02 Advertising basics

The Advertiser-Publisher Relationship

Digital advertising is a global multibillion-dollar industry comprising thousands of companies, but at the heart of it all are two key players: the advertiser and the publisher.

The advertiser-publisher relationship dates back well before the invention of the internet. Publishers, such as newspapers and magazines, would sell ad space to advertisers as a way to generate additional revenue on top of their regular subscriptions and individual sales.

Nowadays anyone can become a publisher by simply creating a website or developing a mobile app and selling ad space to advertisers. This has completely changed the dynamics of the traditional advertiser-publisher relationship.

What is an Advertiser?

An advertiser is a brand or company (e.g. advertising agency) that wants to get its product or service in front of its target audience to build brand awareness, develop brand loyalty, and increase sales.

Below are some examples of brands that spend billions of dollars ($USD) per year on advertising:

Advertisers aren’t only big brands, however; millions of small- and medium-sized enterprises (SMEs) and organizations advertise their services and products online every day.

Large brands, such as those listed above, are often represented by advertising agencies, whose job it is to:

Create the campaign: Designing the graphical elements and message of the ad.

Execute the campaign: Configuring the campaign (e.g. setting up targeting and frequency capping) and launching it across different channels (e.g. web, in-app, and DOOH).

Manage the campaign: Measuring campaign results and making changes to improve performance.

A brief history of advertising agencies

The first agencies date back as far as 1786 when William Taylor opened his office in London, today acknowledged as the first advertising agency in history.

However, while the UK business is considered the precursor of advertising agencies in Europe, it was Volney B. Palmer who took the idea across the ocean, opening the first agency on American soil in Philadelphia in 1842.

Volney would buy large amounts of space in various newspapers at a discounted rate, then resell the space at higher rates to advertisers. The actual ad, including the copy, layout, and artwork, was prepared by the client, which basically made Palmer an ad-space broker with little influence on the creative side.

Some agents, at the request of their clients, created directories with advertising rates of newspapers in New England. Many agencies made a profit buying newspaper space and reselling it with a markup.

Many other advertising agencies soon followed the same business model until the 19th century when N.W. Ayer & Son was founded in New York.

The agency, rather than simply selling space, provided a full range of services, including planning, creating, and executing complete campaigns for its customers.

It made itself famous working for clients such as De Beers, AT&T, and the U.S. Army, creating a number of memorable slogans.

We talk more about ad agencies in Chapter 04: The Main Technology Platforms and Intermediaries in the Digital Advertising Ecosystem

Source: Adland: A Global History of Advertising, published by Kogan Page; Second edition (July 28, 2013)

Throughout this book, you’ll see us use the term advertiser, which can either refer to an advertiser working in-house at a brand, or an ad agency working on behalf of a brand.

Why Do Brands and Companies Advertise?

There are a number of reasons why brands and companies advertise. Below are some of the main advertising strategies:

Brand awareness: Reach a broad consumer audience, engage with them, and maximize the time they are exposed to the brand.

Direct response (aka prospecting, acquisition): Generate new leads, sales, and conversions by displaying ads that persuade the consumer to take some sort of action, such as fill in a form.

Retention: Re-engage with existing customers and consumers who have previously interacted or been exposed to a brand, which is very often conducted via retargeting (aka remarketing) campaigns.

What is a Publisher?

A publisher can be defined as any company that produces content that attracts an audience.

Examples of publishers include newspapers and magazines in the offline world, and websites and mobile apps in the online world.