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Posted on Jan 27, 2022

How to Create Ad Network: DIY vs. White Label Ad Network

With the global market for digital advertising projected to hit US$786 Billion by 2026, the prospect of owning an ad network in this era is not only enticing but promising. But creating your own ad network goes beyond wishful thinking or the programming task.

Notwithstanding, the advent of ad tech, and programmatic ad systems has made it possible and easy to own an ad network.

Ad networks and ad exchanges are the operational houses for Programmatic advertisement. They provide the technology flow through robust ad servers that automate the process of programmatic ad display. The increasing adoption of programmatic advertisement- currently worth $72 billion, expected to grow at 11% annually- suggests the need for more ad networks.

But while ad and marketing entrepreneurs are usually excited about having an ad network, they often fail to calculate the cost of building one from scratch thoroughly.

So you want to create your own ad network or build your ad exchange? This guide is a tell-all on the intricacies of having an ad network, including possible costs and efficient alternatives.

What is an ad network? 

An ad network refers to a technology that links advertisers with publishers (media owners of websites, blogs, applications, etc.) who wish to monetize their inventory through advertisement. An ad network’s primary job is to aggregate ad inventory from publishers and link it with demand. The term ad exchange, meanwhile, is often used interchangeably, their principles of work in many cases overlap, at the same time, these two technologies have some minor differences. In this article, meanwhile, will uncover the mechanism that will be equally relevant for an ad exchange and ad network alike.

How ad network operates?

We cannot exhaustively discuss the topic and operations of ad networks without referring to programmatic advertising. Programmatic is an automated process of procuring advertising spaces through specific third-party technology – an ad network, DSP, SSP. The company deploys a robust algorithm that automatically links the ad content to ad servers, and uses the RTB (real-time bidding) algorithm.

Here the advertiser doesn’t deal directly with the publisher but is charged a fee for every impression. The ad network has to disclose the rates.

The ad network first compiles available ad spaces from publishers and media platforms and offers these spaces to interested buyers (typically in RTB auction). DSP (demand-side platform) bid on impressions in the RTB auction. When the highest bidder is defined, the ad content is immediately transmitted to the publisher’s SSP (supply-side platforms) through an ad server. The ad server calls for ad. Next, the ad is transferred from the ad server to the publisher’s site or application.

It is important to note that the RTB auction process or the process of buying and selling ad spaces as described above is quickly done using automated technology.

In essence, the ad network is simply the link between the publisher and the advertiser. Publishers sell inventory through third-party SSPs, while advertisers purchase inventory through DSPs.

The ad network technology automates the buying and selling of ads, relieving publishers and advertisers of the need to: 

• Identify relevant media platforms for each ad. 

• Identify relevant media platforms for every ad.

• Negotiate CPA and PPC.

• Manually place ad banners or contents etc.

Ad networks earn profits by keeping a percentage of ad income paid by advertisers (also known as margins or commissions).

There are simply two ways to create an ad network; you either build from scratch or procure a white-label solution that you can immediately deploy for business. If you think that building technology from scratch is better, this is not always true except because it can take a lot of time and costs (including hidden ones).

If you plan to create your own ad exchange it’s time to find out the specifics of building technology from scratch and compare them to the benefits of building a white label ad network.

Creating an ad network from scratch

Here are steps to consider if you want to create your own ad network from scratch.

Identify and define a specialty

You can’t accomplish everything at once when you’re new in a business. As a result, your safest choice is to pick one or two comparable areas and begin looking for both large and small publishers.

Although advertisers are impressed by large traffic statistics, they are more interested in the conversion rates. 

High traffic does not always translate to sales and conversion. There are examples of low-traffic websites churning out better conversion rates than some high-traffic websites. How do they do it, you might wonder? Often it boils down to niche area and coverage. Imagine publishing an ad for male shoes on a blog that focuses on male shoes compared to publishing the same ad on a blog that focuses on fashion in general. Although the former may have less traffic, the possibility of having higher conversion rates is much higher.

Importantly, while looking out for high-traffic websites, do not disregard conversion rates.

Engage publishers

To create an ad network, you’d have to acquire a share of a publisher’s inventory and sell it to advertisers. Without the publishers, it would be impossible to display ads and earn. However, while selecting publishers to work with, you have to be very careful and sensitive to your niche and the publisher’s niche and traffic stats. The quality of your publishers would determine if advertisers would engage your network.

Here is a brief checklist to help you when searching for publishers to work with

• First, you have to ensure that your publishers have relevant content to your ad network, niche, and advertisers.

• You should know that most advertisers prefer traffic from the US, Canada, Australia, and EU countries.

• There is also a strong preference for English-speaking audiences.

• Avoid publishers with lewd or violent content.

• Ensure that your publisher has unique and updated content.

Attract advertisers

Having a network of publishers without advertisers is useless. So as much as you need publishers, you must aso attract advertisers to your network. You can do this by creating an expressive display to highlight all of your benefits to a prospective client. Highlight compelling statistics and friendly partnership conditions. Also, include honest metrics and statistics that would intrigue the advertisers.

You can also attract advertisers by:

• Reaching out to ad agencies.

• Offering competitive ad rates

• Ensuring that your publishers have quality traffic that can convert for your advertisers. The success and profitability of your ad network depends on your marketplace success and the average conversion rate. And the success of your advertisers depends on the quality and resourcefulness of our publisher.

• Ensuring that your ad server is efficient and stable at all times.

Establish a price strategy

For ad networks, you cannot arbitrarily set prices for advertisement without considering the needs of connected partners (DSPs and SSPs). When determining which is most advantageous for them, consider that different marketing campaigns may have different goals. As a result, most ad networks provide various pricing structures for online ads.

Below are examples of price structures ad networks offer:

CPV (cost per view) – This is based on the payment model where the advertiser pays for each ad view. It’s most commonly utilized for video campaigns.

CPA (cost per action) – A payment model in which advertisers are charged for specific actions performed by the users. What constitutes chargeable actions is defined by the advertiser. It may include clicks, sales, downloads, etc.

CPC (cost per click) – CPC implies that the advertiser will pay for every click an ad generates on the publisher’s platform.

CPM (cost per thousand impressions) – This pricing model is based on ad impressions per thousand. It is particularly useful for enhancing brand exposure and awareness.

Select technology solution

Your tech stack is what powers the operations within the network, and the efficiency of your network determines if more advertisers would want to collaborate with you. Your tech solution should offer flexibility and ease of use to every partner.

Your system should be able to manage media trading and collect information about the performance of your marketplace, partners, ad formats, and other important details. In summary, your solution must support all essential technologies that ensure efficient ad serving. The more ad serving will be happening in your marketplace, the more you will earn as an owner.

Should you build an ad network from scratch?

If you have the luxury of time and money (much money), you may consider building from scratch. But first, you have to understand that having a robust and progressive ad network demands certain features that would require some complicated programming, features, and integrations. Let’s have a quick rundown of some of these features.

Targeting

If your platform will serve the needs of different demand partners across different niches, then you must have support for detailed targeting. Your targeting features should include enough targeting metrics. Here is an example of such;

• Targeting by location

• Targeting by interest

• Keyword targeting

• Demographic targeting

• Contextual targeting etc.

There are more targeting metrics; the best practice would be defining what your demand partners need and setting up targeting options for them.

Ad placements and delivery

Your ad tech should offer demand partners the flexibility of choosing ad delivery style and ad payment type. This is important as ad campaigns and ad contents are not the same, and not every format works for every ad content type. For instance, video ads will normally require VAST and VPAID capabilities and support for different video ad formats (including interactive ones). There are other ad delivery types; you should do thorough research to implement the necessary delivery modules.

Performance tracking

No advertising platform can function without adequate performance tracking; To have a realistic view of the performance of your ad exchange, you should integrate the necessary tracking tools. You should be curious about the efficiency of media trading in your marketplace.   For example, you would want to keep track of which SSPs (supply partners) drive the most traffic, what types of traffic DSPs prefer, and which ad formats are most frequently purchased.

Compliance

In recent times, there have been regulatory demands that aim to protect the privacy of end-users, and all advertising networks must adhere to these regulations. As an ad network owner, you should be able to provide to your partners a system that is compliant with relevant regulations.

Not so obvious (hidden) costs

Considering the demand for the features highlighted above, one can only imagine what it would cost to create an ad network from scratch. The truth is that you may not be able to determine the real cost until the end of the project because there would be a lot of unseen and hidden costs that would rear up while in the middle of development.

Hidden costs refer to other expenses that were not envisaged during budgeting. Most times, it’s not about how diligent you are; you don’t just see these costs until you get started. So while you make a budget, you should also include “hidden cost” in the budget.

Unseen or hidden costs can include:

Ad server maintenance and upgrade

You will have to routinely upgrade the system and run maintenance to ensure that the ad server is efficient, fast, and available at all times. Running maintenance costs money that may not be easily ascertained. Sometimes you may need to pay for repairs that you did not expect. If an ad server with 1 million monthly impressions tries to scale up to 100 million without a team dedicated to cost optimization and mitigating ad serving difficulties, it will collapse.

Certifications and audits

Furthermore, creating an ad solution necessitates the acquisition of additional software tools, certifications, and audits. These expenses are easy to ignore or underestimate during budgeting. Nevertheless, they are essential services that come at a cost. Besides wages, you can spend more than $100,000 each year for certifications.

Cost of keeping full-time engineers

If you choose to create from scratch, you must be willing to employ the services of in-house software engineers and QA test who would maintain and operate the system. They have to ensure maximum uptime and system efficiency. At least five employees would be required to manage an ad serving system that manages 500million monthly requests; this would cost over $600,000 in salaries at the average engineering salary of $125k.

On the positive side, ad exchanges with in-house teams are more likely to achieve more yields and better efficiency.

According to experts, developing from scratch would take several months to possibly a few years to have a sophisticated and efficient product. Of course, you can build a very simple ad system without any of these features in less time and much less money. But doing so would only limit you, and the business would most likely fail for lack of patronage. Rather than attempt building your own ad network from scratch, which can be problematic and expensive, you can adopt white-label solutions.

Although it may be difficult and misleading to estimate the true cost of creating your own ad network from scratch, it will cost around $800 thousand per year to maintain your own ad exchange or ad network.

The cost breakdown includes:

• Wages for developers, engineers, and other experts;

• Cost of tools and audits.

Don’t get discouraged yet; you can still own your ad network by taking advantage of white label ad servers. Your white-label ad network can be more efficient if you approach the right vendor. This is because you will have a team of dedicated experts who handle the backend operations while you focus on your business.

What are white label solutions?

The concept of white labeling is quite popular in the business world, especially regarding tech products. It generally entails a company developing an unbranded product for another company to deploy. In general, the development firm creates the product for the other company, which then deploys and customizes it under its own brand name.. Such ad exchange is already connected to an ad server, has necessary modules and can be deployed at any time.

In this context, you can acquire a white label ad network from a reputable provider and immediately deploy it after the necessary setup is completed. With a white label solution, you have the liberty to control and operate the ad network as you wish. Your product is not only limited to the extent of development and features provided by the supplier; this is why we emphasize acquiring a ready-made solution from a reputable and innovative company like SmartHub. The company offers one of the best and most efficient white-label ad exchanges, with an additional opportunity to tailor the system to the customer needs (which also involves non-standard integrations). 

SmartHub platform is a completely developed solution with programmatic support that can and team that maintains your system on technically. The SmartHub system is flexible and adaptable and, as such, can be modified and scaled at any moment. 

The platform is generally easy to configure and comes with a guidebook to further simplify the deployment process. It lets you configure supply and demand-side endpoints, blocklists, traffic targeting and retargeting, billing, and other metrics. The endpoints for demand and supply partners are easily configurable allowing the advertising process to begin. It also delivers the owner on-demand, real-time insight regarding every necessary aspect of media trading: how ad formats, partners perform and how traffic is distributed. 

Benefits of SmartHub

Fast implementation: Setup takes a little time because the product is already hosted on ad server (typically a few weeks).

Less expensive: white label solutions eliminate many costs, including ad server maintenance, keeping in-house experts, integrations, licensing, etc.

User-friendly: Using a white-label service does not necessitate any unique skills. It’s simple to get started right away, thanks to an intuitive UI and comprehensive guides.

Adaptive: white-label platforms are progressive and can be modified, making them easy to scale.

Reliable support: with a team of experts that are readily available and can be outstaffed at your request, you are sure of maximum professional support to ensure smooth ad operations. Additionally, you can ask us to select outstaffed ad ops and account managers specifically for your needs and requirements. This way you can focus on your core competencies while outstaffed team boosts your solution and boosts ad revenue outcomes. 

Conclusion

Establishing your own ad network is a challenging endeavor, and you’ll need sophisticated technical capabilities and systems bolstered by smart algorithms to get you there.

If you decide to develop your own solution, we strongly advise you to thoroughly assess your skills, as this is very demanding.

At the same time, if you’re searching for a simpler way to enter the ad network realm, you can use white label solutions. With SmartHub, you can get a fully customized solution that meets all of your company’s requirements and that can be fully serviced by our team so that your could easily grow your ad revenue.

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