Rise Of (Programmatic) Advertising – Part I

Updated: Oct 7, 2019

Did you know who invented the very first web banner?

It was the digital property of HotWired Magazine, called Wired.com.

So, if you dislike the ads displayed to you, interrupting while you’re browsing your favorite content on the internet, then you have hotwired.com to hate for it. But if you are working in the digital advertising industry and actually are passionate about it, like me, then a big thanks to hotwired.com ... #justsaying

However, Wired.com designed a 468x60 banner in 1994, which interestingly read: “Have you ever clicked your mouse right here? You Will”

This first ad was of AT&T, who bought the space for 3 months. After that, the banner was launched in 14 countries, including the then top brands like Volvo, Club Med, etc.

A lot... A lot of people did click their mouse “right there” and can you guess the click-through rate that was achieved?

According to the article on HotWired, that same AT&T banner achieved a staggering CTR of 40%-50% !

Today, a campaign optimizer’s dream is to achieve a CTR between 1%-3%.

The average click-through rate of display ads across all formats and placements is 0.06%.

Source: Hubspot

If you think that ad slows down the page loading now, imagine browsing the website and loading of advertisements over a thin dial-up connection.

HotWired, the digital entity, soon had more employees than the magazine itself and also launched a search engine by the name HotBot. It started pulling in $20M a year in revenue.

Seeing this, other startups like Kozmo to Pets.com jumped into the portal war fueled by the banner ads.

These companies started pouring millions of venture capital dollars to lure the net users and secure the attractive “early bird advantage.”

Fast Forward 2 years

To meet the advertisers’ ever-growing need to place the banners online, the first ad servers were created in 1996. "DoubleClick" was arguably the first ad server.

Later, Google purchased the company in 2007 for $3.1 Billion, and the same DoubleClick (enhanced version) continues to serve ads even today!

Many other players or rather, competitors, entered the market.

OpenX, Tremor Video, LiveRail, SpotXchange, Microsoft, Zedo, Mediamind, Adap.TV were among the top players to enter the digital ad trading business in the early 2000s.

Comes Y2K

Google released its prodigal AdWords, initially with 350 advertisers. However, AdWords was not the beginning of programmatic advertising (because it allows ads to run only within its network) but truly brought clarity into online advertising.

2 years later, Google announced the CPC pricing model. And then in 2013, Google introduced its display ad network, called "GDN". It as available for advertisers through AdWords and was limited to Google's and DoubleClick's properties. The targeting segments in Google’s Display Network were defined by demographic data, search queries, and primary behavioral trends.

"AdSense", part of GDN, was a self-serve platform, which gave publishers a reliable channel to monetize their website inventory.

There was also a potential disadvantage of using AdSense, as many of the sites were created, without any captivating content, to do spam or fraudulent activities. Those websites would attract users and lure them into performing a click.

Thus was the birth of Click Fraud!

Up until now, the history of programmatic advertising was somewhat linear, one innovation leading to another one. What you and I consider as "Programmatic Advertising" is Real-Time Bidding.

Between 2007 – 2010

Ad tech players like Yahoo’s Right Media Exchange, Google AdExchange, Microsoft AdECN, AdMeld, PubMatic, Rubicon Project, OpenX and others, started building their RTB software that worked as a DSP (Demand Side Platform), an SSP (Supply Side Platform), an Ad Exchange or even a combination of the three.

Yahoo’s Right Media was the first to build an RTB ad exchange in 2007. It had a brilliant time and business before sizzling out and eventually was subsumed into Yahoo Advertising as the rebranded Yahoo Ad Exchange.

Gradually, Marketers also started exploring new channels, other than the traditional advertising channels like newspapers, TV, billboards, etc., to reach out to their potential customers.

Advertising on Mobile devices was considered as a new pathway, because we use mobile phones to access the internet more than any other device.

From 2014 onwards

Mobile programmatic advertising started growing at a much faster rate than its desktop counterpart.

The ad platform also needed to segment the users for more effective ad delivery. Part of programmatic advertising’s appeal is that creatives can be served across devices with minimal efforts.

It was challenging to achieve, as mobile devices did not have Cookies.

Despite the hindrances and setbacks, Programmatic or RTB advertising gained a lot of popularity from the last one and a half-decade.

RTB platforms were coming into their own, DSPs and SSPs working together to provide access to vendor-neutral RTB ecosystem.

At the end of the day, advertisers started making more money. Although, programmatic advertising basically started for the publishers to monetize their inventory fell into a discombobulated stand.

Stay Tuned. We’ll be back with Part – II


Post Written By:
Satyam Divecha
Kritter Software Technology Pvt. Ltd.

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