Ad  targeting  and optimization

One aspect of ad serving technology is automated and semi-automated means of optimizing bid prices, placement, targeting, or other characteristics. Significant methods include:

•       Behavioural Targeting - Using a profile of prior behavior on the part of the viewer to determine which ad to show during a given visit. For example, targeting car ads on a portal to a viewer that was known to have visited the automotive section of a general media site.

•       Contextual Targeting - Inferring the optimum ad placement from information contained on the page where the ad is being served. For example, placing Mountain Bike ads automatically on a page with a mountain biking article.

•       Creative Optimization - Using experimental or predictive methods to explore the optimum creative for a given ad placement and exploiting that determination in further impressions.

The  Online  Advertising  Value  Chain

This is a simplistic view of the industry, but it does enable us to understand where the key players sit; on the demand side of the value chain, there are advertisers, and their agencies; and on the supply side, publishers, and ad networks (and/or ad exchanges).

What's  the  product?

Before we get onto the content of the boxes in the above diagram, though, we should be clear about what's in the arrows; that is, what's traded in this market? What's the actual product, here?

The answer is advertising inventory. There are no very good definitions of advertising inventory out there on the Internet, so I offer my own definition:

Advertising inventory is the supply of opportunities to display advertising in a particular medium.