Social Media: The Social Graph Breaks Free
Each auction happens in just 50 milliseconds. First, the ad exchange offers information about the ad impression being bid on, such as site, category and viewer characteristics. Next, advertisers estimate the value of that particular impression. Then all the participating advertisers bid, someone wins and the winner's ad appears on the publisher site for that particular visitor. This is repeated for each ad impression a publisher serves.
This new structure for buying and selling online advertising bypasses the ad networks, allowing advertisers direct access to publisher impressions. It also trumps ad networks' publisher-level targeting with audience-level targeting, while also enabling powerful new automated targeting optimization strategies. In addition, it allows advertisers to skip the markup imposed by ad networks. Finally, because impressions are purchased in real time, exchanges avoid the conflict of interest inherent in the ad network model of buying and reselling publisher inventory before it spoils, while promising to optimize prices and returns for both buyers and sellers.
Graph Data in
The trick to buying effectively on ad exchanges is calculating how much each impression is worth to a given advertiser—and that's where social graph data first becomes incredibly valuable.
During the evaluation phase of the real-time bidding process, social graph data can be used to buy impressions targeted to a particular audience with unprecedented accuracy. If you're sure who your target audience is, and you have good social data keyed to cookies, you can check whether each impression you bid on falls squarely into your target before you decide to buy, drastically decreasing media waste.
Now, consider the optimization possibilities. As an advertiser, you buy an impression on a publisher site using an exchange. That visitor clicks through to your site and converts, purchases or subscribes—whatever your desired action is. During a later auction, you check your social graph data and find out you're bidding on a close friend of the person who converted for you earlier.