In a real-time bidding system, each ad impression is sold off to the highest bidder in real-time, as someone's browser loads an ad unit.

 

In this model, ad buyers can be more selective and specific about which ad impressions they want to buy, even based on things like what is known about the person who is loading the website.

For publishers, the promise is higher ad rates -- and potentially, reducing the cost of ad sales.

In a market, there is supply and there is demand.

 

In the case of online advertising, the "supply" is the advertising inventory that's available on websites, and the "demand" is from advertisers who want to place their ads.

A "demand-side" platform, therefore, is the dashboard of sorts used by advertisers (and their agencies) to engage in ad buying, including real-time bidding. It includes targeting, campaign management tools, reporting, and more features. (More details here.)

A supply-side platform is a tool  used by web publishers to plug into demand-side platforms, real-time bidding, and other advertising systems.

 

The objective, of course, is to get more money for each ad impression delivered.

Madison Avenue has found a solution for its Wall Street envy.

 

As advertising placements become more automated and data-driven, the big agency holding companies have set up "trading desk" corporations to move their clients' money around.

The skeptic's take is that this is allowing agencies to "double dip" advertisers -- charging them once for the agency services, and another time for the "trading desk" services.

It's the advertising equivalent of a fancy party with a guest list.

 

A private exchange allows a publisher (or group of publishers) to sell into real-time bidding and/or agency trading desk systems by invitation only.

The idea is to open up some of these new ad products to publishers without just letting anyone in.

The goal, of course, is to sell ads for more money, keep out the riff-raff, make themselves look more important, etc.

Did you visit a website but didn't buy anything? Or didn't sign up for a newsletter, or some other thing the website owner wanted you to do?

 

They can try to win you back by "retargeting" their ads at you on another site.

The first few times you experience this, it seems like a bizarre coincidence, or maybe even a little creepy. But it makes sense. If you were on their site in the first place, you're probably at least a little interested in what they have to offer. Perhaps they can close the deal a second time.

If ad systems are smart enough to serve up a specific advertiser's ad to you, based on your likelihood of finding it useful, why shouldn't they be able to customize the way the ad looks for you, too?

 

This can be as simple as serving up a male- or female-targeted version of the ad if it knows your gender, or a geographically customized version if it knows your city (or favorite sports team?) or as complex as including your name in the ad.

Ad companies have big hopes for location-based advertising, especially on mobile devices.

 

One concept is geofencing: The idea that a virtual boundary, or "fence" is set up around a particular location. If you enter the geofence area, you may qualify for a discount or promotion.

This is the basis for the age-old mobile advertising cliché: Walk past a Starbucks, and you'll get a coupon beamed to your phone for $1 off a cup of coffee.

Several companies are now working to make that a reality, though it's still not proven that people actually want that.

Most online advertising with multimedia -- video, animations, audio, etc. -- uses Adobe's Flash plugin to display it. But most mobile devices, including Apple's iPhone and iPad, don't support Adobe Flash.

 

So the industry is adopting a new technology called HTML5, which allows for multimedia (or "rich media") content and ads without Flash.

As advertising, apps, and content converge on mobile devices, connected TVs, and on the web, agencies are going to be doing a lot of work with HTML5.

This is the holy grail for advertisers: Knowing that someone bought something because they saw an ad somewhere.

 

This is possible with e-commerce. But most commerce isn't e-commerce.

Offline, it used to mean clipping out and redeeming coupons (something that is trendy again thanks to companies like Groupon).

But as mobile payments develop, advertisers could be getting new ways to "close the loop."

For example, technology called "near-field communication" could soon allow people to make payments with their cellphone -- just by touching it to a sensor -- and simultaneously close the loop for advertisers.