Ad Network Increases Profit Margins and Connects Premium Customers:

The Case of Ad Exchange

Ad Network Increases Profit Margins and Connects Premium Customers:
  • 01
    The Customer

    an ad network.

  • 02

    attract customers with better ads

    buy and sell traffic at most favorable terms for company and advertisers

    acquire resources that allow company to quickly scale without reducing profit margins

    reduce cost of ad management

  • 03

    use Ad Exchange technology to manage customers ads

  • 04
    Six-month results

    eliminated manual processing

    + 25% increase in customer database growth

    + 15% increase in profit due to better conditions for buying and selling traffic

The ad network had been buying and selling traffic manually

The network doesn’t work with advertisers directly and makes money by reselling traffic. The business model is simple: the network tries to buy traffic at a low price, but such that customers are willing to pay for it. The bigger, the better.

Before the company contacted us it was a relatively small business, with around 100 clients per year. At this stage of the company’s development, it was more profitable to work with traffic manually and not invest in software.

Full-time employees' salaries and software costs can differ significantly. For example, for 10 employees who deal with traffic, a business might spend $ 650k a year, while automation can cost twice that. It’s not easy to free such money from a budget. In this case the company decided to stay with manual traffic management.

The Issue: manual processing makes it too expensive to scale the business

Gradually, the company began to develop and build up its customer base. But the growth halted at some point. When there were around 100 customers, the network could manually buy and sell traffic. But when there were three times as many customers, the employees couldn’t cope. There were errors in purchase and placement. And traffic with the same parameters as a year before became several times more expensive.

The company was losing money. There were more customers, there was more turnover — but margins had shrunk. It became clear that it was necessary to look for solutions to automate processes.

Solution: use Ad Exchange

There are many different tools for ad management, each with their own advantages and limitations:

  • due to growth in traffic, cost of server resources becomes too high
  • low response speed due to large volume of traffic
  • limits exist on number of simultaneous requests sent in browser

We wanted to select a tool for the customer that would simplify the process as much as possible, guarantee traffic purchase and display ads under the best conditions, as well as reduce risks. We suggested using Ad Exchange as a solution.

An ad exchange is one class of ad platforms. Such software helps to balance the interests of all participants in the chain: users watch ads that are suitable for them, customers don’t overpay for ineffective ads, and ad networks earn more.

Ad networks and their customers can increase revenue by selling ads with the highest conversions

Ad Exchange is a big topic, and there are several «War and Peace"-sized novels worth writing about this topic. How our client used the technology and how it helped is also a big story. In this article, we’ll focus just on the key points for now.

These are the most important things that helped the ad network achieve its goals.

Ad Exchange features for the ad network.For business
Automatic process the exchange does everything itself, so you don’t need to process the data manually or hire employees to do this.There is no risk of making mistakes in the purchase of advertising → the exchange itself analyzes the customer’s requirements and holds an auction, so there is no risk of mistakes due to carelessness of employees.
No restrictions on the number of requests → you can increase the volume of traffic without the risk of losing ad impressions.The auction takes just 100 ms → the user doesn’t leave the site due to long loading times.
You can buy more expensive advertising → turnover and commissions increase.The user sees only those ads that interest them → the customer pays for ads with higher conversion.
The ability to resell advertising and work with a direct publisher → more formats for making money

What business tasks does an Ad Exchange solve?

One of the tasks of our customer was to increase the number of clients in the premium segment. In order for the ad network to achieve these results, we helped introduce the technology to customers. We show several examples of how this could benefit them.

? No risk of making mistakes when placing ads. The technology works according to the principle «whoever makes the best offer first, wins». A big plus is that no manual labor is needed to determine the winner: the exchange does everything itself.

The advertiser pays only for the attention of an audience that matches the product’s requirements. The analysis and purchase of traffic is fully automatic, so there’s no risk of spending money on somebody who isn’t a member of your desired audience.

? There is no risk of losing a visitor. One ad placement cycle takes approximately 100 ms. When a visitor visits the site, the exchange immediately starts working: in just 100 ms the exchange manages to: place a lot, figure out who to offer to, find a winner among the advertisers, and show ads.

The whole process takes so little time that the visitor doesn’t notice anything. At the same time, the exchange manages to complete the entire purchase cycle in order to select the best conditions for the network and advertisers.

? Payment for the attention of the target audience. Ad Exchange is powered by Real Time Bidding technology, which means «real-time bidding management». For customers, this solves the conversion problem.

There are exchanges that sell places on sites. This is a working approach, but it has drawbacks: the best placement is determined by the average of all users. This approach doesn’t take into account individual parameters.

Ad Exchange sells the attention of a specific user with specific interests. For example, companies producing kitchen appliances need young families with small children from certain regions. With Ad Exchange, this particular group of people will see the ad. The more interesting the ads are for the user, the higher the conversion.

? No format restrictions. With Ad Exchange, you can manage ads and place any display format, such as banners, video, and audio clips. Creatives can also be different, for example, in-stream ads or overlays can be used.

To work with Ad Exchange, there are no special requirements for the format of advertising content, so the technology is suitable for any business.

Results: the company increased their profit margin by 15% with Ad Exchange

The launch process for the new ad management solution took two months. During this time, we customized our product for the customer’s tasks and launched.

Advertising network results for six months using Ad Exchange

25% 15%
Eliminated manual processingGrowth in client base due to increase in premium segmentGrowth in profit margin due to better conditions for buying and selling traffic

Whatever your needs, we can help!

Tell us what problems you’re facing with your business. We look forward to hearing from you.

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