Video Advertising Overview

What is video advertising?

Ads reaching users by means of the Internet and social media environments on various platforms (mobile devices, tablets, personal computers, gaming devices, smart TVs) is what is today referred to as Digital or Online Advertising, with video as the dominant form.

The term video advertising includes online display advertisements (ads on websites) that have video within them, but it is generally accepted that it refers to advertising that occurs before, during and/or after a video stream on the internet . Even videos as short as ten or fifteen seconds can create a lasting brand impression. The primary business of Pulse Video Advertising is delivering individually selected video ads to wherever you deliver your videos.

According to Interactive Advertising Bureau (IAB) guidelines, there are three types of video ad formats:
  • Linear Video Ads: Ads that interrupt video content before (pre-roll), during (mid-roll), or after (post-roll) the streaming content. They can be accompanied by a companion ad, or they can include an interactive component.
  • Non-linear Video Ads: Ads running concurrently with the video content so the users see the ad while also viewing the content without interruption. Non-linear video ads can be delivered as text, graphical ads, or as video overlays.
  • Companion Ads: Ads served along with linear or non-linear ads in the form of text, static image display ads, rich media, or skins that wrap around the video experience.

The advertising ecosystem

The Interactive Advertising Bureau (IAB) is an advertising business organisation that develops industry standards, conducts research, and provides legal support for the online advertising industry. They portray the advertising ecosystem with six rings, each representing a distinct activity area, encircling the brand upon which all actions are centered.

IAB advertising arena
Area of activity Segment description
Media Planning and Buying
  • In-House advertising companies: Companies that have the resources and appropriate teams to handle all aspects of their brand and oversee all of their advertising initiatives internally.
  • Advertising agencies: Businesses dedicated to creative development, media planning, and media buying, or some combination of all three.
  • Media Management Systems: Sophisticated tools that make it easier, faster, and more cost efficient to create, plan, buy, analyse, and optimise campaigns for both brands and agencies.
Content Creators
  • Publishers: Entities that produce some sort of text, images, audio, or video edited by professionals (for example, on a website or mobile app), this way providing inventory where ads can be displayed.
  • Brands: Brands manage websites for their corporations, their branded products, and often sites specific to various campaigns.
  • Users: Any person creating any text, audio, visual, or video content in digital media, for example blogging and social sites such as Facebook or Instagram.
  • Social sites: For example, Facebook, Instagram, Pinterest, and Snapchat, whose primary focus is communication and sharing photos and video content.
Media Vendors
  • Publishers: For example VUDU or Hotstar, which based on assets, capabilities, and audiences of the content produced, have to predict and sell out their entire advertising inventory.
  • Ad networks: Aggregators of video advertising inventory that package and resell it based on context or audience, enabling publishers to generate advertising revenue from their video content libraries or other advertising inventory without a direct sales relationship to an advertiser.
  • Digital Media Exchanges: Neutral parties of computer systems where media is traded much like stocks on the NASDAQ. Sellers designate pools of impressions to be sold in the exchange while buyers go into the system, check what is available, and make the transactions that are then automatically fed through ad servers.
  • Full-service Demand-Side Platforms (DSPs): The buy-side of the business. DSPs access inventory through exchanges or networks, determine the available inventory for given targets available, place the buys, connect into the ad serving, and then optimise the campaigns while ultimately porting the purchase and performance data back to the agency or advertiser for payment and analyses.
  • Agency Trading Desks: Media buyers and re-sellers within an ad agency that help advertisers execute programmatic media buys.
  • Sell-Side Platforms (SSPs): Exchange-like systems that enable content creators to manage the programmatic sale of their inventory, for example Pulse.
Execution Technologies
  • Ad servers: For example Pulse, handle administrating the ads and their distribution.
  • Site serving: Ad serving (delivery) done by a specific media entity. Third-party ad servers are used by agencies and advertisers to serve ads to a multiplicity of sites and in return receive standardised reporting.
  • Self-serve DSPs: Systems that enable any advertiser to purchase advertising inventory. There is no human interaction as all buying processes have been automated.
Media Enhancements
  • Rich media: Form of advertising creative that has interaction and visual elements, for example, ads that appear and disappear automatically, and those that pull down or across with the move of a mouse or finger.
  • Creative Optimisation: Enables marketers to optimise versions of a creative asset (the ad) and automatically serve up the best performing ones.
  • Data Management Platforms (DMPs): Systems for processing, integration, and implementation of various data sets, most commonly user data. Media departments at agencies determine how specifically they would like to target the audience that sees the ads and can then purchase data on individuals of interest to a specific advertiser.
  • Tag Management companies: Tags are computer codes attached to specific ad assets related to, for example, targeting, search engine optimisation, and first party/third party measurement. These companies automate the task of managing all of the tags that have been developed and often reduce them down to a single tag to speed the delivery of the ad.
  • Ad Verification and Privacy: Companies that provide marketers with services to validate the delivery of display ads and ensure brand safety.
Business Intelligence
  • Site Measurement and Analytics: Publishers use tags to report back usage metrics on various pages and the content within them. This way they can determine how to better develop and optimise content to ensure greater engagement and growth of their audiences.
  • Media Attribution: Refers to a level of reporting on media buys where systems help the marketer understand a true, holistic picture of exposure to an entire chain of media that results in the ultimate outcome.
  • Marketing Reporting and Analytics: Systems typically customized to the needs of the advertiser or agency. These may include dashboards that enable them to pull in data from a variety of sources, including ad servers, to get a macro view of advertising spend, performance in terms of interaction, and connection to a sale.

For more information on this topic, see The IAB Arena - A Simplified View of the Digital Advertising Ecosystem.

How is inventory traded?

There are three common methods of trading video advertising inventory:
  1. Non-Programmatic: Direct sold inventory through one-on-one interactions between advertiser and publisher, most often using insertion orders. An insertion order represents a contract between the advertiser and publisher that outlines the details of the transaction, which is then translated into a campaign on the publisher's ad server.
  2. Automated Guaranteed: Similar to direct sold inventory because the sale is made directly between the buyer and seller, except that the buying process happens programmatically through automated trading systems (SSPs and DSPs).
  3. Programmatic Real-Time Bidding (RTB): Refers to the process of making an individual ad impression available for purchase on multiple ad exchanges, using data to determine if the ad impression is right for the buyer, and bidding on it, and all this happens in milliseconds as the website loads. Inventory is available to buyers through RTB marketplaces and traded through auctions. At the heart of the RTB marketplace is the second-price auction. In a second-price auction, the highest bidder only pays 0.01 more than the second highest bidder. This creates a very efficient marketplace, as advertisers are free to bid the most that the impression is worth to them, without fear of bidding more than they need to.
Ad inventory trading
Transaction type Description Benefits Drawbacks
Direct Deal Non-programmatic purchase of reserved or guaranteed ad space by advertisers directly from a publisher, most often using insertion orders.
  • Highest ad serving priority
  • Reserved or guaranteed inventory
  • Custom ad formats based on publisher needs
  • Human relationship
  • Manual process which requires a lot of administrative work
  • Publishers care about selling as much of their inventory as possible
  • Premium prices
Automated Guaranteed Also known as Programmatic guaranteed, Programmatic premium, Programmatic direct and Programmatic reserved, refers to programmatic transaction of reserved or guaranteed packages of ad inventory between publishers (the sell-side) and advertisers (the demand side) through automated trading systems, such as Pulse. You could think of these packages as pre-configured insertion orders. The inventory and pricing are guaranteed, and the campaign is inserted alongside other direct deals in the ad server.
  • Automated process
  • Ad serving priority
  • Guaranteed inventory volume
  • Detached relationship
  • Limited adoption of this transaction method
  • Premium prices
Private Deal (Fixed price with Deal ID) Also known as preferred deal, refers to programmatic real-time bidding (RTB) purchase of ad space through automated trading systems (Demand Side Platforms), where a set price for a thousand impressions (CPM) has been agreed between buyer and seller and is used for all impressions delivered in this deal. This way advertisers bypass any kind of auction or competition and immediately purchase the inventory that was agreed upon.
  • Premium inventory
  • Agreed upon price
  • Human relationship
  • Semi-automated
  • Unreserved or non-guaranteed inventory
  • Limited adoption of this transaction method
  • Higher prices
Private Marketplace (Auction price with Deal ID) Refers to programmatic real-time bidding (RTB) purchase of ad space, where multiple bidders participate in an invite-only auction. Only those advertisers who have been explicitly selected by the publisher (seller) will be allowed to bid on that inventory and compete against each other to win the auction.
  • Premium inventory
  • First look
  • Agreed upon price
  • Human relationship
  • Semi-automated
  • Unreserved or non-guaranteed inventory
  • Limited adoption of this transaction method
  • Higher prices
Open Marketplace (Not supported in Pulse ), refers to programmatic real-time bidding (RTB) purchase of ad space in a public auction, where any buyer who is connected to the seller programmatically and interested in the inventory can submit a bid and compete against other buyers to win the auction. The open auction of the public RTB marketplace is powered by the OpenRTB protocol.
  • Complete automation
  • Maximum reach
  • Data-driven targeting
  • Efficient pricing by paying for impressions that match buyer's specific criteria
  • Highly accessible - advertisers of all sizes can purchase publisher inventory
  • No publisher relationship
  • Lowest priority
  • Unreserved or non-guaranteed inventory
  • Unpredictable delivery

Example scenario

A short scenario, showing what an end-to-end process in ad delivery may look like, showcasing all parts of the advertising ecosystem.
  1. A company that needs to advertise itself and/or its products hires an advertising agency. The company briefs the agency on the brand, its imagery, the ideals and values behind it, the target segments and so on.
  2. The agency converts the ideas and concepts to create the visuals, text, layouts, and themes to communicate with the user. After approval from the client, the ads are ready to go on air.
  3. A publisher manages a very successful website with thousands of unique visitors each month. This publisher has decided that they want to make their content available for free, but still need a way to monetise it. They decided to do this by displaying ads on their website. They have dedicated areas on each page for ads to show up, also known as available inventory.
  4. The publisher manages the ad insertion by using an ad server, such as Pulse, which is a tool that fetches and loads the advertisement (the creative file) onto the website. Using Pulse enables the publisher (seller) to configure all the requirements from the advertiser (buyer), such as storing the advertisement files (in case of direct deals), setting the start/end date, the amount of impressions to be served, the targeting rules, but also to monitor and analyse user engagement.
  5. When a user visits the publisher's website, the video player makes an ad request to Pulse and in the request it sends a lot of extra information, such as the device from which the request was made and the tags used.
  6. Pulse algorithmically decides which campaign to choose. Which ad it picks and includes in the ad response depends on the settings and configurations for the campaigns, goals and ads, the current delivery of campaigns, which ads the user has seen before, and so on. When deciding, Pulse looks at direct campaigns and bids from marketplace buyers at the same time. The buyer with the highest bid wins the ad impression opportunity and the real-time bidding settlement price is then compared with the CPM of the direct campaign as configured in Pulse. This means direct campaigns are not always selected first, instead the decision is based on price.
  7. When the player receives an ad, it starts playing it. It records any interactions the user has with the ad, for example clicking on the ad, pausing it, skipping it or for how long the user actually watched the ad. Some advertisers also require publishers to provide data to third-party data collectors. That is done through pixel trackers which are inserted in ads and used to track performance metrics.
  8. The interaction and tracking information is sent back to Pulse so publishers can pull their reports and forward it to the advertiser.