port over article http://brett.is/writing/about/how-ads-are-delivered/

contents/writing/about/how-ads-are-delivered/index.md

@@ -0,0 +1,85 @@
+---
+title: How Ads are Delivered
+author: Brett Langdon
+date: 2012-09-02
+template: article.jade
+---
+
+A really brief look into how online advertising works.
+
+---
+
+For the last 6 months or so I have been working in the ad tech industry for a
+search re-targeting company,
+<a href="http://www.magnetic.com" target="_blank">Magnetic</a>,
+as a software engineer working on software to deliver ads online and I wanted
+share some of the things I have learned.
+
+When I started working for them I did not realize how online ads are delivered.
+I thought that web sites offer up space to advertisers and then they show various
+ads based on what the web site wants them to show. Well, this isn’t really wrong
+but not quite right. There are a few more pieces to the puzzle.
+
+### Advertiser
+
+An advertiser is the person, or agency, that wishes to deliver ads to the internet.
+
+### Publisher
+
+A publisher is a person, or organization, that has online ad space that they
+wish to fill.
+
+### Ad Exchange
+
+An ad exchange is a company that allows various advertisers to bid on available
+ad space provided by publishers.
+
+
+## How It Works
+
+This is the part I never fully understood until I started working in the industry
+(there are still parts I do not know). The magic for most online ads is in the ad
+exchange. When a user goes to a website there are various iframes on the page which
+the publisher has pointed to the ad exchange. This lets the exchange know that
+there is space currently available.
+
+So the exchange then compiles a bid request which contains as much information
+about the ad space and user as possible. This information can contain simple
+things like the size of the ad and location of the add (above or below fold), to
+various information about the user, geo location, window size, etc.
+
+The bid request is sent out to all of the advertisers to let them know about the
+potential ad space available. The advertisers must then make a decision whether or
+not they want to bid on that ad space, based on the information provided. If they
+have an ad that meets the criteria then they will return a bid response to the ad
+exchange telling them of their bid. The bid price for an ad is provided in micro
+dollars or one one millionth of a dollar. Another common unit for ad tech is CPM
+or cost per mile which denotes the price for every one thousand ads.
+
+Once the ad exchange has all the bids they take the ad with the highest bid to
+deliver. The cost you pay is not the price you bid, but one bidding unit above
+the next highest bid. Lastly, the ad is delivered to the user.
+
+One thing to note, which I find very cool, is this all happens in real time for
+every page request that a user makes. Next time you go to a website which contains
+ads, stop to think about what had happened for that ad to become available to you.
+
+
+## Why Is This Cool?
+
+Some might not find this topic very interesting, others might hold a grunge to the
+fact that ads are being shown on websites or to the fact that some companies are
+maintaining search information about them on their systems (in order to make
+future ad decisions based on available ad space for you specifically). To me this
+is interesting because of the scale that these systems need to be in. Our company
+does not make a few hundred bids per day or even hour, this can happen in seconds.
+We also do not make any “static” decisions based on the bids that we receive,
+instead we are trying to make informed, real time decisions as to which ads we
+want to show.
+
+Our systems need to not only be scalable, for an increase in available bids, but
+they also need to be fast. If we waited for a SQL query to finish we would lose
+out on hundreds of bids before we got our response. Our system is based heavily
+on caching and rebuilding useful information for bidding. The fact that our
+company works under these constraints requires our developers (that includes me)
+to have to think outside the box and about the bigger picture.