I wrote this post for ArchDaily’s internal wiki soon after leaving the company, I been asked many times about my experience managing the ArchDaily inventory that I decided to make this post public.

Google Ad Exchange (Adx from now) it’s considered a premium version of Google AdSense, only offered for Google to publishers with more than 5mm page views per month. Adx it’s a programmatic advertising sales platform which connects ad networks, digital agencies, advertisers and publishers giving the chance to maximize ROI across millions of sites, in real time.

ArchDaily pioneered the use of Adx in the region, so as being guinea pigs for Google we made a lot of mistakes, but we ended up earning as twice of the revenue generated by Google in only one year.

The main difference between Adx and Ad Sense are the CPM prices, and this is key to understand how it runs in our inventory flux in Google DFP, to make this very clear, we will cover how Adx works first and then how it works inside the Google DFP flux.

AdExchange, the Wall Street of Ads
Adx is a huge marketplace of online advertising, where Publishers (ArchDaily, for example) are offered to Advertisers (Rolex, for example). This marketplace is so big and diverse that you can buy basic traditional advertising (for example: a couple thousand leaderboard impressions) or very engaging cutting-edge solutions to deliver your message (for example: 10 mm impressions native advertising units in the very demographic vertical that consumes your product). Yes, it’s pretty powerful. And it works based on bids, and basically the better the publishers and their contents are, the highest the bids of the advertisers to be with them.
There are so many bids happening worldwide at the same time, that all this exchange of advertising is done dynamically through rules. These rules are configured by the publisher’s commercial team (or whoever manages the account) otherwise it would be impossible to manage each deal in real time.

Quality / Quantity
One of the most groundbreaking features of Adx is the capacity of offering your site based on the relevance of the publisher to certain business vertical, so you can be available as ArchDaily (which is known as “Branded”) or one-of-the-sites-in-the-construction-related-vertical (known as Anonymous). This gives you complete control over what kind of advertising is being displayed in your site. And it’s also very good for making better deals between Publishers and Advertisers. Imagine that Moleskine just launched a special notebook just designed for architects, and they want to advertise it in ArchDaily, they just need to log in in their Adx account, search ArchDaily and buy inventory. Cash In.

As we all know, the most common currency of the online advertising is the CPM (Cost per mile) which is the price for a thousand impressions in the publisher site. It’s very hard to say the “average price” of the CPM, it’s depend in many factors, but let’s say in ArchDaily case, it’s around 5 USD. The rules are mostly defined by revenue (it can be also quality of advertising or demographic data, but we don’t want to get there yet), and it works based in the very old economic principle of “supply v/s demand”. The lower your prices, the most request for advertising you will have. But it is not always only about quantity, specially in this case, most of the time low CPM prices means very bad quality advertising, and also small revenue for the publisher. After all the experience we got in this matter, we decided to set up a different strategy for ArchDaily. We defined a set of rules for different markets based on pricing and blocking:

1) Markets (USA, UK, Australia & Brazil) with developed digital marketing industries: Higer prices for branded and anonymous visibility – Exceptions for exclusive AdUnits – Low Quality industries blocked
2) Markets (Rest of the world) with non with developed digital marketing industries: Lower prices for branded and anonymous visibility – Exceptions for exclusive AdUnits – Low Quality industries blocked

So with this, we are basically telling all the Advertisers interested in ArchDaily that if an advertiser wants to buy impressions in ArchDaily for a campaign to be displayed in the US, they’ll have to pay the first price. But if a construction supplies brand in Mexico is looking to buy impressions in any architecture/construction related site, they’ll pay the second price.

With this rules we ensure we are not losing a single cent, and we are taking care of the quality of the ads displayed in our site.

Adx and DFP a love (for money) story
Adx can work alone very well when the publisher doesn’t have any other strategy to monetize apart from Google. But if there is a direct sales force or deals with Ad Networks, things can get very messy. That’s where our well appreciated friend Google DFP comes in very handy. Google DFP is an advertising server which controls all the inventory in our network, a huge and complicated duty, dealing with all type of queries from different advertisers from all over the world. Google DFP works based on priorities, those priorities are key on how campaigns are displayed and how DFP manage the performance of our inventory, priorities are:

Sponsorship: This is the highest priority campaign, in our case is used for Materials partners with long-term sponsorship deals where branding is more important than performance.
Standard: This is the second highest priority campaign, but intended for campaign with defined number of impressions to deliver.
Network, bulk and price priority: This is where things start getting interesting, this priority is for programmatic sales through Ad Networks, so in this case is very important to define a price for the CPM, this is the only way that DFP can understand when and where deliver this impressions.
AdExchange / AdSense: Here is where Adx meets DFP, and basically DFP shows campaigns according the rules defined in Adx, based on CPM price and location.
House: This is the lowest priority, is often used for promote internal products or content.

So this is basically how Adx and DFP interacts, it’s a very precise combination of rules, prices and priority.

The image for this post belongs to the video “The Future Of Advertising” by Daniel Alegre, President Global Partnerships, Google Inc.