Everything You Wanted to Know About Ad Operations (Ad Ops)
Over the years, digital advertising has developed a reputation for being intimidatingly complicated. It’s not hard to see why — modern ad ops sounds like the precursor to Skynet: automated and practically human-free, blazing through obscure, technical tasks in the fraction of a second it takes to load a webpage. And then there’s the acronyms: DSP, SSP, RTB, CPM and on and on. It almost seems like a waste of time to try and get it sorted — after all, you’re only human.
But underneath the technical shop talk is a pretty simple idea: a transaction between a content provider with ad space to sell and an advertiser that wants to buy it. So let’s get into it: What is ad ops, anyway?
What Is Ad Ops?
Digital Advertising Wasn’t Always This Complicated
When digital ads first appeared on the internet, they were sold in much the same way as ads in newspapers. Just like in print, potential advertisers worked directly with salespeople at websites to negotiate prices and purchase ad space. Wired’s website, HotWired, sold one of the earliest digital ads — a clickable “banner” ad purchased by AT&T for $30,000 that ran on the site for three months.
Banner ads are still very much a part of the digital world, but, today, the purchase of digital ads is usually automated — what’s known as programmatic buying. Throughout the nineties, as internet use grew dramatically and advertisers started to see the web as a legitimate way to reach consumers, the number of websites on the internet skyrocketed past a million. Through the use of automation, the emergent programmatic models offered advertisers the promise of placing ads on more websites than their human marketing teams could possibly manage on their own.
Since most website operators weren’t technically savvy enough to automate their own ad space sales, third-party tech startups emerged as brokers to facilitate programmatic buying. Early programmatic deals relied on “ad networks” to bundle ad space from different websites and sell them to advertisers. Advertisers could then select the bundles with the type of content their ideal customers were thought to prefer.
Programmatic models offered advertisers the promise of placing ads on more websites than their human marketing teams could possibly manage on their own.
Next came real-time bidding (RTB), digital auctions where advertisers bid for each ad shown to each user. Auctions are facilitated by third-party “ad exchanges” and are completed within the fraction of a second it takes to load a webpage.
Programmatic — which includes real-time bidding as well as a few other methods of automated ad sales — is the dominant digital ad buying model today. The market research company eMarketer reported that, in 2019, 83.5 percent of digital display ads in the United States were purchased programmatically, and that number is continuing to increase.
That growth has brought along with it an ecosystem of companies that specialize in the selling, buying, measuring and strategizing of digital ad purchasing — an estimated $106 billion industry known as ad ops.
A Third of Programmatic Ads Are Sold Through Automated Auctions
Brent Carter, vice president at OpenX, used an analogy to explain what the ad ops folks at his company do.
“You’re almost like the mechanic,” he said. “You’re making sure the code is firing correctly, you’re making sure all the signals are passing properly between our UI and the publisher site, and that we’re operating the best we can within the auction. We’re basically auction mechanics.”
OpenX is one of the leading ad exchanges in the digital advertising industry. The company has over 300 employees based at its headquarters in Pasadena, California, and 500 employees globally.
“We’re primarily a programmatic exchange,” Carter said. “We have what we would call an open exchange, which is really just the collection of all of our publishers. ... And then you have what we call our PMP, or private marketplace, which is where I’m creating specific deals for publishers.”
Both types of exchanges on OpenX, open and private, facilitate real-time bidding: the auction-based programmatic buying model. A report by eMarketer found that 38 percent of all programmatic deals in 2019 used real-time bidding.
Even Automated Processes Need Help Sometimes
Here’s how real-time bidding works: When a user loads a webpage, code on the webpage sends information about the available ad space on the page and information about the user to an ad exchange such as OpenX. The ad exchange then announces the auction to advertisers using the exchange, who submit bids priced according to whether the ad space and user information matches predetermined factors the advertiser is looking for.
These predetermined factors are what ad ops workers help with. Carter said that, when OpenX onboards a new customer that wants to sell ad space — known in ad ops as the publisher — a representative from OpenX meets with the publisher to figure out the type of exchange the publisher should sell on based on the ad inventory it has. The next step is to actually set up the connections within the exchange so that any user loading the publisher’s website will automatically send the necessary information to the exchange and trigger the right auctions.
“That’s where ad ops will come in,” Carter said. “Creating the ad on the site to make sure we’re mapped correctly, ensuring that all the code is connecting properly. ... And that we’re seeing your requests properly, we’re seeing all your traffic come through and our demand-side platforms are responding to it.”
“That’s where ad ops will come in. ... Creating the ad on the site to make sure we’re mapped correctly, ensuring that all the code is connecting properly.”
OpenX is categorized as a supply-side platform (SSP) because it works to maximize the price of ad sales on behalf of publishers. It sells ad space to advertisers, who often use demand-side platforms (DSPs) that work on their behalf to purchase ad space for a low price. Ad ops workers for a supply-side platform like OpenX are the ones who set up publishers so that they get good prices for selling ad space.
“They are making sure that, [when] we create a deal for a publisher, that deal is mapped correctly to get the most value from the buy side,” Carter said. “Conversely, from the buy side, when we get money or spend from ad agencies, we’re trying to make sure that we are sourcing the right inventory for them from our publisher set.”
Ad Ops Encompasses a Rich Ecosystem
Aside from supply-side platforms, demand-side platforms and ad exchanges, there are other important players in the ad ops space. Data management platforms gather information about users’ internet habits by tracking them, often using what’s commonly referred to as “third-party cookies.”
In real-time bidding deals, this information is sent through ad exchanges, so that potential advertisers can determine whether the user loading the webpage fits their customer profile. That, along with information about the location and context of the ad space, helps determine the cost per impression (CPM) of the final ad.
Ad ops companies also handle other types of ads, apart from display ads. In March, Magnite became the industry’s largest independent supply-side platform when the former Rubicon Project merged with video ad specialist Telaria — both supply-side platforms.
Clare Mullins, SVP of client success at Magnite, explained how the company facilitates the sale of video ads shown on smart TV devices — known in the industry as connected TV (CTV) advertising.
“You click on your Hulu icon, you hopefully pick the Hulu subscription that includes ads, and as you reach the television breaks, you will see ads, which are powered by the Magnite CTV platform,” Mullins said. “We are their main technology provider. We are responsible for making sure that those ads work as they should.”
For the Right Person, Ad Ops Might Be the Right Kind of Chaos
The problem of ensuring that all ad inventory is sold — and sold for the highest possible price — is a universal challenge for publishers and supply-side platforms. Strategies for tackling this problem is known as yield management. Mullins described yield management as among the most interesting and challenging responsibilities of ad ops.
“Yield management is really, in my opinion, the critical factor when it comes to things like operations,” Mullins said. “You’ve got an SSP that really works very similarly to a stock market — you’ve got buyers and sellers on both sides, and you’re really trying to ensure that both sides are getting the best possible deal that they can.”
Part of what makes yield management interesting, Mullins said, is that ad ops workers have to approach the problem differently depending on the nature of the exchange and the types of ads being sold.
“Even within my own team, I have different teams that manage yield management in very different ways, depending on the platform that they’re working on,” Mullins said. “A lot of the supply that comes through CTV is very unique. It’s not something that you’re going to find in what we call the open auction. ... Anybody transacting within these private marketplaces are looking to buy a very particular set of either an audience or a type of supply. And then the publishers are only looking to expose that supply to certain buyers or certain prices, or based on things that they’ve already agreed on beforehand.”
“The speed at which this industry moves is pretty fast, so if you’re not really organized and you don’t really have a good sense of troubleshooting, you can be pretty challenged.”
In order to keep both publishers and advertisers happy, yield management workers need a good understanding of the quirks of specific markets, and also the flexibility required to adapt to frequent changes within the industry. It’s a demanding role, but, as a result, yield management can be a good way to gain experience in the digital advertising industry.
“People can wear multiple hats, and because of that they also have a potential career trajectory that could go in multiple directions,” Mullins said.
Brent Carter, from OpenX, said that working for an ad ops technology provider isn’t the right fit for everybody.
“You’re dealing with a lot of new products, you’re dealing with a lot of connections,” Carter said. “The speed at which this industry moves is pretty fast, so if you’re not really organized and you don’t really have a good sense of troubleshooting, you can be pretty challenged.”
But for the right type of person who enjoys imposing order onto chaos, a career in ad ops can provide interesting challenges. Carter pointed to the current changes within the industry, such as a trend toward private marketplace auctions and away from the open exchange, pressure to move away from third-party cookies, and changes to privacy laws that all impact how companies in the ad ops space operate.
“People who like to troubleshoot, people who like to work in a very undefined process initially and create that process, tend to excel at this,” Carter said. “You’re really somebody who’s very process driven, who can work in a very chaotic environment and bring order to that chaos.”