A brief Story about Digital Advertising - Part 1

Published on
April 11, 2023

When the internet was introduced to the society, back in the 90s, it was never conceived as a means of advertising. It was created as a simple tool for the exchange of electronic mails and digital information. That is to say, the enormous impact that this simple tool would have was still unknown. Such was its great potential that it was not long before the marketing pioneers opened their eyes. They started to see the big business that digital advertising would have. More and more users began to connect trying to search relevant information about their interests. For many advertising managers, this marked a turning point in the history of online advertising.

At this time, the buying and selling of ad space was initially just direct. On the one side, there was the Advertiser –  or an Agency, representing an Advertiser – and on the other side, there was the website owner, the so called Publisher. This ad space was appropriately named “Inventory” and the currency which was created from that inventory was “Impressions” on a CPM (Cost per Mille) basis. Inventory was sold on a traditional, manual basis, involving Request For Proposals (RFPs), negotiations and signing contracts.

As time went on, publishers began to create thousands of webpages which led to billions of unsold inventory and a widespread landscape of independent Publishers. This gave rise to a new set of company – The Ad Network. The Ad Network acted as a Sales Representative or broker, buying unsold or remnant inventory from the publisher. They applied technology, aggregated the content and sold packaged inventory on to the buyer, mostly focusing on content of the websites in the particular package.

Over the years, more and more of these ad networks were invented and hundreds of competing business models existed that were trading inventory in different ways. This made it hard for everyone as Advertisers had to deal with lots of different companies selling inventory. And not only this was an issue – the Advertiser could not be sure to buy the same inventory more than once with different pricings. There was a desperate need for more efficiency which gave rise to a brand new business model called “The Ad Exchange”.

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