Author Archives: krcmic.com

Preferred deals – what is it?

Leave a reply

A preferred deal, also referred to as programmatic non-guaranteed, involves an agreement between a publisher (seller) and an advertiser (buyer) granting the advertiser preferential access to inventory. In this arrangement, the advertiser receives early access to inventory in exchange for a fixed, pre-negotiated cost per thousand impressions (CPM). This arrangement ensures that the advertiser receives priority access to desired inventory while providing the publisher with a guaranteed revenue stream.

What are preferred deals?

Preferred deals, a type of programmatic direct advertising, facilitate direct connections between publishers and advertisers. In this arrangement, an agreement is established where the publisher agrees to offer advertisers preferential access to their inventory at a pre-negotiated cost per thousand impressions (CPM).

Unlike private marketplace or open auction setups, the inventory in preferred deals is not reserved for a specific advertiser. Instead, buyers are given the first opportunity to review the inventory and make a decision on whether to purchase it.

If a buyer declines the deal, the publisher has the option to sell their inventory in a private marketplace or open auction. Furthermore, publishers can negotiate preferred deals with multiple advertisers.

It is important to note that the specifics of preferred deals, such as impressions and dates, are not fixed and can be subject to adjustment. This flexibility is why preferred deals are also referred to as programmatic non-guaranteed.

How do preferred deals work?

Preferred deals operate in two ways, depending on whether the publisher or the advertiser initiates the process:

If a publisher initiates a preferred deal:

  1. The publisher sends invitations to potential advertisers, often utilizing platforms like Google Ad Manager.
  2. Interested advertisers accept the invitation and establish communication with the publisher.
  3. Both parties engage in negotiations to determine terms, including the number of impressions and the cost per thousand impressions (CPM).
  4. The publisher creates a proposal outlining the agreed-upon terms and shares it with the advertiser.
  5. Once both parties finalize the deal, the campaign begins, and the agreed-upon inventory is allocated.

If an advertiser initiates a preferred deal:

  1. The advertiser identifies a suitable website or app that aligns with their requirements.
  2. The advertiser reaches out to the publisher expressing interest in a preferred deal.
  3. The publisher responds with more information and engages in CPM negotiations.
  4. Upon reaching an agreement, the advertiser places an order for the desired inventory.
  5. The publisher reviews the order, confirms it, and initiates the campaign accordingly.

Top benefits of preferred deals for publishers

Preferred deals enable a direct partnership between publishers and advertisers, allowing for more tailored and mutually beneficial advertising arrangements.

Preferred deals offer several significant benefits to publishers, enhancing their revenue and providing greater control and flexibility in their advertising strategies. Here are the top advantages:

  1. Predictable revenue: Preferred deals eliminate the uncertainty of auctioning inventory and fluctuating prices. With a fixed cost per thousand impressions (CPM), publishers can enjoy a more stable and predictable revenue stream. This allows for better financial planning and management.
  2. Premium pricing: By offering preferential access to inventory, publishers can set a fixed CPM that is often higher than what would be achieved in an open auction. Advertisers are willing to pay a premium price for the opportunity to secure priority access to desired inventory, enabling publishers to maximize their revenue potential.
  3. Increased flexibility: Publishers are not limited to a specific set of advertisers in preferred deals. If an advertiser declines the deal, publishers have the freedom to sell their inventory in the open market or explore other opportunities. This flexibility empowers publishers to optimize their revenue and ad quality without solely relying on specific advertisers.
  4. Quality control: Preferred deals allow advertisers to ensure brand safety and deliver their campaigns in a trusted and brand-friendly environment. Publishers and advertisers agree on specific ad placements before finalizing the deal, enabling better control over the quality and context of the advertising. This fosters improved ad performance and enhances the overall user experience.

Furthermore, advertisers have the option to decline an inventory if it doesn’t meet their specific needs, providing a level of flexibility and quality assurance for both parties involved.

Disadvantages of preferred deals

While preferred deals offer significant advantages, there are a few drawbacks that both publishers and advertisers should consider:

Disadvantages of preferred deals for publishers

  1. Unfulfilled inventory risk: The main disadvantage is that publishers face the possibility of unfulfilled inventory if an advertiser chooses not to buy it. In such cases, the inventory may move to a private auction and, eventually, the open market. This can impact the publisher’s revenue potential.
  2. Challenges for newer or smaller publishers: Preferred deals may not be as accessible for newer or smaller publishers who may struggle to attract advertisers’ attention. Established publishers with a strong reputation and larger audience bases often have a higher chance of successful preferred deals.
  3. Limited reach: Preferred deals typically involve a one-on-one agreement with a specific advertiser, which may limit the reach and variety of advertisers accessing the publisher’s inventory. Publishers may miss out on opportunities to work with other advertisers who could potentially bring different targeting options or niche markets.
  4. Resource intensive: Managing preferred deals requires time and resources to negotiate and maintain agreements with individual advertisers. Publishers need to dedicate efforts to communicate, negotiate terms, and ensure the smooth execution of each preferred deal. This can be challenging for publishers with limited resources or smaller teams.
  5. Dependency on advertiser demand: Publishers relying heavily on preferred deals may face challenges if the demand from advertisers decreases. They might become more dependent on a limited number of advertisers, potentially leading to fluctuations in revenue and the need to explore alternative revenue streams.

Disadvantages of preferred deals for advertisers

  1. Competition for specific inventory: Preferred deals do not guarantee exclusivity, so advertisers may find themselves competing with other buyers for the same inventory. This can drive up the CPM and increase competition for the desired ad placements.
  2. Lack of benchmark pricing: Unlike open auctions, preferred deals do not provide advertisers with a benchmark for pricing. Advertisers must assess the credibility and trustworthiness of the publisher before negotiating the price, which requires careful evaluation.
  3. Complex publisher selection process: Advertisers need to identify the right publishers whose audience aligns with their target demographic. This process can be more complex and time-consuming, requiring thorough research and analysis to ensure the best match.

Understanding these disadvantages allows publishers and advertisers to make informed decisions and develop strategies that effectively balance the benefits and drawbacks of preferred deals.

Preferred deals vs. private auctions

While preferred deals and private auctions share similarities in terms of publishers inviting advertisers to purchase their inventory, there is a crucial distinction between the two methods:

  • Private auctions: In a private auction, publishers selectively invite a limited number of advertisers to bid for their inventory. The publisher sets a floor price and has full control over the participants in the auction. Advertisers submit their real-time bids, and the highest bid ultimately wins the auction. Private auctions are also referred to as private marketplaces or invitation-only auctions.
  • Preferred deals: In contrast to private auctions, preferred deals do not involve real-time bidding. Instead, advertisers agree to pay a fixed, pre-negotiated cost per thousand impressions (CPM) to secure inventory. Preferred deals do not provide early-bird access to inventory, and advertisers are given lower priority in ad servers compared to private auctions.

The distinction lies in the bidding process and pricing structure. Private auctions rely on real-time bidding, where advertisers compete with their bids, while preferred deals establish fixed CPMs without real-time bidding. Additionally, private auctions offer higher priority in ad servers and provide advertisers with early access to inventory, whereas preferred deals do not offer these advantages.

Understanding the difference between preferred deals and private auctions helps advertisers and publishers choose the most suitable approach based on their specific needs and objectives.

Preferred deals vs. private auctions

While preferred deals and private auctions share similarities in terms of publishers inviting advertisers to purchase their inventory, there is a crucial distinction between the two methods:

  • Private auctions: In a private auction, publishers selectively invite a limited number of advertisers to bid for their inventory. The publisher sets a floor price and has full control over the participants in the auction. Advertisers submit their real-time bids, and the highest bid ultimately wins the auction. Private auctions are also referred to as private marketplaces or invitation-only auctions.
  • Preferred deals: In contrast to private auctions, preferred deals do not involve real-time bidding. Instead, advertisers agree to pay a fixed, pre-negotiated cost per thousand impressions (CPM) to secure inventory. Preferred deals do not provide early-bird access to inventory, and advertisers are given lower priority in ad servers compared to private auctions.

The distinction lies in the bidding process and pricing structure. Private auctions rely on real-time bidding, where advertisers compete with their bids, while preferred deals establish fixed CPMs without real-time bidding. Additionally, private auctions offer higher priority in ad servers and provide advertisers with early access to inventory, whereas preferred deals do not offer these advantages.

Understanding the difference between preferred deals and private auctions helps advertisers and publishers choose the most suitable approach based on their specific needs and objectives.

Considering preferred deals?

Before committing to preferred deals and purchasing ad inventory, it’s crucial for advertisers to carefully assess the pros and cons.

Preferred deals are particularly advantageous when you aim to target a specific audience segment without being tied down to a long-term commitment. They offer flexibility and are beneficial when you have a clear understanding of your target demographic and have identified publishers that align with your goals.

However, it’s essential to thoroughly vet the publisher and analyze their current traffic patterns before entering into a deal. Evaluating the publisher’s reputation, audience quality, and suitability for your brand ensures a mutually beneficial partnership.

By weighing the advantages and considering the publisher’s credibility, you can make an informed decision and maximize the effectiveness of your advertising efforts.

KEY INFORMATION ABOUT PREFERED DEALS TO REMEMBER

Considering Preferred Deals?

  • A preferred deal is a direct agreement between a publisher and an advertiser, providing preferential access to inventory at a pre-negotiated cost per thousand impressions (CPM). It’s important to understand the benefits and drawbacks of preferred deals for both publishers and advertisers.
  • Benefits for publishers:
    • Revenue Predictability: Preferred deals offer a more predictable revenue stream compared to other advertising methods.
    • Quality Control: Publishers can maintain brand safety and ensure high-quality traffic by curating the advertisers and placements within the preferred deal.
    • Higher Earning Potential: Preferred deals often result in higher CPMs, allowing publishers to maximize their earning potential.
  • Drawbacks for publishers:
    • Unfulfilled inventory risk: One drawback is the possibility of unfulfilled inventory. If an advertiser does not purchase the available inventory within the preferred deal, the publisher may need to find alternative ways to sell the unsold inventory, such as private auctions or the open market. This can impact the publisher’s revenue potential and require additional effort to monetize unsold inventory.
    • Limited reach: Preferred deals typically involve a one-on-one agreement with a specific advertiser, which may limit the reach and variety of advertisers accessing the publisher’s inventory. Publishers may miss out on opportunities to work with other advertisers who could potentially bring different targeting options or niche markets.
    • Resource intensive: Managing preferred deals requires time and resources to negotiate and maintain agreements with individual advertisers. Publishers need to dedicate efforts to communicate, negotiate terms, and ensure the smooth execution of each preferred deal. This can be challenging for publishers with limited resources or smaller teams.
    • Dependency on advertiser demand: Publishers relying heavily on preferred deals may face challenges if the demand from advertisers decreases. They might become more dependent on a limited number of advertisers, potentially leading to fluctuations in revenue and the need to explore alternative revenue streams.
  • Benefits for advertisers:
    • Brand Safety and Quality Traffic: Preferred deals provide better control over ad placements, ensuring brand safety and access to high-quality traffic.
    • Reduced Ad Fraud Risk: With limited access to inventory, preferred deals minimize the chances of ad fraud.
    • Improved Transparency: Advertisers can have increased visibility into inventory availability, pricing, and campaign performance through direct agreements.
  • Drawbacks for advertisers:
    • Finding Suitable Publishers: Advertisers need to invest time and effort in identifying suitable publishers who align with their target audience and are worth the higher price tag of a preferred deal.
    • Competition for Ad Inventory: Advertisers may have to compete with other buyers for the limited ad inventory available within the preferred deal.
  • Preferred deals are ideal for advertisers who aim to reach specific audience segments without long-term commitments. They are particularly useful when advertisers have a clear understanding of their target demographic and have identified suitable publishers for their campaigns.

However, it is crucial to carefully weigh the pros and cons and evaluate the suitability of preferred deals for your advertising goals and budget before proceeding with them.

eCPM – what is effective cost per mille, eCPM formula and what is eCPM used for?

1 Reply

The term eCPM, or effective cost per mille, is a key metric that publishers use to evaluate the revenue generated from every one thousand ad impressions displayed on their app or website. It is a measure of the effectiveness of their monetization efforts and helps them optimize their ad placements for maximum revenue. By tracking eCPM, publishers can monitor the performance of their monetization campaigns, identify areas for improvement, and make data-driven decisions to enhance their overall ad monetization strategy.

What is effective cost per mile (eCPM) and how does it differ from CPM?

To grasp the meaning of eCPM, it is important to start by understanding CPM, which stands for cost per mille (thousand). CPM represents the predetermined cost that advertisers assign to every one thousand impressions they receive.

CPM is a metric used by advertisers to allocate budgets and optimize campaigns.

On the other hand, eCPM refers to the cumulative revenue earned by a publisher for every one thousand impressions. Unlike CPM, which can be accurately calculated based on the total campaign spend and the number of impressions, eCPM is a dynamic calculation influenced by the forces of supply and demand.

eCPM encompasses two key aspects: monetization and user acquisition (UA).

  • Monetization side of eCPM: On the monetization side, eCPM serves as a measure of a publisher’s ad monetization performance. A high eCPM indicates that the ads displayed on their app are performing well and effectively converting users. The concept is straightforward: higher conversion rates lead to increased competition for ad placements, resulting in higher payments for app developers.
  • User acquisition (UA) of eCPM: eCPM quantifies the ad revenue generated by a specific campaign. Ad networks utilize eCPM to rank campaigns within their ad-serving models, giving prominence and frequency to campaigns with the highest eCPM scores. This strategy enables these campaigns to increase their volume of impressions and rapidly scale. Consequently, eCPM reflects the value of an impression and the purchasing power of a given campaign.

How to calculate effective cost per mille eCPM/eCPM formula

To calculate effective cost per mille (eCPM), you can use the following formula:

(Total earnings / Total number of impressions) x 1000 = eCPM

Let’s consider an example: a mobile app has earned $700 per day from ads and has served 200,000 ad impressions. We can calculate the eCPM as follows:

($700 / 200,000) x 1000 = $3.5 eCPM

This means that for every 1,000 impressions, the publisher (app developer) generates $3.5 in revenue.

What are the main advantages of eCPM metrics?

Effective cost per mille (eCPM) provides marketers with a way to assess the performance of each campaign while maintaining their reach. Understanding how these metrics are calculated helps marketers ensure they are following the most effective purchasing model.

In what scenarios is the eCPM model beneficial for publishers?

  1. Running a direct response campaign: Effective cost per mille (eCPM) can help publishers evaluate the effectiveness of their direct response campaigns, allowing them to make data-driven decisions to optimize performance and maximize revenue.
  2. Assessing the impact of app changes: Publishers can use effective cost per mille (eCPM) as a measurement tool to analyze how changes in their app, such as design or features, affect ad performance and revenue generation.
  3. Comparing app performance to averages: Effective cost per mille (eCPM) enables publishers to compare the performance of their app over specific periods, such as monthly or yearly, against average eCPM values. This comparison helps identify trends and areas for improvement.
  4. Universal measurement of revenue per impression: Effective cost per mille (eCPM) serves as a standardized metric for publishers to evaluate the revenue generated per ad impression served across different campaigns and platforms.
  5. Critical indicator for campaign performance: Effective cost per mille (eCPM) acts as a key performance indicator (KPI) that reflects the efficiency and profitability of ad campaigns. Publishers can use it to gauge the success of their campaigns and make informed decisions for optimization.
  6. Optimizing revenue streams: Since effective cost per mille (eCPM) is influenced by ad performance, publishers can leverage this metric to optimize their revenue streams. By analyzing eCPM trends and identifying factors that impact its fluctuations, publishers can make strategic adjustments to maximize their overall revenue.

What is an effective cost per mille (eCPM) floor?

An eCPM floor, also known as a flat eCPM or predefined CPM, is the minimum bid threshold that an advertiser or ad network must meet to serve an ad on a publisher’s website. It ensures that the winning bid meets a certain minimum value, typically set slightly higher than the second-highest bid, to maximize advertising revenue.

However, there is a caveat. The eCPM floor will only come into effect if the winning bid surpasses this minimum threshold. If none of the bids meet the publisher’s defined minimum, the ad will not be served, resulting in potential revenue loss.

eCPM floors can be established for specific geographical regions, device types, advertisers, ad formats (such as rewarded video, banner, interstitial, etc.), or even individual ads. It requires ongoing monitoring to ensure its effectiveness.

Setting up floor prices incorrectly can lead to revenue loss, but there are strategies to minimize such losses. One approach is to set a higher floor price for one ad network and a lower floor price for another. In this way, if neither network wins the bid, advertisers still have a fallback option to rely on.

It’s important to note that as the mobile app market progresses towards a pure in-app bidding monetization system, the relevance of eCPM floors will diminish over time. The industry is moving closer to a more advanced bidding mechanism, rendering the need for predefined floors less significant.

What factors contribute to a good Effective cost per mille (eCPM)?

Determining a “good” eCPM depends on several factors that influence the overall performance and revenue potential. Here are some key considerations:

  1. Ad placement: The location of ad units on a webpage or app can impact the total volume of impressions and ultimately affect eCPM. Typically, ad units placed at the top of the page or in prominent positions tend to generate higher revenue.
  2. Geolocation: Publishers operating in top-tier markets or regions with high demand often experience higher eCPM rates. Geographic location plays a role in advertisers’ willingness to pay for ad impressions.
  3. User engagement: Mobile apps with engaged and loyal users can command higher prices for ad placements, resulting in increased eCPM rates. User engagement metrics, such as session duration, retention rates, and user activity, contribute to the perceived value of ad inventory.
  4. Advertising format: Different ad formats have varying pricing dynamics. Video ads, for example, tend to be more expensive than standard display ads due to their higher effectiveness and conversion rates. Additionally, the placement of video ads can influence pricing, as some placements may be more valuable or incentivized than others.
  5. Advertising channel: Native ads or sponsorships often yield higher revenue rates compared to traditional display ads. These formats provide a more seamless and integrated advertising experience, driving better engagement and monetization outcomes.
  6. Seasonality: Certain events or holidays, such as Black Friday, Christmas, Valentine’s Day, and Mother’s Day, can significantly impact the volume of impressions bought by advertisers. Increased competition during these periods may lead to higher eCPM rates.

By cross-referencing these factors with historical year-over-year and month-over-month data, marketers can gain insights to assess what constitutes a good eCPM rate for their specific context. This analysis allows them to set realistic and objective targets for their monetization strategies.

KEY INFORMATION ABOUT EFFECTIVE COST PER MILLE (ECPM) TO REMEMBER

  • While CPM helps you measure and monitor cost per campaign, eCPM is how you estimate whether you got bang for buck.
  • eCPM is a metric used to measure an app developer’s ad monetization performance, or to measure the ad revenue generated by a specific campaign.
  • Understanding how eCPM is calculated can help marketers ensure that they’re sticking to the most effective buying model.
  • By combining historical data with factors such as ad placement, location, user engagement, seasonality, and ad format, marketers can accurately assess a good eCPM rate, and set realistic targets for their campaign optimization efforts.

Real-time bidding (RTB) – what is real-time bidding and what is it used for?

3 Replies

Demand-side platforms (DSPs) are utilized to automate the bidding for ad impressions, a process that takes place in real-time within the small window of time between a prospect landing on a webpage and the page fully loading.

What is real-time bidding (RTB)?

Real-time bidding (RTB) is a fundamental component of programmatic advertising, which involves the dynamic buying and selling of ads in real-time and on a per-impression basis. This process occurs through instantaneous auctions facilitated by demand-side platforms (DSPs) and supply-side platforms (SSPs).

Have you ever experienced that particular instance while playing a mobile game when an ad appears between game levels? It is precisely at that moment when a mobile supply-side platform (SSP) conducts an auction, allowing advertisers to bid for the opportunity to show you (the player) an ad through demand-side platforms (DSPs). In a matter of milliseconds, the highest bidder is determined, and their ad is instantly displayed to you.

Now, let’s dive into how real-time bidding functions work.

How does real-time bidding work?

 

In real-time, multiple advertisers engage in a bidding process for a single impression of a publisher’s inventory. The highest bid, representing the winning ad, is then displayed to the user.

Real-time bidding (RTB) offers advertisers the opportunity to precisely target and focus on inventory that is most relevant to the consumer. This explains why, when reading your favorite clean-eating blog, you often encounter ads promoting your local organic market, or when browsing a mommy blog, you come across advertisements for strollers.

By targeting users in this manner, conversion rates/CTRs are improved, leading to a better return on investment (ROI) and higher effective cost per thousand impressions (eCPMs). Moreover, advertisers can make real-time adjustments to their campaign budgets to optimize performance through RTB. It’s truly impressive how campaigns can perform!

According to research, the global real-time bidding market is projected to grow from USD 6.6 billion in 2019 to USD 27.2 billion by 2024.

What are the advantages and disadvantages of real-time bidding (RTB)?

RTB technology has revolutionized the way advertisers and publishers buy and sell ad inventory programmatically. While there are notable advantages to utilizing this method, marketers should also be aware of its potential drawbacks.

Advantages of RTB

  1. Precise audience targeting: One of the primary benefits of RTB is its ability to enable advertisers to bid on ad space specifically intended for a particular audience. This precision targeting ensures that advertisers can reach the exact customers who are interested in their offerings.
  2. Enhanced inventory targeting: RTB empowers publishers to have control over their inventory’s floor price. This means that publishers can set and modify the minimum price for their ad space at any given time, allowing them to maximize their revenue.

By leveraging RTB, advertisers can target their desired audience, while publishers can effectively manage and optimize their inventory’s value, creating a mutually beneficial programmatic advertising ecosystem.

Disadvantages of RTB

  1. Ad fraud and brand safety concerns: RTB opens the door to potential ad fraud issues, such as invalid traffic or ad placement on low-quality or inappropriate websites. Advertisers must remain vigilant and employ proper measures to mitigate these risks and ensure brand safety.
  2. Lack of transparency: The complex nature of RTB can sometimes result in a lack of transparency regarding ad placements, pricing, and data usage. Advertisers and publishers need to establish clear communication channels and ensure transparency from their RTB partners.
  3. Lack of control over context:With the removal of human involvement in programmatic advertising, there is a potential for ad match mistakes that can reflect poorly on advertisers. For instance, imagine reading a news article about a tragic plane crash and seeing an ad for discounted plane tickets below it. Reliance solely on algorithms, keywords, and RTB can sometimes result in unfortunate ad placements that raise questions about advertiser sensibilities.
  4. Lack of control over content: On the other hand, for publishers, programmatically selling ad impressions means relinquishing control over who and what appears on their pages. Serving unwanted ads or partnering with unfavorable advertisers can have a negative impact on user experience, potentially deterring visitors from returning to the site in the future.

Understanding both the advantages and disadvantages of real-time bidding is crucial for marketers to make informed decisions when implementing programmatic advertising strategies. By capitalizing on the strengths while addressing the challenges, RTB can be a valuable tool in reaching the right audience and optimizing ad campaigns.

Despite the promising future of programmatic advertising and real-time bidding (RTB), there are notable drawbacks that both advertisers and publishers should consider. Two significant disadvantages include the lack of human control, leading to brand inconsistencies and ad placement issues.

The absence of human involvement in programmatic advertising and real-time bidding can lead to mismatched ads, which is an unfortunate consequence of relying solely on algorithms and automation. Advertisers and publishers should be aware of these potential challenges and explore strategies to mitigate them, such as employing thorough brand safety measures and implementing robust ad verification processes.

Real-time bidding vs. header bidding – what is the difference?

When comparing real-time bidding (RTB) and header bidding, it’s important to note that header bidding is a form of programmatic advertising that occurs in real-time. It allows publishers to auction their inventory to multiple ad exchanges simultaneously, resulting in higher bids.

While header bidding and RTB may sound similar, they have nuanced differences that require careful consideration. Header bidding is actually a subset of RTB, which explains why they can be easily confused.

In traditional RTB, each ad exchange conducts its own auction individually. In contrast, header bidding enables multiple ad exchanges to participate in simultaneous auctions through the implementation of RTB technology.

Header bidding can be seen as the enhanced version, or “2.0,” of programmatic ad buying. It provides publishers with the ability to offer their inventory to multiple ad exchanges, expanding opportunities for premium ad placements and reaching a broader audience. Essentially, it overcomes some of the limitations of traditional RTB in terms of audience targeting and reach.

Publishers are the primary beneficiaries of header bidding. Research indicates that among the top 1,000 popular internet sites that employ programmatic advertising, 79.2% utilize header bidding to maximize their revenue and ad inventory management.

Real-time bidding vs. programmatic buying

When comparing real-time bidding (RTB) to programmatic buying, it’s important to note the differences in their models within programmatic advertising. Programmatic buying, specifically programmatic direct, operates on a non-auction basis.

In programmatic direct, publishers directly sell their ad space to advertisers at a negotiated price and for a predetermined duration, without going through an auction process like RTB.

Programmatic buying is particularly suitable for premium display formats, such as full-page takeovers. Given the significant investment involved, advertisers often require guaranteed measures to precisely determine the audience, placement, and context of their ads. This level of control and transparency is essential for high-cost campaigns to ensure optimal results and align with the advertisers’ objectives.

KEY INFORMATION ABOUT REAL-TIME BIDDING (RTB) TO REMEMBER

Real-time bidding (RTB) and the programmatic advertising ecosystem offer numerous advantages, but it’s important to acknowledge the potential drawbacks as well. Here’s a recap of key points to remember – these insights provide a summary of real-time bidding, header bidding, and programmatic buying within the larger programmatic advertising landscape:

    • RTB is a crucial component of programmatic advertising, enabling automated bidding for ad impressions in real-time using demand-side platforms (DSPs).
    • RTB grants both advertisers and publishers significant control over their ad spend and allows for real-time segmentation and optimization of audiences.
    • However, the absence of human involvement in media buying can lead to untimely or insensitive ad mismatches, posing risks to the brands of publishers and advertisers.
    • Header bidding, a subset of RTB, empowers publishers to offer their inventory to multiple ad exchanges, providing access to premium ad space for advertisers. It represents an enhanced version of RTB.
    • Programmatic buying, a non-auction approach, is a safer method for premium ads in programmatic advertising, allowing publishers to directly sell ad space to advertisers for a negotiated price and duration.

Demand-side platform (DSP) – what is demand-side platform platform and what is it used for?

2 Replies

Demand-side platform (DSP) is a software platform that consolidates data exchange accounts and multiple ad exchange accounts into a single interface, enabling advertisers to efficiently manage and optimize their advertising campaigns. DSPs serve as powerful marketing automation tools, allowing advertisers to purchase high-quality impressions in large volumes with minimal effort.

What are demand-side platforms (DSPs)?

Demand-side platforms (DSPs) are software platforms utilized by advertisers to acquire and oversee ad inventory across various channels, including video, mobile, and search ads. They provide a marketplace that aggregates available ad inventory from publishers.

DSPs offer advertisers the ability to manage their advertising campaigns across multiple real-time bidding networks, expanding their reach and targeting options. Together with supply-side platforms (which publishers use to list their ad inventory), DSPs facilitate programmatic advertising, automating the buying and selling of ad space.

How do demand-side platforms (DSPs) work?

Demand-side platforms (DSPs) utilize artificial intelligence (AI) and machine learning algorithms to help advertisers determine the most suitable ad placements at optimal prices. These platforms aim to target individuals who are most likely to engage with the ads and convert.

Before the advent of DSPs and programmatic advertising, advertisers had to manually negotiate with publishers and platforms, limiting their audience reach and adaptability based on human capabilities. However, with the introduction of programmatic advertising and DSPs, ad placement is now automated.

DSPs act as intermediaries between advertisers and publishers, enabling advertisers to purchase ad impressions across various publisher sites. These impressions are targeted to specific users based on their key online behaviors. This functionality allows advertisers to reach their desired audience on multiple publisher sites, maximizing the reach and effectiveness of their ad campaigns.

For instance, you may have noticed how Facebook ads seem to know your preferences, such as suggesting a new dishwasher when you need one. This is possible because Facebook collects user data and utilizes various targeting options to deliver relevant ads. Similarly, DSPs operate on a larger scale, providing advertisers the opportunity to distribute their ad creatives across multiple publisher sites instead of being limited to a single platform like Facebook.

DSPs and SSPs: Exploring the differences

When it comes to programmatic advertising, two key players in the ecosystem are demand-side platforms (DSPs) and supply-side platforms (SSPs). DSPs are utilized by advertisers to purchase ad inventory, while SSPs are employed by publishers to sell their available ad space.

DSPs and SSPs connect through ad exchanges, where DSPs participate in automated auction-style bidding for ad inventory. DSPs enable advertisers to make purchases across multiple ad exchanges simultaneously, while SSPs allow publishers to sell their ad inventory across various ad exchanges.

Different types of DSPs

There are three primary types of DSPs, each catering to specific advertising needs and strategies:

  1. Mobile DSPs: These are integrated within the existing DSP ecosystem and are not standalone programs. Mobile DSPs specifically handle mobile inventory, connecting with mobile ad exchanges where app publishers and developers offer their available impressions. The DSP automatically analyzes and determines the value of impressions for advertisers. Once a bid is accepted, the ad creative is served when the app is initialized, downloaded, or opened.
  2. White-label DSPs: This type of DSP can be customized to meet specific requirements. A white-label DSP is a platform that can be purchased and customized according to your preferences. It provides a blank canvas for designing your own programmatic algorithm for ad placements, rather than relying on a pre-existing one from another DSP. Additionally, a white-label DSP can be integrated with multiple ad exchanges and SSPs to expand your audience segment and traffic.
  3. Self-serve DSPs: Designed for smaller agencies or advertisers starting with programmatic advertising, self-serve DSPs offer complete control over the ad buying process. Advertisers sign up for these platforms, which enables them to manage their campaigns independently. With self-serve DSPs, advertisers have the flexibility to select inventory, target their audience, and manage their campaigns. It provides a user-friendly interface for optimizing campaigns without involving third parties.

Choosing the Right DSP

Selecting the appropriate DSP depends on the specific advertising goals, preferences, and level of control desired. Mobile DSPs are suitable for reaching mobile users, while white-label DSPs offer customization options for advanced advertisers. Self-serve DSPs are ideal for smaller advertisers seeking a simplified entry into programmatic advertising.

By understanding the differences between these DSP types, advertisers can make informed decisions and leverage the right platform to optimize their programmatic ad campaigns.

Benefits of using a demand-side platform (DSP)

Demand-side platforms (DSPs) offer several advantages to advertisers, regardless of the specific type being used. Here are four universal benefits of DSPs:

  1. Streamlined workflow for ad buyers: DSPs simplify the ad buying process, providing a more efficient workflow for advertisers. Instead of dealing with multiple salespeople, contracts, negotiations, and various documents, advertisers can work with a single program. This streamlined approach saves time and eliminates the complexities associated with traditional ad-buying methods. Advertisers can easily activate their media by simply using the DSP, without the need to recreate the entire infrastructure.
  2. Cost savings: DSPs accelerate the ad buying process by removing time-consuming elements like negotiations, resulting in cost savings for advertisers. By eliminating manual tasks and automating the buying process, DSPs enable advertisers to optimize their budgets and achieve better cost efficiency in their campaigns.
  3. Enhanced access to ad inventory: DSPs provide advertisers with expanded access to multiple ad exchanges through a single interface. This allows advertisers to reach a wider range of publishers and ad inventory sources. By leveraging DSPs, advertisers can access various inventory options simultaneously, ensuring broader reach and increasing the potential to connect with their target audience.
  4. Advanced targeting capabilities: Unlike traditional ad networks that have limitations on audience targeting, DSPs offer sophisticated targeting options. Advertisers have the freedom to create their own targeting criteria, allowing for more precise audience segmentation. DSPs utilize advanced technologies, such as AI and machine learning, to optimize targeting and ensure ads reach the most relevant and engaged users. This level of targeting precision helps advertisers maximize their campaign performance and increase the effectiveness of their ad messaging.
  5. Real-time optimization: DSPs leverage real-time data and analytics to optimize ad campaigns on the fly. Through continuous monitoring and analysis of campaign performance, DSPs can make instant adjustments to targeting, bidding strategies, and creative elements. This real-time optimization helps advertisers maximize the effectiveness of their ads and achieve optimal results.
  6. Increased transparency and control: DSPs provide advertisers with transparency and control over their ad campaigns. Advertisers have access to detailed reporting and analytics, allowing them to track the performance of their campaigns in real time. They can monitor key metrics such as impressions, clicks, conversions, and cost-per-action (CPA). This transparency enables advertisers to make data-driven decisions, refine their targeting, and allocate budgets more effectively.
  7. Advanced ad format capabilities: DSPs support a wide range of ad formats, including display ads, video ads, native ads, and mobile ads. This flexibility allows advertisers to choose the most suitable ad format for their campaign goals and target audience. DSPs often provide advanced creative tools and features, empowering advertisers to deliver engaging and interactive ad experiences. By utilizing the diverse ad format capabilities of DSPs, advertisers can effectively capture audience attention and drive higher engagement rates.

In summary, DSPs streamline the ad buying process, lower costs, expand access to ad inventory, and provide advanced targeting capabilities. By leveraging these benefits, advertisers can enhance their advertising efforts, improve campaign efficiency, and reach their desired audience more effectively.

The programmatic advertising ecosystem

The evolution of programmatic advertising has transformed the way digital advertising space is bought and sold. This ecosystem encompasses various components, including demand-side platforms (DSPs), real-time bidding (RTB), programmatic direct, ad networks, and data management platforms (DMPs). Let’s explore these elements:

  • Demand-side platforms (DSPs) and real-time bidding (RTB): DSPs are instrumental in programmatic advertising, enabling advertisers to automate the buying and optimization of digital ad space. Through DSPs, advertisers participate in real-time bidding (RTB), where they bid for ad impressions in milliseconds. The DSP manages this bidding process based on advertisers’ budgets and targeting criteria, ensuring the winning ad is served to the intended audience.
  • Programmatic direct: Programmatic direct provides an alternative model to RTB. In this approach, publishers directly sell their ad space to advertisers at negotiated prices and fixed durations. This model guarantees advertisers premium ad placements on specific web pages that align with their target audience. Programmatic Direct is particularly advantageous for advertisers seeking to reach niche markets or establish direct partnerships with publishers.
  • Ad networks and the rise of DSPs: Ad networks act as intermediaries, connecting advertisers with publishers by aggregating available ad space and matching it with advertiser requirements. However, as programmatic advertising and DSPs continue to advance, ad networks may become less prominent. Unlike ad networks, DSPs offer automation, efficiency, and data-driven targeting capabilities, reducing the reliance on manual processes and human intervention.
  • Data management platforms (DMPs): DMPs play a critical role in the programmatic advertising ecosystem by collecting, storing, and analyzing data from various sources. These sources include identifiers like browser cookies and mobile identifiers such as Apple IDFA. DMPs gather audience insights and create detailed profiles that inform DSPs about the most relevant audiences for ad targeting. By leveraging DMPs, advertisers can deliver personalized and targeted ad content to specific user segments.

As programmatic advertising continues to evolve, the integration of DSPs, RTB, programmatic direct, ad networks, and DMPs will shape the future of digital advertising. Advertisers benefit from improved efficiency, precision targeting, and automation, allowing them to maximize the impact of their ad campaigns and drive better results.

How to choose the right demand-side platform (DSP)?

Selecting the right demand-side platform (DSP) requires careful consideration to ensure it aligns with your specific needs and objectives. Here are three essential questions to help guide your decision-making process:

  1. Does it fulfill the fundamental requirements? A reliable DSP should offer a user-friendly interface, enabling smooth navigation and efficient campaign management. Look for a platform that provides unrestricted audience targeting options, allowing you to reach your desired audience segments effectively. Additionally, ensure that the DSP seamlessly integrates with Data Management Platforms (DMPs), enabling you to leverage valuable audience insights for campaign optimization.
  2. Does it optimize for your specific key performance indicators (KPIs)? Consider your unique KPIs and objectives when evaluating DSPs. Seek a platform that offers advanced features to optimize your desired outcomes. For example, if your goal is to enhance brand awareness, look for a DSP with a robust KPI dashboard that measures key metrics like impressions, time on site, and unique users. These features will enable you to monitor and enhance your brand awareness campaigns effectively.
  3. Does it provide access to the necessary supply? The availability of suitable inventory is a critical factor in selecting a DSP. Ensure that the platform offers the inventory types that align with your target audience and campaign goals. Whether you require specific types of inventory or media channels, choose a DSP that provides a diverse range of supply options tailored to your niche market. Serving your ads alongside high-quality publishing content, such as established brands or popular niche sites, increases the likelihood of engagement and conversions.

Understanding the different types of DSPs, as discussed earlier, will further assist you in identifying the platform that can provide the most valuable inventory for your specific needs. Some DSPs offer direct access to publishers through programmatic direct, while others employ Supply Path Optimization (SPO) strategies to enhance the efficiency of the supply chain and improve campaign performance.

By carefully evaluating these factors and aligning them with your advertising objectives, you can choose a DSP that effectively supports your campaigns, maximizes performance, and helps you achieve your desired results.

Prominent DSPs on the market now

As programmatic advertising continues to thrive, advertisers must be familiar with the various programmatic platforms available to them. Here are some of the top demand-side platforms (DSPs) in the market today, categorized by mobile, white-label, and self-serve platforms:

Major demand-side platforms (DSPs) for mobile app performance campaigns

When it comes to mobile DSPs, transparent analytics for strategy and media placement are essential. Here are those highly regarded DSPs:

  • Smadex
  • 3.14
  • Bidease
  • Liftoff
  • AppLovin
  • AdColony
  • ironSource

Major white-label demand-side platforms (DSPs)

For marketers seeking greater control over their ad traffic, customizable options, and cost savings, a white-label DSP offers the flexibility they need. These platforms eliminate the reliance on third parties and allow worldwide traffic buying with audience customization. Here are three noteworthy options:

  • SmartyAds
  • AdKernel
  • Beeswax
  • Adform
  • MediaMath
  • StackAdapt
  • Adacado

Major self-serve demand-side platforms (DSPs)

If you are new to the world of ad and media buying or have a single account requirement, a self-serve DSP is an ideal choice. These platforms enable learning and growth while offering control over campaign management. Here are three reputable self-serve DSPs:

  • Edge226
  • Platform.io
  • Epom Market
  • The Trade Desk
  • Google Ads
  • Amazon Advertising
  • Verizon Media DSP

By considering these prominent DSPs and their specific features, you can make an informed decision that aligns with your advertising goals and maximizes your campaign performance.

KEY INFORMATION ABOUT DEMAND-SIDE PLATFORMS (DSPs) TO REMEMBER

DSPs and the programmatic advertising ecosystem can be complex, filled with specialized terminology that evolves alongside the industry itself. However, there’s no need to feel overwhelmed. Here are some key points to remember:

  1. DSPs streamline ad buying by enabling advertisers to purchase high-quality traffic at scale with ease and efficiency.
  2. There are three primary types of DSPs: mobile, white-label, and self-serve. Each type offers distinct features and advantages to cater to different advertising needs.
  3. DSPs optimize ad buying and selling processes, resulting in cost savings for advertisers. By automating tasks and eliminating manual negotiations, DSPs minimize friction and improve operational efficiency.
  4. DSPs provide expanded access to a wide range of advertisers, allowing them to reach their target audiences across various ad exchanges and inventory sources. This increased access opens up new opportunities for reaching and engaging consumers effectively.
  5. DSPs offer sophisticated targeting capabilities, leveraging data and algorithms to reach the right consumers with the right ads at the right time. This precise targeting improves ad relevance and increases the likelihood of driving desired actions from the target audience.
  6. As programmatic advertising continues to advance, ad networks may become obsolete. DSPs offer a more automated and efficient solution that reduces the need for intermediaries and manual processes.

By understanding the benefits and functionalities of DSPs, advertisers can make informed decisions and select the perfect DSP that aligns with their specific advertising goals and requirements. Asking the right questions will help you navigate the complex landscape of DSPs and find the ideal solution for your advertising needs.

Supply-side platform (SSP) – what is supply-side platform and what is it used for?

6 Replies

SSPs (Supply Side Platforms) are technology platforms or software that efficiently manage a publisher’s ad impression inventory across various ad exchanges. These platforms serve as powerful marketing tools by automating and optimizing the sales of a publisher’s media space. By effectively filling the inventory with relevant ads, SSPs enable publishers to generate revenue from their advertising efforts.

What are supply-side platforms (SSPs)?

Supply-side platforms (SSPs) are technology platforms that assist publishers in automating the selling, management, and optimization of their ad inventory across web and mobile devices.

Prior to the introduction of SSPs, publishers had to manually handle and sell their ad space, limiting their ability to scale the selling process and ensure optimal utilization of ad spaces.

Initially, SSPs were primarily used to fill leftover inventory at lower prices. However, today, SSPs play a crucial role in the programmatic selling of all ad inventory.

How do supply-side platforms (SSPs) work?

Have you ever wondered how Google serves you personalized ads?

Although it may seem like Google knows you a little too well, the truth is that it shares your user behavior with both advertisers (DSP) and publishers (SSP) to deliver relevant ads in real time.

SSPs act as intermediaries between publishers and advertisers, enabling them to efficiently connect and exchange information. They distribute available ad impressions to multiple potential buyers, aiming to sell the publisher’s inventory at the most favorable price.

Using the publisher’s content and visitor data, advertisers bid to display their ads on specific sites. This process occurs as the publisher’s SSP offers its available impressions, which are then analyzed in real time by the advertiser’s DSP. The outcome is precisely targeted ads delivered to the right users, based on their key online identifiers and behaviors.

SSPs and DSPs: Supply-side platforms versus demand-side platforms

Supply-side platforms (SSPs) and demand-side platforms (DSPs) operate in opposite roles within the digital advertising ecosystem. DSPs are utilized by advertisers seeking to purchase ad inventory (representing the demand), while SSPs are employed by publishers who have ad space to sell (representing the supply).

SSPs and DSPs establish connections through ad exchanges, where DSPs engage in automated auction-style bidding for ad inventory. SSPs enable publishers to sell their ad inventory across multiple ad exchanges, while DSPs allow advertisers to make purchases across various ad exchanges simultaneously.

Mobile SSPs

Mobile SSPs are an integral part of the existing SSP ecosystem and are typically not standalone programs. Therefore, when referring to mobile SSPs, it primarily indicates the functionality within a standard SSP that handles mobile inventory.

Mobile SSPs are linked to mobile ad exchanges, which serve as platforms where app publishers and developers offer their available mobile impressions to advertisers.

Main advantages of using SSPs

SSPs offer numerous benefits, starting with the automation of previously manual and labor-intensive processes. While the specific advantages may vary depending on the chosen platform, here are three universal benefits of utilizing SSPs:

  1. Enhanced ad fill rates One of the primary benefits of employing a supply-side platform is the ability to significantly increase your ad fill rate. The ad fill rate measures the percentage of available ad spaces that are filled with ads. Since filling rates directly impact revenue generation, it is crucial to prioritize boosting this rate. SSPs ensure that your available ad spaces are efficiently sold to the highest bidder, maximizing revenue potential for each space. By encouraging greater advertiser participation, SSPs facilitate optimized space utilization and drive increased revenue.
  1. Improved revenue generation Utilizing an SSP can have a direct impact on revenue generation. By optimizing the selling process and increasing competition among advertisers, SSPs enable publishers to command higher prices for their ad inventory. This results in improved monetization and revenue streams. Furthermore, SSPs streamline the transaction process, reducing operational inefficiencies and administrative burdens. This allows publishers to focus on creating quality content while the SSP manages the sale of their ad space, ultimately leading to improved revenue generation.
  1. Access to a broader range of advertisers SSPs provide publishers with access to a diverse pool of advertisers, including both direct buyers and programmatic demand sources. This broader range of advertisers translates to increased competition for ad inventory, driving up demand and potentially securing higher bids. By connecting with multiple ad exchanges, SSPs enable publishers to reach a larger audience and target their inventory to specific advertiser segments. This expanded reach and targeting capabilities create new opportunities for revenue growth and maximize the value of their ad space.

In summary, SSPs offer benefits such as enhanced ad fill rates, improved revenue generation, and access to a wider range of advertisers. These advantages contribute to the optimization of ad inventory monetization and overall profitability for publishers.

Limited impression fatigue

In today’s crowded digital marketplace, it’s increasingly common for users to encounter the same ad content repeatedly. This repetition can lead to ad impression fatigue, diminishing the impact of these impressions. We’ve all experienced frustration with advertisers who continue to serve us ads we’ve already seen.

To combat this issue, supply-side platforms (SSPs) collaborate with demand-side platforms (DSPs) to establish frequency caps on ad impressions. This means publishers can control the number of similar or identical ad impressions shown to users on their site. By implementing frequency caps, SSPs help publishers avoid ad impression fatigue, ensuring the effectiveness of their impressions and maximizing their revenue-generating potential.

Empowering publishers with pricing control

SSPs grant publishers the ability to set price floors for their impressions, liberating them from the necessity of filling ad space at any price (typically low). This means publishers can establish their own pricing standards, ensuring that their ad inventory is filled while being compensated fairly for each impression. By giving publishers greater control over pricing, SSPs enable them to monetize their ad space effectively and optimize their revenue streams.

The ecosystem of programmatic advertising

Programmatic advertising revolutionizes the buying and selling of digital advertising space through automation. This dynamic ecosystem seamlessly connects publishers with ad exchanges, facilitating the efficient placement of valuable ads. Key components of the programmatic advertising ecosystem include real-time bidding (RTB), supply-side platforms (SSPs), and demand-side platforms (DSPs).

Real-time bidding (RTB)

RTB plays a pivotal role in programmatic advertising by enabling advertisers to automatically bid for ad impressions via a DSP. These bids are made through an SSP, which acts as a bridge between the publisher and the advertiser.

The entire RTB process occurs within milliseconds, starting when a prospect lands on a webpage that is in the process of loading. During this brief timeframe, the SSP orchestrates the bidding process, evaluating bids based on predefined budgets and demographic criteria. Ultimately, the winning bid is selected, and the corresponding ad is served to the user on the publisher’s site, ensuring a relevant and personalized advertising experience.

Programmatic Direct: A Non-Auction Model in Programmatic Advertising

In programmatic advertising, Programmatic Direct represents a distinct approach that differs from real-time bidding (RTB). With Programmatic Direct, publishers have the ability to sell their ad space directly to advertisers, establishing a negotiated price and fixed duration for the advertising placement.

One significant advantage of Programmatic Direct is that publishers are assured of displaying premium ads on their web pages. In this model, both the publisher and advertiser engage in negotiations to establish a fair cost per mille (CPM) or cost per thousand impressions.

For instance, let’s consider a popular mommy blog that decides to sell ad space to a high-end stroller company. In this scenario, the publisher’s ad space aligns perfectly with the advertiser’s target audience. Through Programmatic Direct, the advertiser secures a specified number of impressions while the publisher benefits from the partnership. This mutually beneficial arrangement exemplifies the advantages of Programmatic Direct over real-time bidding, providing a win-win situation for both parties involved.

Choosing the right SSP: Things to take into account

When selecting a supply-side platform (SSP) for your programmatic advertising needs, it’s crucial to ask the right questions. Here are four considerations to guide you in finding the ideal SSP:

  • Third-party SSPs: Third-party SSPs are ready-made software and ad technology platforms that are readily integrated into existing infrastructure, making it easy to embark on your programmatic advertising journey. The choice of a third-party SSP depends on your specific needs, strategy, budget, and target audiences. Each available SSP in the market has unique features, fees, and customer ratings, allowing you to make an informed decision. The advantage of using a third-party SSP is the ease of implementation—simply plug in and go. However, it’s important to consider that your data and intellectual property may not be fully under your control, and fees and commissions will be incurred.
  • Custom SSPs: Custom SSPs are platforms built from scratch, specifically engineered to cater to your ad space inventory needs. Opting for a custom SSP provides you with complete ownership and control over the platform, intellectual property, and data. You can create a tailored product roadmap and build unique features to optimize your inventory, eliminating any limitations on your market value. While a custom SSP can lead to long-term cost savings without third-party fees or commissions, the upfront costs of developing a custom platform tend to exceed those of third-party software.
  • Considering publisher’s users: An SSP that offers a variety of options is preferable, as user satisfaction is crucial. Unsatisfied users can present larger challenges for publishers beyond prices and rates. Many publishers like to experiment with different ad formats to determine the most suitable options for their users. Choosing an SSP with a wide range of options grants publishers the freedom to test and explore how and when to serve valuable impressions to users, increasing the likelihood of clicks and conversions.
  • Multiple demand sources: To sell ad inventory at the best possible price, publishers require buyers who are willing to compete for their space. Connecting to top-quality demand-side platforms, ad exchanges, and ad networks is essential for publishers. By seeking an SSP with access to various demand sources, publishers gain access to potential buyers who are willing to compete for their valuable ad space.
  • Analytics and reporting: An SSP with an analytics and reporting interface helps publishers understand and track the performance of their inventory, including fill rates, clicks, and impressions. By gaining insights into how their inventory operates, publishers can effectively monetize their ad impressions and scale their revenue generation.

The 8 best supply-side platforms (SSPs)

When considering programmatic platforms, it’s crucial for publishers to be aware of the top SSP options available. Here are eight of the best SSPs in the market currently:

  1. Google Ad Manager: A comprehensive SSP that offers advanced monetization tools and access to a wide range of demand sources.
  2. Rubicon Project: Known for its robust programmatic advertising capabilities and global reach, Rubicon Project provides publishers with advanced targeting and optimization features.
  3. OpenX: A leading SSP that focuses on delivering high-quality programmatic advertising solutions, offering publishers efficient revenue optimization and access to premium demand.
  4. PubMatic: PubMatic offers publishers an extensive suite of tools for managing their programmatic inventory, including real-time analytics and yield optimization features.
  5. Index Exchange: A reliable SSP that provides publishers with access to a vast pool of premium demand sources, along with advanced analytics and reporting capabilities.
  6. Sovrn: Sovrn specializes in providing independent publishers with programmatic advertising solutions, offering a user-friendly interface and a variety of monetization options.
  7. AppNexus (Now Xandr): AppNexus is a renowned SSP that offers a robust programmatic advertising platform with extensive audience targeting capabilities and a wide range of demand partners.
  8. Magnite (Formerly Rubicon Project and Telaria): Magnite combines the technologies of Rubicon Project and Telaria to provide publishers with a unified and scalable programmatic advertising solution.
  9. Verizon Media: Verizon Media’s SSP provides publishers with advanced monetization capabilities, including access to premium demand partners and comprehensive ad management tools.
  10. Adform: Adform offers a feature-rich SSP that empowers publishers with real-time bidding, advanced targeting options, and comprehensive reporting and analytics.
  11. TripleLift: TripleLift is known for its native advertising solutions, delivering visually engaging and contextually relevant ad experiences to publishers’ audiences.
  12. Smart AdServer: Smart AdServer offers a holistic SSP solution that enables publishers to maximize revenue through programmatic advertising, with features such as header bidding and audience segmentation.

By assessing your needs and considering these reputable SSP options, you can make an informed decision and leverage the right platform to optimize your programmatic advertising efforts.

KEY INFORMATION ABOUT AD EXCHANGES TO REMEMBER

Supply-side platforms and the programmatic advertising ecosystem can be filled with complex terminology and rapid changes. However, understanding the basics is key. Here are some important points to remember:

  1. SSPs are the future of digital advertising as they automate and optimize the sale of a publisher’s media space, maximizing revenue generation.
  2. SSPs play a crucial role in connecting publishers with advertisers, ensuring that ads are delivered to the right users on relevant websites.
  3. The benefits of using an SSP include increased ad fill rates, minimized ad impression fatigue, and providing publishers with greater control over pricing.
  4. When choosing an SSP, consider whether a custom or third-party solution is best for your needs. Asking the right questions will help you identify the perfect SSP for your requirements.

By keeping these key points in mind, you can navigate the world of SSPs with confidence and make informed decisions to enhance your programmatic advertising efforts.

Ad exchange – what is ad exchange and what is it used for?

2 Replies

An ad exchange refers to a digital platform or marketplace where the buying and selling of advertising inventory take place.

What is an ad exchange?

An ad exchange is an online marketplace that facilitates the buying and selling of advertising inventory across various platforms, including websites, mobile sites, and mobile apps. Publishers, such as website or app owners, provide advertising space to advertisers, such as agencies or ad networks. This enables advertisers to purchase ad space and showcase display, video, and mobile ads.

Who uses ad exchange?

Ad exchanges are utilized by a wide range of individuals. Virtually anyone can participate in buying and selling impressions on an ad exchange. Publishers use ad exchanges to sell their available ad space, while advertisers or agencies utilize them to purchase ad space.

Why do marketers make use of ad exchanges? Marketers choose to use ad exchanges because they provide a more efficient and transparent method for buying and selling digital advertising. With the rapid growth and evolution of the mobile landscape, buyers and sellers have embraced ad exchanges to streamline processes and maximize profitability. The actual exchange of ads occurs through sophisticated algorithms, enabling publishers to obtain the best possible price for their ad inventory and allowing advertisers to reach their desired target audience with the right timing and contextual relevance.

Ad exchanges enable advertisers to easily purchase ads across a wide range of websites, mobile sites, and mobile apps simultaneously, eliminating the need for direct negotiations with individual publishers.

How do ad exchanges work?

To gain a deeper understanding of the role played by ad exchanges in the digital marketing ecosystem, let’s first examine the key participants and their interactions:

Ad networks – differentiating ad exchanges from ad networks

An ad network acts as a link between advertisers and publishers who possess advertising inventory. The primary function of an ad network involves gathering ad supply from publishers and matching it with the demand from advertisers.

Although ad exchanges and ad networks may appear to perform similar roles, they are distinct from each other. Ad networks acquire digital ad inventory from a list of publisher websites or purchase ad impressions in bulk from ad exchanges. They then sort and resell this inventory to advertisers. As advertisers often lack the time or resources to filter through available inventory, ad networks perform this task on their behalf.

Ad networks group inventory based on specific criteria such as pricing, scale, or audience segments (demographics, geography, language, interests, consumer behavior, etc.). Some ad networks prioritize broad coverage and quantity, while others specialize in offering high-quality ad slots.

Thus, while an ad exchange functions as an open pool of impressions, an ad network operates as a closed group of privately traded ads. In this sense, ad exchanges provide greater transparency to buyers as they can directly observe the exact prices at which each impression is being sold, without any intermediary players involved.

Terminology breakdown:

  • Demand side platform (DSP) – a DSP is a technology that enables automated purchasing of advertising. It is commonly utilized by advertisers and agencies to facilitate the buying of display, video, mobile, and search ads.
  • Supply side platform (SSP) – an SSP is a technology that enables automated selling of advertising. Online publishers primarily use SSPs to facilitate the selling of display, video, and mobile ads.

How does it all converge on the ad exchange?

In many ways, the functioning of an ad exchange resembles an auction, creating opportunities for advertisers to reach their target audiences across a vast array of publishers.

Advertisers and agencies typically connect to an ad exchange via a DSP, which allows them to participate in the buying process. On the other hand, publishers make their ad impressions available on the exchange by utilizing an SSP, enabling them to engage in the selling process.

The mechanics of real-time bidding (RTB)

Ad exchanges and the real-time bidding process When a user visits a web page or in-app screen, an ad impression is generated and put up for auction on the ad exchange. Using a DSP, advertisers can analyze data from various sources, such as the user’s mobile identifier, time of day, device type, ad position, demographics, and purchasing behavior, to determine whether they should bid on the impression and the optimal bid amount.

What makes this entire buying and selling process remarkable is its speed. Everything unfolds in an instant.

RTB relies on a fully automated procedure that calculates the price of advertising space and inventory in real-time, based on supply and demand dynamics. Advertisers can bid for ad space with a specific number of ad impressions, and ultimately, the ad belonging to the highest bidder is displayed for the impression.

Types of ad exchanges and prominent players Varieties of ad exchanges

  1. Open ad exchange / Public Marketplace / Open Auction

This type of ad exchange operates as an open digital marketplace, offering a wide range of publishers’ inventory accessible to all advertisers. While open ad exchanges provide an extensive list of publishers, advertisers do not have detailed information about individual publishers, unlike in a private marketplace. Advertisers seeking broad exposure often opt for open ad exchanges.

However, with the vast number of impressions flowing through open ad exchanges daily, concerns about digital ad fraud have emerged among advertisers and publishers. Consequently, private marketplaces are gaining popularity due to their perceived safety and increased transparency.

  1. Private ad exchange / Private Marketplace (PMP)

A PMP functions as a closed, “premium” platform that allows publishers to exercise control over which advertisers can bid, at what price, and under what conditions. Each private ad exchange is operated by a specific publisher who personally invites select advertisers to participate in the PMP. Additionally, the publisher has the ability to block access to its pool of impressions for ad networks and other third-party entities. Private ad exchanges facilitate direct relationships between brands, publishers, advertisers, and agencies, which can result in more time-consuming negotiations compared to open ad exchanges.

  1. Preferred deal

A preferred deal enables a publisher to sell digital ad inventory at a predetermined fixed price to preferred advertisers. This arrangement provides the publisher with a steady revenue stream through a controlled transaction system, while advertisers benefit from stable CPM/eCPM prices and exclusive access to inventory.

Prominent ad exchanges include:

  • DoubleClick (Google)
  • AppNexus
  • OpenX
  • Rubicon Project Exchange (Magnite)
  • Right Media Exchange (Yahoo)
  • Smaato (focused on mobile)
  • MoPub (Twitter) (focused on mobile)

Maximizing ad exchange performance through mobile attribution By leveraging mobile attribution data, mobile advertisers can unlock valuable insights to optimize their ad exchange activities. This data provides authoritative and indisputable information, empowering advertisers to make smarter budget allocations and optimize their app’s performance, return on ad spend (ROAS), and customer lifetime value (LTV).

If you’re considering ad exchange options, rest assured that there is a reliable method to maximize the impact of your ad spend by identifying the most valuable and least valuable digital investments.

KEY INFORMATION ABOUT AD EXCHANGES TO REMEMBER

  • An ad exchange functions as a pool of ad impressions, where publishers offer their inventory in the hopes of attracting advertisers. Advertisers choose the impressions they wish to purchase from this pool.
  • Ad exchanges enhance the efficiency and transparency of the process of buying and selling ad space while maximizing profitability. Publishers obtain the best price for their ad inventory, and advertisers effectively reach their target audience with contextually relevant, data-driven campaigns.
  • Ad exchanges analyze real-time data from various sources, such as users’ mobile identifiers, time of day, device type, ad position, demographics, and purchasing behavior. This data is used to determine whether to bid on an impression and how much to bid.
  • Ad exchanges enable advertisers to easily purchase ads across multiple sites simultaneously, eliminating the need for direct negotiations with individual publishers. In an increasingly complex and dynamic advertising market, ad exchanges provide a more efficient and transparent solution for buying and selling digital advertising.

AMP – accelerated mobile pages – what it is?

Leave a reply

AMP, the accelerated mobile page, is a framework developed by Google that aims to improve the loading speed and enhance the overall user experience of web pages.

What exactly are accelerated mobile pages? And what is the concept behind accelerated mobile pages (AMP)?

AMP is an engaging framework introduced by Google in 2016, specifically designed for building web pages.

Although the primary objective of AMP was to enhance loading speed and improve user experience, there have been several challenges associated with its adoption as a widely used web page model.

AMP pages coexist alongside regular mobile pages, resulting in two versions of the same content. These two pages are linked using a special header tag, which is utilized by GoogleBot and potentially other search engines for indexing purposes.

How do accelerated mobile pages (AMP) work?

AMP operates through a set of components and techniques designed to enable fast-loading mobile pages from search results. These elements optimize the page by eliminating features that contribute to slow loading times. Here are the key points:

  1. Asynchronous JavaScript (JS): AMP utilizes asynchronous JS, which differs from regular JS. It restricts the use of JS authored by the website’s webmaster, allowing only certain AMP-approved scripts.
  2. Quick determination of page layout: The AMP HTML code defines the dimensions of essential page elements, such as images and inline frames. This enables AMP to determine the size and position of these elements before the complete page loads. It achieves this with a single Hypertext Transfer Protocol (HTTP) request.
  3. Inline styles only: AMP permits only inline styles and avoids external mechanisms that can impede page rendering. It avoids using external Cascading Style Sheets (CSS) and instead focuses on keeping the styles inline within the HTML.
  4. Controlled downloads: AMP prioritizes page loading by limiting the downloads to essential page resources. It strategically fetches and loads components that are crucial for immediate rendering, while delaying or optimizing the loading of other resources.
  5. Pre-rendering: AMP can pre-render web pages within search results, making them instantly viewable to users before they navigate to the actual page. This pre-rendering capability enhances the perceived speed and user experience.

By employing these techniques and components, AMP significantly improves the loading speed and performance of web pages on mobile devices, providing users with a seamless and fast browsing experience.

How Google AMP works?

Google AMP is designed to significantly reduce page loading times, with the average loading time of an AMP page being less than one second. This has led to widespread adoption, with over 900,000 domains publishing more than 2 billion AMP pages.

The core components of Google AMP are AMP HTML, Google AMP Cache, and the AMP JS library, which work together to enable fast-loading pages.

AMP HTML: AMP HTML is based on standard HTML with certain restrictions and specialized tags. It retains the structure of regular HTML but incorporates custom AMP properties. Some standard HTML tags are replaced with custom tags that are optimized to work seamlessly with other AMP components.

AMP JavaScript (JS) Library: When a web page loads, the browser creates a Document Object Model (DOM) that establishes the connection between the web page and the underlying programming language. JavaScript utilizes the DOM to access and manipulate HTML documents. However, JavaScript can sometimes block DOM construction, leading to delays in page rendering. AMP addresses this issue by prohibiting the use of author-written JavaScript, ensuring the smoother and faster rendering of AMP pages.

Google AMP Cache: Google’s AMP Cache functions as a proxy-based content delivery network (CDN). It fetches AMP HTML pages, caches them, and automatically enhances their performance. By leveraging Google’s infrastructure, AMP pages can be served quickly from the cache, further improving loading times and optimizing page delivery.

These components work together to optimize the performance of mobile websites, providing an improved user experience for visitors.

For non-coders, AMP plugins are available for WordPress, enabling the creation of AMP versions of web pages with a simple activation of these plugins. Once activated, the URLs of posts are automatically given an “/amp/” version, indicating the AMP version of the page. Additionally, the plugin adds a standard meta tag to normal pages, making AMP-activated pages recognizable to Google.

Why are accelerated mobile pages (AMPs) so important?

Accelerated Mobile Pages (AMPs) hold considerable importance for content producers for two primary reasons:

  1. Enhanced user experience: AMPs significantly improve loading speeds, ensuring users’ smooth and seamless experience. In today’s fast-paced digital landscape, where slow-loading pages can result in losing potential users, AMPs significantly upgrade web pages. This is particularly beneficial for websites with complex code or those that interact with other content within their platforms.
  1. Visibility on Google: AMPs play a crucial role in improving visibility in Google search results. Setting up AMPs requires minimal investment while offering substantial benefits. Google introduced the AMP Carousel, which prioritizes news-related queries and displays them prominently on the search results pages. This special treatment is a result of AMP’s support from major industry players, excluding Facebook and Apple.

Whether your website requires optimization due to complicated code or you aim to enhance visibility on Google, implementing AMPs can substantially boost your overall performance and user experience. But there are more points to mention in detail.

  1. Speed optimization: One of the primary objectives of AMP is to deliver blazing-fast loading speeds for web pages. AMP achieves this by employing various optimization techniques, such as pre-rendering, lazy loading of images, and resource prioritization. The streamlined code structure and limited use of JavaScript contribute to faster rendering and improved performance.
  2. SEO benefits: Implementing AMP can have positive implications for search engine optimization (SEO). Google prioritizes mobile-friendly and fast-loading pages in search results, and AMP can provide a competitive advantage in mobile search rankings. AMP pages often appear with a lightning bolt icon, indicating their AMP status, which can attract more clicks from users.
  3. Mobile-first indexing: With the shift towards mobile devices for internet access, Google has emphasized the importance of mobile-first indexing. AMP pages are optimized for mobile, making them an attractive option for publishers looking to improve their mobile search rankings. By promoting AMP, Google encourages publishers to create mobile-friendly content and enhance the overall mobile web experience. In organic mobile search results, mobile-friendly websites are rewarded with higher rankings. Pages built with AMP are likely to receive higher rankings in mobile search results compared to non-AMP pages. The primary reason behind this is that AMP enables faster page loading, which aligns with the search engine’s preference for delivering a seamless user experience. The positive effect of AMP on page load speed not only benefits user experience but also has the potential for a greater impact on search engine results pages (SERPs) in the future. As search engines continue to prioritize fast-loading and mobile-friendly pages, AMP’s emphasis on quick loading times positions it favorably for enhanced visibility and ranking in mobile search results.
  4. Mobile user experience: With the increasing dominance of mobile devices in internet usage, providing a seamless and engaging user experience is crucial. AMP focuses on creating a responsive and mobile-first experience by ensuring that web pages adapt well to different screen sizes and orientations. AMP’s standardized components and layouts contribute to a consistent and user-friendly interface.
  5. Data usage reduction: AMP pages offer the advantage of caching content for end-users, allowing them to save on data usage by downloading content only when necessary. This reduced data consumption not only helps users conserve their data allowance but also lowers costs associated with data usage. This aspect encourages users to prefer AMP over standard mobile pages. By leveraging AMP, businesses can create websites and applications that cater to mobile users, regardless of their internet connection speed. This ensures a broader reach and improved accessibility for users, further enhancing the overall user experience.
  6. Improves server responses: Connected with the above-mentioned. In addition to delivering an enhanced user experience, the AMP web framework also contributes to improving server performance by reducing the load on servers. If your website receives significant mobile traffic, implementing AMP can help alleviate the strain on servers and boost overall performance. AMP content is pre-fetched, which means that it is retrieved in advance, reducing the workload on your servers. This pre-fetching mechanism significantly improves server responses and enables faster load times, as mentioned earlier.
  7. Content portability: AMP offers the advantage of content portability across various platforms and devices. AMP pages can be easily cached and served from different locations, including Google AMP Cache and content delivery networks (CDNs). This enables faster content delivery, particularly in areas with limited connectivity or slower network speeds.
  8. Support for interactive features: Initially, AMP was primarily focused on delivering static content efficiently. However, the framework has evolved to support interactive features while maintaining its performance benefits. AMP now provides components for forms, lightboxes, image carousels, and other interactive elements, allowing developers to create engaging experiences within the AMP framework.
  9. E-commerce applications: While initially popular in news publishing and content-driven websites, AMP has also expanded its reach to e-commerce platforms. AMP for E-commerce allows retailers to create fast-loading product pages, enabling users to quickly browse and make purchases directly from AMP-enabled search results or social media platforms.
  10. Progressive web AMPs: The concept of Progressive Web AMPs combines the benefits of Progressive Web Apps (PWAs) with AMP technology. This approach allows developers to build web experiences that offer the speed and performance advantages of AMP while incorporating the offline access, push notifications, and app-like features of PWAs.
  11. Improved security: AMP pages offer enhanced security compared to standard mobile pages. One key aspect contributing to this is that AMP pages are inaccessible outside their designated online servers. Additionally, leading internet security company Cloudflare operates its own AMP caches, further bolstering the security of these pages. The utilization of AMP and Cloudflare’s AMP caches allows organizations to safeguard their content and data from potential third-party attacks. This added layer of security provides peace of mind and reassurance for businesses seeking to protect their valuable assets while delivering fast and engaging mobile experiences to users.

What are the limitations of accelerated mobile pages (AMPs)?

Since their introduction a few years ago, AMPs have faced criticism from both the web and publisher communities, primarily focusing on two main areas:

  1. “Stolen” brand traffic: One limitation of AMPs is that they don’t allow users to click on the publisher’s content directly from the AMP itself. Instead, users are redirected back to the Google search results, which can be seen as “stealing” the brand’s traffic. This makes it challenging to measure website performance accurately and retain control over user engagement.
  2. Poor monetization capabilities: AMPs present difficulties in monetization. As mentioned earlier, the redirection of traffic from the AMP to Google search results can result in lower traffic and revenue rates for publishers. Many publishers who initially adopted AMPs due to their visibility in Google searches soon realized the implications and challenges associated with monetizing their content effectively.
  3. External content and coordination problems: Although AMP pages load quickly, there is a significant issue when it comes to external content, especially hosting advertisements. The delayed loading of ads on AMP pages can lead to missed opportunities for conversion as visitors may scroll past the ad before it fully loads. Google acknowledges this problem and states that it is actively working on resolving it. However, until a solution is implemented, publishers need to be aware of this variable and consider its impact on ad performance. Taking this into account will help publishers make informed decisions regarding AMP implementation and optimize their ad placement strategies accordingly. The main problem with external sources of data is connected with slow-loading video content – as simply not all types of content experience the same lightning-fast loading speed with AMPs. If your website heavily relies on video content, AMP may not deliver it as quickly as other types of content. Videos typically render at their own pace, which is often slow compared to other elements on AMP pages.
  4. Challenges for non-developers: Implementing AMP can be challenging, particularly for individuals without coding knowledge. For non-coders, AMP implementation is typically reliant on WordPress plugins that simplify the process. Unfortunately, this means that AMP usage may be limited to WordPress websites, as other content management systems (CMS) may not provide straightforward AMP plugins for non-developers. On non-WordPress CMS platforms, implementing AMP requires learning coding skills since there are no readily available plugins designed for non-developers. Take also into account, that the development costs for AMP can range from 5 000 USD (for smaller websites) up to 70 000 USD (for bigger websites).  Implementing AMP can be challenging due to its restrictive nature and the effort required for implementation. While the benefits can be significant, it’s important to carefully consider whether prioritizing the performance improvement of HTML web pages might be a more suitable approach for your specific needs. Following Google’s guidelines is crucial when implementing AMP pages. However, the process can become confusing due to conflicting information and frequent updates to the AMP template. And to be honest – even WP implementation of AMP can be quite tricky. Why? Even with available tools and plugins for AMP integration in certain content management systems (CMSs) like WordPress, conflicts may arise with other SEO tools such as Yoast or any other plugin you use. As a result, implementing AMP can be a complex task that requires careful consideration and attention to avoid potential conflicts and challenges.
  5. Limited analytics support: AMP has a restricted range of analytics support, primarily focusing on Google Analytics integration for WordPress users. However, it lacks flexibility in accommodating other popular analytics platforms such as Adobe Analytics, Heatmap Analytics, Crazy Egg Analytics, and Kissmetrics Analytics. And even in GA – it is hard to analyze this traffic. It’s crucial to understand that your AMP page differs from your original page. Implementing Google Analytics for AMP requires specific tags and can be time-consuming and cumbersome. Setting up these tags to collect and analyze data requires dedicated resources and efforts, which may take time and may not be immediately accessible for tracking purposes.
  6. Limited widgets and features: AMP employs a restricted range of CSS, HTML, and JavaScript, resulting in a limited selection of available widgets. In simpler terms, you cannot incorporate additional widgets and features into your AMP mobile pages, such as a Facebook “like” box or forms for email opt-ins.
  7. Google cache server: One of the reasons behind the fast loading speed of AMP pages is that Google serves users with a cached version of the AMP-enabled page. When a page appears in search results, Google retains the information and stores a copy of the content in its cache server. To access the information, users are directed to the AMP cache server rather than their own server. While Google maintains that AMP was developed as a collaborative effort, some publishers and industry analysts have expressed concerns regarding Google’s position and intentions. The main worry is that Google could potentially use AMP to shape the mobile web landscape according to its own interests. Publishers fear that relying solely on Google’s cache could result in a loss of control over content distribution, potentially impacting their advertising revenue. Therefore, it is essential to consider the implications and dependency on Google’s cache before fully committing to AMP.
  8. No leads and subscribers: AMP pages may not support certain elements such as email popups, opt-in forms, sidebar widgets, strategically placed social share buttons, and other components that are commonly used for lead generation and subscriber acquisition. As a result, there is a possibility of losing potential email subscribers and leads during the AMP conversion process. It’s important to carefully evaluate the impact of these limitations on your specific goals and consider alternative strategies to maintain lead generation and subscriber engagement.
  9. Risk of the decrease in ad revenue: Last but not least – AMP can decrease your income/revenue. How is this even possible, when you implement it because of possible revenue increase? Well… The official support for ads in the AMP Project does not guarantee the easy installation of ads on AMP pages. This limited potential to generate revenue is due to the streamlined nature of AMP, which removes unnecessary elements from the website, including certain types of advertising. As a result, the visibility of the products or services you offer to buyers or viewers may be reduced. Consequently, the potential to generate revenue becomes limited, and the advertisements from the agencies or platforms you partner with may not reach your viewers effectively. It’s worth noting that Google has made efforts to address these challenges faced by publishers using AMP. The recent introduction of AMP Advertising aims to improve the integration of content and advertising, providing a more robust platform for ad presentation. However, it is important to acknowledge that the HTML codes and structure of AMP are designed to prioritize the applicability of ads to your website, which can impact additional revenue opportunities.
  10. Limited impact on site traffic: While implementing AMP markups in pages can potentially improve visibility, it does not guarantee a significant increase in site traffic. Users may still choose to visit other pages for various reasons, and factors like content relevance and quality remain crucial in attracting traffic and driving conversions.
  11. Potential impact on webpage loading time: Webpages that combine both AMP and non-AMP content may experience slower loading times. Improper insertion of AMP HTML can also lead to issues with page performance. It is important for webmasters to carefully create and optimize content specifically for AMP to achieve the best results in terms of loading speed and overall performance.

These limitations have contributed to a slower adoption rate of AMPs compared to other emerging technologies. While AMPs offer benefits in terms of user experience and page visibility, addressing these challenges is crucial for AMPs to gain prominence on the mobile web.

While AMPs offer significant benefits to news publishers, businesses that maintain a blog and regularly publish timely content on popular topics can also potentially leverage this technology. This is particularly advantageous if there is a skilled individual on the team who can learn to build web pages using the AMP code.

However, for businesses that primarily publish evergreen content or do not have a blog at all, the investment of time and resources required to duplicate parts of their website in the AMP format may not be worthwhile. In such cases, the benefits of AMP may not outweigh the costs, making it less practical to implement AMP for their specific website needs.

Who does use AMP and why?

AMP has transformed how leading search engines and social media platforms present web content, prompting professionals in the technology sector to adopt AMP markups in their web content. Here are some roles commonly associated with AMP usage:

  • Software engineers: Software engineers utilize the AMP framework to develop mobile applications, optimizing speed and functionality by refining HTML and JS code to enhance efficiency and reduce file sizes.
  • Web developers: Web developers strategically implement AMP in homepage markup, leveraging AMP code segments to improve search engine visibility and rankings.
  • Bloggers: Bloggers can integrate AMP scripts into their blog posts, enhancing accessibility on social media platforms and search engines. AMP-coded posts may enjoy increased prominence and visibility, benefiting affiliate marketers and improving conversion rates.
  • SEO professionals: SEO experts utilize AMP markup to optimize clients’ websites, enhancing visibility on major search engines by guaranteeing a certain level of performance and service quality.
  • E-commerce managers: E-commerce websites prioritize fast speeds for high sales volumes. AMP provides a practical solution to improve page speed, enabling e-commerce managers to structure pages based on the AMP framework, increasing mobile accessibility and performance to boost click-through rates (CTR) and conversions.
  • User experience (UX) designers: UX designers employ AMP HTML and JS in mobile-focused projects to deliver optimal user experiences, enhancing functionality and interactions on websites.
  • Digital marketers: Digital marketers leverage AMP pages to present well-structured content, benefiting from improved loading times and the ability to cache feature-rich content such as videos and PDFs, ensuring wider accessibility and greater reach.
  • Small business owners: Small business owners utilize AMP to enhance online visibility, generate leads, and increase sales. AMP pages are particularly effective for local search engine results pages (SERPs), as they are indexed quickly, leading to improved visibility and higher click-through rates (CTR) on mobile devices.

By embracing AMP, professionals in various fields can improve website performance, user experience, and search engine visibility, and ultimately drive business growth.

Why Google promotes AMP and why do other companies use it?

However, Google promotes AMP as the main reason are:

  • Ad performance and viewability: AMP allows for better ad performance and viewability, which benefits both publishers and advertisers. AMP provides a controlled environment with strict guidelines for ad placements, ensuring that ads are displayed in a user-friendly manner. This leads to higher ad engagement, improved viewability, and potentially higher revenue for publishers. Google has invested in developing ad formats and solutions specifically designed for AMP. This includes AMP Ads and AMP for Ads, which enable publishers to monetize their AMP pages effectively. By supporting AMP, Google expands its ad revenue opportunities by providing a framework that encourages publishers to adopt AMP and utilize Google’s ad products. If the implementation of AMP will help to all publishers increase their revenue – honestly – I don’t think so. Everything that Google does is simply big rubbish and the same thing is AMP (and the same as well those AI recommendations for Google Ads/Adsense accounts – I would avoid that as well :-)) if you are a normal small publisher or small media company. The only reason why Google promotes AMP is – the better view rate of their ads = bigger income. And the last what they care about is publishers. Although of course Google always claims in all its materials that it cares about publishers, it constantly does everything against the interests of publishers. Unclear terms and conditions, basically no customer support, unclear changes of the algorithm, charges for invalid clicks and rules which are not clear even to people in Google, chargebacks for anything (even for valid clicks because the AI decided so…) and the inability to appeal are just some of the many reasons why hundreds of ad networks have been created in the last few years, which have no problem making a living, because Google is just really doing it wrong and there is a high probability that some publishers will start going elsewhere.
  • Promoting web standards: Google encourages the adoption of web standards and best practices. AMP’s structured and streamlined codebase follows these principles, promoting a more efficient and reliable web ecosystem. By pushing AMP, Google encourages publishers to prioritize performance, user experience, and adherence to web standards. And for sure = Google does not need to invest so much money in its hardware infrastructure to make its ad system and search engines run.

So what possible benefits can AMP have on your business?

  • Increase AMP traffic: because AMP pages rank higher, provide a better UX, and have faster loading times, they generally receive more traffic than other web pages. In fact, AMP leads to a 10% increase in website traffic overall. With more AMP traffic, many companies see growth in sales. Studies have shown that e-commerce sites with AMP pages have a 20% increase in sales compared to sites without AMP pages.
  • Decreased bounce rates: The bounce rate represents the percentage of people who visit one of your web pages and then leave the website without clicking anywhere else. Mobile users bounce from websites the most compared to users of other devices. One of the main culprits of the high mobile bounce rate is slow-loading pages. AMP pages substantially reduce bounce rates by rendering the website quickly, therefore improving the website rank. Industry mavens like Gizmodo and Wired saw a significant increase in traffic and engagement after using AMP.
  • Enhanced return on investment (ROI) for advertisements: AMP offers a favorable environment for various ad networks, aiming to deliver faster-loading ad experiences. The swift loading of ads increases the likelihood of users viewing them, maximizing the effectiveness of ad messaging and ultimately leading to improved ROI. AMPHTML ads, specifically designed for AMP pages, provide exceptional ad experiences. These ads are optimized to be fast, lightweight, and secure, ensuring a seamless and engaging user experience while driving higher ad efficiency and revenue.

Native Apps vs. PWAs vs. AMPs

This is more topic for tech guys, so in case you are not a developer, you can skip this part. 🙂

Let’s compare all three technologies to gain a better understanding of which one is most suitable for your business. But firstly – let’s start with an explanation of what each of these terms means.

  • Native apps: Native apps are applications developed specifically for a particular platform or operating system, such as iOS or Android. They are typically downloaded and installed from app stores and offer high performance, access to device features, and offline capabilities. Native apps are developed using platform-specific programming languages and tools.
  • PWAs (Progressive Web Apps): PWAs are web applications that leverage modern web technologies to deliver an app-like experience to users. They are built using web technologies such as HTML, CSS, and JavaScript and can be accessed through web browsers without the need for installation. PWAs offer features like offline functionality, push notifications, and access to device features, providing a seamless user experience across different platforms.
  • AMPs (Accelerated Mobile Pages): AMPs are a framework introduced by Google to optimize the performance of mobile web pages. They prioritize fast loading speeds and improved user experience by utilizing a streamlined version of HTML, limited JavaScript, and specific caching techniques. AMPs are primarily designed for delivering content-focused web pages, such as news articles, with an emphasis on speed and mobile optimization.

In summary, native apps are platform-specific applications installed on devices, PWAs are web applications that offer an app-like experience, and AMPs are a framework for creating fast-loading mobile web pages. The choice between these technologies depends on factors such as your target audience, desired functionality, and development resources.

Native PWA Google AMP
Development Language Swift, Objective C, Java, C# HTML5, CSS, JavaScript HTML5
Development Cost (approx.) $25,000-$70,000 $8,000-$25,000 Free
Means of Discoverability Play Store, ASO, referral advertising Search engine optimization Search engine optimization
Device Access Completely Partially Not possible
Offline Functionality Yes Yes No
Linking & Sharing Not possible Possible via URL Possible via URL
Push Notifications Available Available Not available

Choosing the right technology for your business depends on various factors. Based on my knowledge and experience in the application development industry, here are some considerations for each technology:

Why choose native apps?

Native apps are ideal for startups or businesses that already have a website and want to expand their reach by offering a mobile application. They are well-suited for media-rich content and mobile gaming. Native apps are in high demand in industries such as hotels, insurance, flight booking, e-commerce, and digital payments. Examples of popular native apps include Pokemon Go, Skype, and Twitter.

Why choose PWAs?

PWAs are suitable for businesses that aim to attract users to visit their platform on a weekly or monthly basis, rather than every day. PWAs create an engaging web experience that encourages users to consider downloading the mobile app in the future. Industries such as travel, retail, banking, media, and e-commerce commonly benefit from PWAs. Notable brands like Forbes, Santa Tracker, George.com, and Flipkart have seen increased conversions and tangible results through PWAs.

Why choose AMPs?

AMP is a good choice for businesses with content that is not heavily focused on media elements. It is well-suited for static content and is commonly used in news publishing, e-commerce, and advertising industries. AMP is particularly effective for sharing blogs, articles, and recipes, and it is also used for lead-generation landing pages due to its speed. Some companies that benefit from AMP include GIZMODO, The Washington Post, WIRED, Fast Commerce, and U.S. Xpress.

Ultimately, the decision on which technology to choose depends on your specific business requirements, target audience, and objectives. Consider the nature of your content, desired functionality, and user engagement goals to determine the most suitable technology for your business.

Marketing ROI – what is the (marketing) return on investment and how is ROI and MROI calculated?

3 Replies

ROI, short for return on investment, is a widely used metric in business to assess the effectiveness of investments in generating revenue. At its core, ROI measures the ratio of what you gain compared to what you invest.

What is ROI?

The concept of ROI is straightforward. It enables you to evaluate the financial performance of your investments by calculating the return you receive relative to the cost incurred. By understanding the ROI of your investments, you can determine their profitability and make informed decisions about resource allocation.

To calculate ROI, you need to subtract the initial investment cost from the final value generated and divide it by the initial investment cost. The result is typically expressed as a percentage or ratio, representing the return on your investment.

ROI provides valuable insights into the efficiency and success of your investments. It helps you identify which investments are generating positive returns and which may need adjustments or reevaluation. By analyzing ROI, you can optimize your decision-making process, allocate resources effectively, and drive overall business growth.

In summary, ROI is a fundamental metric that allows you to assess the performance of your investments in generating revenue. It provides a clear understanding of the value you receive in relation to the resources you allocate, helping you make informed decisions to maximize profitability and drive business success.

Marketing ROI (MROI) – what it is?

Companies spend trillions of dollars on marketing each day, yet marketing often gets labeled as a cost center rather than a profit driver. The key to changing this perception lies in proper planning and measurement. The ability to measure and justify marketing spend is what separates a profitable investment from wasteful expenditure.

This is where Marketing ROI (MROI) comes into play. Instead of relying on gut feelings when investing in marketing channels, Marketing ROI provides a way to measure the overall success and returns of marketing campaigns.

So, what exactly is Marketing ROI?

It is a metric that measures the return on marketing investment within an organization. In simpler terms, it quantifies the revenue generated from a company’s marketing spend, which includes various components such as overhead costs, salaries, media buys, creative services, and more.

The ultimate objective of any marketing operation is to accurately measure the return on every dollar invested and the revenue generated from that investment. In the past, this was mostly guesswork, but with the advent of digital marketing, marketers now have the tools to more precisely measure their marketing costs and the resulting revenue.

Why is Marketing ROI so crucial? Successful marketing organizations rely on data-driven decision-making. Understanding attribution, fraud, and misattribution is vital for achieving profitable marketing performance. By leveraging Marketing ROI, companies can gain valuable insights into the effectiveness of their marketing efforts, identify areas of improvement, and optimize their strategies for maximum returns.

In summary, Marketing ROI is a powerful tool that allows organizations to measure the impact of their marketing investments. By utilizing data and analytics, businesses can make informed decisions, drive profitability, and establish marketing as a revenue-generating function within the organization.

MROI vs ROAS comparison and understanding the key differences

ROI and ROAS are two widely used metrics in marketing that provide valuable insights into the effectiveness of advertising campaigns. While these acronyms are often used interchangeably, there are distinct differences between them.

ROAS, or Return on Ad Spend, focuses specifically on measuring the revenue generated per dollar spent on a particular advertising campaign. It provides a granular analysis of the campaign’s performance and helps marketers evaluate the success of their ad investments.

On the other hand, MROI, or Marketing Return on Investment, takes a broader perspective and assesses the overall impact of marketing efforts on a company’s profitability. It considers the collective effect of multiple marketing campaigns and initiatives, providing a high-level view of marketing performance.

The importance of marketing ROI for marketers

Marketing ROI, represented by metrics like MROI, plays a vital role in the strategic decision-making process of marketers. Here are a few reasons why marketing ROI is crucial:

  1. Justifying Marketing Spend: MROI helps marketers demonstrate the value and effectiveness of their marketing activities. By quantifying the impact on the company’s bottom line, it enables marketers to justify their investments and secure resources for future campaigns.
  2. Leading Indicator of Performance: MROI serves as a leading indicator of marketing performance and profitability. It provides executive leaders with valuable insights into the return generated from marketing efforts, allowing them to make informed decisions about resource allocation and strategic direction.
  3. Accountability and Optimization: MROI holds marketing teams accountable for their actions by measuring the tangible impact on the company’s financial success. It encourages marketers to carefully consider how they allocate their time and budget, driving optimization and efficiency in marketing strategies.
  4. Strategic Planning: Accurately calculating MROI enables marketers to establish a long-term strategic roadmap. It guides decisions related to channel investments, budget allocation, and talent acquisition, and tracks spending patterns over time. MROI serves as a guiding principle for aligning marketing goals with overall business objectives.

While MROI is a valuable metric, it should be noted that it is not the sole measure of marketing success. It should be used in conjunction with other key performance indicators to gain a comprehensive understanding of marketing performance and inform data-driven decision-making.

In conclusion, understanding the differences between ROI and ROAS is essential for marketers. MROI provides a holistic view of marketing impact, whereas ROAS focuses on the performance of individual advertising campaigns. By leveraging both metrics effectively, marketers can optimize their strategies, demonstrate the value of marketing efforts, and drive long-term business success.

Let’s break it down – 3 steps to measuring your marketing return on investment (ROI)

To calculate marketing ROI, you can use the following formula:

However, determining the total marketing spend and defining sales growth can be challenging. To ensure accuracy, follow these steps:

Step 1: Identify your key performance indicators (KPIs)

Since every business is unique, measuring marketing ROI requires considering multiple metrics aligned with your campaign goals. To justify your marketing budget, determine the KPIs most valuable to your business. Some examples include:

  • Cost per lead (CPL)
  • Customer acquisition costs (CAC)
  • Customer lifetime value (LTV)
  • Conversion rates
  • Average order value (AOV)
  • Purchase frequency (PF)
  • Customer average lifespan (CAL)

Step 2: Determine your attribution model

Marketing attribution involves identifying the touchpoints that lead to conversions. Understanding which touchpoints have the greatest impact on conversions helps identify the channels, campaigns, and factors contributing the most to your bottom line. Attribution models can include:

  • First touch attribution: 100% credit to the first touchpoint
  • Last touch attribution: 100% credit to the last touchpoint
  • Time decay: More credit to touchpoints closer to conversions
  • Linear: Equal credit to all touchpoints
  • Multi-touch attribution: Considering multiple touchpoints and assigning credit based on specific logic per business

Step 3: Select the metrics to measure

There is no single metric that determines a good marketing MROI, as it depends on various factors such as market conditions, business stage, campaign stage, unique KPIs, and revenue goals. Different organizations may use different formulas to calculate marketing MROI, such as:

  • Hubspot marketing ROI formula

Hubspot calculates MROI by using the formula:

 

  • The alternative marketing ROI formula

In contrast, another organization may use the following formula to calculate MROI:

  • Marketing ROI formula based on customer LTV

Or when you consider that customer LTV is the most important metric to your business, you will use this formula:

Ultimately, use the metrics that are most relevant to your business and complement your MROI calculations with contextual data to obtain a comprehensive understanding of your marketing returns.

How to determine a good marketing ROI?

As discussed in the previous chapter, determining what constitutes a good marketing ROI (MROI) is highly subjective and specific to each business. There is no universally applicable golden ratio that indicates a good MROI. Instead, marketers should focus on ensuring their data is clean and accurate, identifying their key metrics, and calculating their overall marketing performance based on their unique customer needs and behaviors.

The main challenges of marketing ROI

Obstacles on the path to accurate marketing ROI While MROI is intended to provide a comprehensive view of marketing performance, there are common challenges that can undermine its effectiveness, even with advancements in attribution technology. Often, marketers are unaware that their calculations are inaccurate or incomplete. Here are the four most common reasons for this:

  1. Inaccurate data sources: A significant challenge for marketers in measuring MROI is the accuracy of attribution. Regardless of the sophistication of your business intelligence team, actionable insights rely on measuring the right parameters. Ensuring confidence in your numbers requires reducing fraud and misattribution, which can be achieved by partnering with a trusted mobile measurement platform (MMP) and utilizing predictive modeling.
  2. Not included labor costs: Many marketers only consider advertising costs in their MROI calculations. However, for a more accurate measurement, it is necessary to incorporate all the factors involved in campaign management, from ideation and strategy to creative execution and reporting. This includes accounting for the costs of full-time employees and designers involved in crafting advertising campaigns, in addition to the expenses of placing ads.
  3. Undervaluing brand marketing: MROI calculations can sometimes encourage a narrow focus on short-term results, neglecting the long-term value of building brand equity. Brand recognition plays a crucial role, particularly in highly competitive markets where differentiation is essential. When the primary metric is sales numbers without considering sales cycles and customer lifetime value (LTV), MROI calculations may lead to short-term decision-making.
  4. Ignoring other data: MROI should be considered as just one part of the overall marketing equation. Business decisions should never rely solely on MROI but should be supplemented with contextual information such as market factors, competition, and the company’s stage. For example, the impact of privacy laws like Apple’s App Tracking Transparency (ATT) policy can significantly affect advertising costs. Even if your campaigns are performing well relative to the market, it could still impact your MROI calculations.

Often, marketing efforts don’t yield positive ROI immediately. For instance, Search Engine Optimization (SEO) is a prime example of a strategy that requires six months or more to see positive results. Similarly, there are situations where substantial upfront investment is necessary to kickstart marketing campaigns and build initial momentum.

App Marketing ROI

Measuring marketing ROI can be both challenging and rewarding, especially when it comes to app marketing. App marketers need to adopt a unique approach to calculating ROI due to specific hurdles they face.

Here are a couple of obstacles that make measuring App Marketing ROI (MROI) challenging:

Fragmented cost data

One major challenge for app marketers is obtaining accurate cost data while dealing with various sources. Data reporting across different platforms, such as Twitter, Facebook, and Snapchat, vary in terms of format, frequency, and granularity. This fragmentation and lack of standardization make it difficult to compare and weigh the costs accurately.

Additionally, with the introduction of App Tracking Transparency (ATT), marketers must gather data from multiple sources, including aggregated deterministic data from SKAdNetwork, user-level data from ATT consenting users, and aggregate data from probabilistic modeling, among others. To tackle this challenge, working with a mobile measurement provider (MMP) that can collect, organize, and standardize cost reporting using multiple data collection methods is essential.

Lack of awareness of true ROI

Some marketers are unaware of their true ROI due to distorted data caused by sophisticated fraud and false attribution. This leads to significant financial losses, often amounting to millions or even billions of dollars, creating what is known as “the bleeding cash cycle.”

Addressing this issue requires implementing robust fraud detection mechanisms and attribution models that can accurately identify genuine conversions and attribute them to the appropriate marketing sources.

Overall, app marketers must navigate these challenges to gain a clear understanding of their marketing ROI and make informed decisions to optimize their app marketing strategies.

When fraud compromises your data, your calculations become meaningless and unusable. It not only wastes your valuable time and resources but also sets you back steps, leaving you without any actionable insights to work with.

Essential steps to measure your app marketing ROI effectively

Step 1: Validate your data sources

The initial step involves ensuring the reliability and accuracy of your data sources. As mentioned earlier, partnering with a reputable mobile measurement provider (MMP) is crucial. Take the necessary measures to validate your data sources, eliminating any fraudulent or unreliable data that may skew your calculations.

Step 2: Determine your key performance indicators (KPIs)

Calculating app marketing ROI goes beyond a simple revenue-to-marketing spend ratio. Due to the diverse variables involved in marketing different types of apps, there is no one-size-fits-all formula for measuring app marketing ROI. Embrace the fact that app marketing ROI carries a degree of uncertainty and focus on identifying KPIs that have a direct correlation to your revenue figures.

Consider leveraging the AARRR framework (Acquisition, Activation, Retention, Referral, Revenue) to establish goals, signals, and metrics that define the success of your app marketing campaigns. This framework provides a comprehensive approach to tracking the various stages of user engagement and conversion.

Goals Signals Metrics
Acquisition Users understand the benefits and features of your app – User downloads
– Positive social media sentiment
– Brand awareness
– Downloads
– App store ranking
– Cost per acquisition Cost per install
– CPI per campaign
Activation Users complete their desired action – User in-app activity
– Number of onboarded users
– Goal completions
– DAU / MAU
– Length per session
– Goal completions
– Cart abandonment
Retention Users return and use your app regularly – Repeat orders
– User frequency
– Shorter time between sessions
– Increased feature usage
– Churn rate
– Session frequency
– Session duration
Referral Users talk positively about your app and drive more downloads – App reviews on app store and 3rd party review sites
– Positive press
– Increased social media and forum sentiment
– Number of reviews
– User invitations
– Customer Lifetime Value
– Referral retention rates
– Install per invite
– Net Promoter Score (NPS)
Revenue Users spend money on your app – In-app purchases
– Freemium subscription upgrades
– Purchase frequency
– Average transaction value
– Average revenue per user
– Customer Lifetime Value
– Average order value
– MRR / ARR

Step 3: Calculate the most relevant metrics

To measure your app marketing ROI effectively, it is important to select the most relevant metrics for your app. One approach is to consider metrics such as the total value of post-install actions or average revenue per user (ARPU).

If you choose to focus on ARPU, you can calculate your app marketing ROI by comparing it to the cost per loyal customer (CPLU). If your ARPU exceeds your CPLU, it indicates a positive ROI for your app marketing efforts.

Step 4: Analyze and refine your app marketing strategies

Once you have reliable data sources and defined KPIs in place, it’s time to analyze your app marketing efforts and refine your strategies accordingly. Regularly evaluate your campaign performance, align it with your established KPIs, and make data-driven decisions to optimize your app marketing ROI.

By following these steps, you can enhance your ability to accurately measure and improve your app marketing ROI, leading to more effective and efficient marketing strategies for your app.

The best practices for achieving a positive MROI in 2022

  1. Ensure accurate attribution data: Accurate data is crucial for calculating MROI effectively. By utilizing a trusted Mobile Measurement Partner (MMP) and reducing fraud and inaccuracies, you can make informed data-driven decisions with confidence.
  2. Avoid vanity metrics and focus on what truly matters: Metrics like page views, social media followers, and app users alone are not sufficient for assessing the marketing performance. Instead, prioritize revenue-tied metrics such as customer lifetime value (LTV), average order size, retention rates, and daily active users. These metrics provide meaningful insights into the effectiveness of your marketing campaigns.
  3. Look at the entire funnel: A common pitfall in calculating MROI is having a narrow focus on short-term revenue numbers. To maximize the effectiveness of your marketing efforts, consider the entire customer journey and how marketing activities impact various funnel stages. Evaluate metrics such as retention rates, referral rates, and average order values to gain a comprehensive understanding of your MROI.

Key information about the return on investment (ROI) to remember

  • MROI measures the revenue generated from marketing activities and varies across organizations.
  • MROI examines overall marketing spend, while return on ad spend (ROAS) focuses on specific campaigns.
  • MROI justifies marketing investments, offers a holistic view of performance, and aids in long-term strategic planning.
  • Inaccurate data sources can hinder MROI effectiveness, so partnering with a reliable MMP is crucial.
  • App marketing ROI poses unique challenges due to fragmented cost data and a lack of standardization across channels.

To maximize your MROI, prioritize accurate data, focus on meaningful metrics, and consider the complete customer journey in your analysis. Remember to approach MROI with a positive mindset and embrace the opportunities it presents.

Active user

1 Reply

An active user refers to a unique individual who interacts with an app or website during a specific period of time. This metric is used to measure growth, churn, and the stickiness of a product.

Understanding engagement Engagement can vary depending on the industry and business model. For example, in an online banking app, engagement might be defined as making a transfer, while an eCommerce app may consider adding an item to the cart as a form of engagement. In the case of a SaaS company, software usage could be the focus.

Identifying active users are identified through personal unique identifiers such as email addresses, user IDs, or cookies for web users. In some cases, a combination of these identifiers is used to ensure accurate identification.

Benefits of measuring active users The number of active users is an important indicator of success. Tracking the number of active users over time helps assess the effectiveness of campaigns and the overall customer experience. It also relates to other key metrics like customer lifetime value (LTV) and retention rates.

Types of active user metrics The definition of an active user and the engagement criteria can vary based on the business. Here are three common types of active user metrics:

  1. Daily Active Users (DAU): The number of unique users who engage with the app within a 24-hour period. This metric is commonly used for apps where users are expected to interact daily, such as gaming apps.
  2. Weekly Active Users (WAU): The number of unique users who engage with the app within a seven-day period. WAU is typically used for apps that expect weekly interaction, like analytics tools.
  3. Monthly Active Users (MAU): The number of unique users who engage with the app within a 30-day period. This metric is commonly used for B2B apps where users interact a few times a month or less, such as banking apps.

Measuring active users helps evaluate the health of an app or website and enables alignment of user needs with business objectives. It provides valuable insights for growth and retention strategies, allowing businesses to optimize their products and enhance the user experience.

Calculating active users / how to calculate active users as the metric

Calculating active users can seem deceptively simple, but it can become more complex depending on how the activity is defined. Here are the steps to get started:

  1. Define the criteria for an active user: Determine the specific actions or behaviors that qualify a user as active. This could be clicking a button, swiping, scrolling, or any other relevant engagement.
  2. Define the frequency of engagement: Decide the time period you want to measure, such as daily (DAU), weekly (WAU), or monthly (MAU). This determines how often users need to engage to be considered active.
  3. Collect and analyze data: Use an analytics tool of your choice to track user activity and identify unique users who meet the active user criteria for each period. Sum up the number of unique users for each time frame.

Let’s go through an example together:

  • Criteria – app user clicked a button, swiped, or scrolled
  • Frequency of engagement – DAU
  • On day X, the following engagements were registered:
    • User 1 clicked a button and then closed the app
    • User 2 logged into the app but then remained idle
    • User 3 logged into the app, scrolled, swiped, or clicked a button
    • User 1 logged back into the app and clicked another button

Bottom line: Our DAU count adds up to 2. Why?

      • User 1 is an active user (counted once)
      • User 2 is not considered active
      • User 3 is also an active user

Remember that measuring active users depends on your company’s long-term growth goals and business model. For example, the UK’s National Health Service might focus on increasing vaccination awareness, so they would measure active users based on unique logins to their app. On the other hand, Uniqlo’s objective might be to drive sales, so they would measure active users as those who completed a purchase within a given period.

Different business goals require different active user criteria, so tailor your measurements accordingly to align with your objectives.

Unlocking product success: Analyzing the DAU/MAU ratio to measure user engagement and stickiness

The DAU/MAU ratio is a metric that measures the proportion of monthly active users who engage with your app within a 24-hour period. This ratio is useful for forecasting traction, and potential revenue, and evaluating the value your product holds for users based on their return frequency.

To calculate the DAU/MAU ratio:

  1. Determine the number of Daily Active Users (DAU) for a given time period, such as a month.
  2. Determine the number of Monthly Active Users (MAU) for the same time period.
  3. Divide the DAU by the MAU and multiply the result by 100 to get the percentage.

For example, if you had 2,000 DAU and 8,000 MAU in the month of August, your stickiness ratio for that month would be 25%. This indicates a high level of user engagement, as a stickiness ratio above 20% is generally considered good, and 25% or higher is exceptional in most industries.

Key information about active users to remember

  • The definition of an active user can vary depending on the industry and specific business goals.
  • Tracking the number of active users over time helps assess the effectiveness of campaigns and the overall customer experience.
  • Active users can be categorized as Daily Active Users (DAU), Weekly Active Users (WAU), or Monthly Active Users (MAU), with the choice of frequency determined by industry and business needs.