There’s no contesting that the in-app advertising industry is huge — but with great size comes great complexity. In Q1 2019, there were 30 billion app downloads worldwide.1 Considering that over 90% of apps are free to consumers,2 publishers are relying heavily — and sometimes solely — on advertising to monetize their app. Mobile programmatic ad spending in the US grew 45% from 2017 to 2018, and it is expected to grow a further 23% in 2019 to reach an impressive $55 billion.3
Alongside this monetary growth, the number of players and the complexities of their technology has also increased. The ad tech world today is full of acronyms and industry-specific lingo that can confuse even the most seasoned ad tech veterans. This post will examine the roles that ad networks and supply-side platforms (SSPs) play in the programmatic supply chain and what differentiates them from each other.
Defining Supply-Side Roles: SSP vs. Ad Network
Let’s start with some basic definitions of these two roles in the programmatic supply chain.
What Is an SSP?
SSP is short for supply-side platform. An SSP is a programmatic technology that connects directly with publishers, enabling them to sell their inventory to buyers, fill the inventory with the buyers’ advertisements, and earn revenue. The SSP can make this inventory available to buyers either via ad exchanges, DSPs, agencies, or directly.
What Is an Ad Network?
An ad network is a piece of technology that bundles publisher inventories based on vertical, demographics, and context. Buyers tell the ad network their targeting criteria, and the ad network can match their request to the available bundles.
Key Differences Between SSPs and Ad Networks
Ad networks were the original tech solution for connecting buyers with a variety of inventory, alleviating their need to buy on individual websites. As programmatic technology developed, SSPs came on the scene and enabled for the sale of inventory on the impression level in real time. Today, both types of ad tech vendors continue to exist alongside each other, albeit with significant differences that can spell huge advantages and disadvantages for publishers and advertisers.
Since SSPs sell individual ad impressions (not bundles like ad networks), they provide publishers more control over their inventory. By being able to see who is paying what for their inventory on the impression level, publishers can optimize their ad requests. This includes testing which information is passed, such as location and demographic data.
The most common way to target audiences via an ad network is to work with a vertical ad network. Vertical ad networks offer specialized inventory for a specific audience. These targeted verticals can include technology, travel, or automotive. Advertisers choose the vertical ad network that best represents the interests of their target audience.
Since SSPs have a direct connection to the inventory on a per-impression basis, they offer much more robust targeting options via the data passed to them from the publisher. This can be as granular as user age, gender, GPS location — or even a combination of all three.
Ad networks determine the prices for their packaged inventory via their proprietary algorithm, which is based on historic pricing and estimated value to advertisers. In the open marketplace, SSPs conduct auctions on a real-time basis. This means that the price of impressions (eCPM) is determined organically by market competition.
Ensuring that only high-quality, brand-safe ads are delivered is a key responsibility of both SSPs and ad networks. Most SSPs, and that includes Smaato, deploy a combination of in-house technology, an internal staff of ad quality experts, and partnerships with trusted third-party vendors.
Ad networks have a poor history in upholding a high level of ad quality, as evidenced by the major ad fraud scheme uncovered by Buzzfeed in October 2018. Due to a lack of transparency by ad networks, this ad fraud scheme was able to steal close to $10 million from advertisers who used Google's ad network, and according to Google, the vast majority of ads being placed in these apps and websites came from other major ad networks.
Ad networks were the first step in enabling advertisers to transition from directly purchasing inventory from individual publishers to buying targeted inventory at scale. Advertisers could greatly extend their reach and publishers could monetize more efficiently. As technology has advanced, SSPs have expanded these possibilities even further with the open ad exchange. Publishers can sell inventory on a per-impression basis with improved transparency and control, and advertisers can precisely target their ideal audiences at a scale never before available.
If you would like to learn more about mobile advertising and the programmatic supply chain, check out the In-App Advertising Playbook.
Sources: 1App Annie, April 2019|2Statista, Q1 2018|3eMarketer, April 2019