms a major part of the total online advertising market. The revenues the group receives from delivering advertising on the digital service activity itself will already form part of the revenues of that digital service. However, the revenues received from facilitating advertising on third party publishers will be revenues relating to online advertising services.

Programmatic advertising

Most advertising displayed on third party websites (which are not digital services activities) is delivered through programmatic advertising. This involves the use of automated systems and processes to buy and sell advertising inventory. It often involves real time bidding for inventory.

There is often a complex and highly integrated chain of participants in a programmatic advertising transaction and many different online services can be involved.

These services all facilitate online advertising and will therefore be online advertising services. The following list explains some of the key services in the programmatic advertising value chain.

Demand-side platforms (DSPs)

DSPs are services which facilitate advertisers and media agencies to buy programmatic display advertising from ad exchanges, publishers and Supply Side Platforms (SSPs). They are likely to meet the marketplace definition given their main purpose is to facilitate the sale of third party advertising inventory.

Supply Side Platforms (SSPs)

SSPs are online services used by publishers to facilitate the sale of online advertising inventory. They effectively connect publishers’ advertising inventory to sources of demand. These include DSPs, ad exchanges and other SSPs. SSPs are also likely to meet the marketplace definition.

Ad servers

Ad servers are online services which serve adverts to users and manage publisher ad inventory.

Analytics

Analytics software enables advertisers to understand the impact and effectiveness of advertising campaigns. The ability to track the performance of online adverts in granular detail is a key selling point of online advertising over traditional forms of advertising and analytic services consequently form an important part of the online advertising ecosystem.

Web browsers

Web browsers facilitate advertising online by notifying the SSP that advertising space is available for sale when a user visits a web page.