How Online Ads Work

By Adam Clark Estes on at

You probably think online ads are pretty annoying. But without them, the internet as we know it would not exist—and this blogger would not have a job. These are not your everyday ads, though. They're built on an impressively complex network of technology that anyone can appreciate.

CM Summit just posted a clever interactive feature that explains how online ads work—in real-time—in a few simple steps. It's a process that bounces your data around the globe yet only takes mere milliseconds. The whole dance is pretty impressive.

It all starts with you: the user. When you visit any given website, your browser arrives with a pretty detailed data profile that can reveal not only your age and gender but also your location and a list of sites you've recently visited. This is how the website knows which ad to show you. Or rather, it's how the websites start to figure it out.

How Online Ads Work

Your digital profile is basically a collection of key words or facts about you and your web usage. Webpages use this information to submit a request of an advertising impression that would appeal to you. So if you've just looked at some shoes on eBay, maybe an add for would make sense.

There are other factors involved, of course, including, but not limited to, simple economics.

How Online Ads Work

This request is handled by the publisher's ad network. Doubleclick, one of the biggest, is one you might've heard of. The ad network will check to see if your profile matches up with any of the pre-sold inventory of ads.

Maybe has an ad campaign that it wants to target shoe shoppers with. If the profile fits, the ad is served up in a split second.

How Online Ads Work

If it doesn't fit, things start to get interesting. Your request is then sent to an ad exchange that might be operated by anybody from Adobe to Facebook. These exchanges might already have data on you which it will use to bolster your profile information in order to serve you more relevant ads.

But, first, your request goes on the auction block. Different third parties try to match their ads with your profile for the right price.

Within a few milliseconds, the impression is sold to the highest bidder, and the ad itself is sent to your web browser for your eyes to behold.

How Online Ads Work

Now, don't forget, this is all happening in the blink of an eye. And it's much more complicated than an advertiser just buying a bunch of inventory on a website that will be seen by consumers. Ads are targeted as specifically as possible and ultimately sold for the highest price possible.

So you know the next time you see an ad that seems eerily relevant to your interests, there's been a lot of back-room bidding to get you to see it. To click or not to click, that is the question. [Co.Design]

Images via Shutterstock / CM Summit