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What data does a DSP have access to when bidding on an ad exchange?

Ie, what types of information are contained within the cookies made available? Thanks!
This question was asked on Quora.com, below is my answer.

Identity DataIn a typical RTB transaction there’s a user ID, pulled from the user’s cookie or some form of server side system, which is passed to the DSP from the SSP. That ID is, in most cases, the DSPs record locator for the user’s information. Most DSPs have a server side data store where this information is housed, updated and augmented from a variety of sources including data companies like Blue Kai and Excelate and their ilk. DSPs may also be collecting and distilling information based on bid request activity from that user (although most SSPs put language into the contracts governing the use of this “bid stream” data) or retargeting data gathered for their customers. This type of data system is generally referred to as a Data Management Platform (DMP) in the industry. While there are some stand-alone DMPs out there, more and more DSPs are integrating or building their own.

There are a variety of other bits of information about the ad impression that get passed in the bid stream. To get a sense of what might be passed you can look at the Open RTB API (http://code.google.com/p/openrtb/). It is, of course, very technical but there are grids that list out the information being exchanged.

What are the revenue models for SSPs and DSPs?

 What kind of gross margins do they earn? Specifically do SSP/DSPs earn a % of ad spend? If so what is it? Or do they operate on an arbitrage model, straight fee model? I’m looking for specific numbers/percentages. Do the same models apply to both desktop and mobile RTB?
This question was asked on Quora.com, below is my answer.

I can answer some of these questions, but I won’t go into specifics about the percentages since I can only really give you insight into one company with any confidence.

SSP

Revenue Models

On the SSP side the revenue model is based on a percentage of revenue flowing to the publisher. This works well as it lines up the SSP’s incentives with the publisher. The more money the publisher makes – the more money the SSP makes. SSP’s are generally geared toward serving the publishers so that alignment makes for a good relationship.

DSP

On the DSP side I know of two prevalent revenue models. The most prevalent has profits tied to a percentage of spend. This is taking money the same way the SSPs do, so it requires the advertisers that use the DSP to trust that all the algorithms and technology is: A – getting them a good price, and B – fulfilling the requirements of the campaign in the most optimal way. The major DSPs seem to have a good handle on these two elements and appear to be doing fine, even though the financial model doesn’t inherently lend itself to support “A”.  Read more

The Real Problem with Getting More Spend Online

Two weeks ago I participated in a couple of events during AdWeek in New York.  The first was Rubicon’s own #letsfixit event where agency advertising representatives joined a panel with publishers and the rest of the demand train to discuss the difficulties of running ads online.  The attention shifted from learning about the process to learning about where the process fails.

Familiarity

Spend OnlineBernhard Glock of Medialink, who was not on the panel, but chimed in with a profound thought.  Buying on television is buying something that’s familiar, with seemingly known or at least comfortable impact and expectations on results.  By contrast, buying online display is a complete mystery.  His solution, just buy on television because that’s what he understands.

In addition to all the great insight each panelist shared, this sticks out as an important point of the event.  If there’s something to be learned by this it’s that the Kawaja diagrams are illustrating the point – online is confusing to the buyers, and that’s bad.  Read more

How are bidding conflicts avoided in a real-time bidding (RTB) environment with multiple ad exchanges and networks?

How are bidding conflicts avoided in a real-time bidding (RTB) environment with multiple ad exchanges and networks?
This question was asked on Quora.com, below is my answer.

In the advertising soup, how do you avoid bidding conflicts?The short answer is that bidding conflicts aren’t avoided. The DSPs have no idea that they are seeing the same impression from multiple sources – whether in serial or parallel. They don’t have anything built to detect such events.

Within a single SSP/exchange the auction can be configured in such a way that if multiple DSPs are bidding for the same advertiser or seat holder then they are not allowed to set the second price for themselves. This is something that we’re considering at Rubicon as we learn more about the perceived problem. As the recent Econsultancy report shows, most buyers are working with more than one DSP. Read more

Top 10 Things Publishers Need To Know About Real-Time Bidding

I’ve been threatening on twitter to write a book on the things publishers need to know about Real-Time Bidding (RTB). At the Rubicon Project, we like to talk about ‘RTB Done Right’ and how to help publishers understand what’s really going on. With a full-time day job I don’t have quite enough time to bang out chapter after chapter of really fascinating business and technical aspects of RTB, so I thought I’d do a Top 10 list.

I started watching the Late Show with David Letterman to get the format down and then I popped over to a bunch of sites to make sure I wasn’t producing a fluff SEO piece. So based on what myself and our team has learned, here are the Top 10 Things Publishers Need To Know About Real-Time Bidding (link goes to admonsters.com article).