AdTech
AdTech is the market of technology providers and systems that make up the infrastructure of the online advertising industry.
What is AdTech?
AdTech, short for advertising technology, describes the software, tools, and systems that enable the buying and selling of digital advertising. AdTech allows advertisers to segment their audience, buy online ad space, serve up ads, and analyze their performance.
Buying and selling online advertising is a complex process, involving a network of advertisers (brands with content to promote), publishers (sites or apps with ad space to sell), and intermediaries. AdTech brings all these players together, providing the tools and platforms they need to negotiate and run campaigns.
AdTech vs MarTech: What’s the difference?
It’s easy to confuse AdTech with MarTech (you guessed it: marketing technology), but there are several clear differences. MarTech is an umbrella term that covers all marketing technology products, from podcasting to content management to social media management platforms. You can think about AdTech as one branch of the big MarTech tree.
In-house marketing teams build a stack of MarTech platforms to help them communicate directly with leads and customers through email, social media, and their website. However, they may not play a hands-on role in the bidding or placement process for online advertising.
Instead, AdTech platforms, often directed by agencies, act as an intermediary to automate the ad-buying process and purchase audience impressions on behalf of a company.
| AdTech | MarTech | |
| Types of media supported | Paid online advertising | Paid online advertising, email marketing, SMS marketing, organic social media marketing, website publishing, SEO/SEM, organic video and audio content |
| Billing models | Cost of ad spend with a markup for commission | Flat subscription rates |
| Primary audience | Agencies and publishers | In-house marketers and agencies |
What are the benefits of AdTech to advertisers?
As online advertising has grown more complex, new tools and solutions have emerged to help advertisers manage and measure their campaigns. AdTech enables advertisers to run campaigns across channels, reach specific audiences, and analyze performance.
Here’s how AdTech can save you time and help you optimize digital campaigns.
1. Automation and scaling
Before AdTech, advertising managers had to manually research, select, and approve individual ad slots or placements. Now, brands can use automation, including AI and machine learning, to buy ad space and optimize campaigns based on real-time results.
In short, AdTech tools have made it easier to launch campaigns at scale without a large marketing team.
2. Optimized ad spend
AdTech enables you to identify and reach a precise demographic, so you don’t waste your budget on general advertising that may or may not get to your ideal audience.
3. Cross-device tracking
With AdTech, you can run omni-channel campaigns across devices. This works by recognizing a user based on their email address or cookies and matching them to other devices. Once a match is made in the network, ad networks can deliver re-engagement ads to give consumers multiple touchpoints. Cross-device tracking also enables better analytics, giving a fuller picture of the customer journey across devices.
4. Speed
Since AdTech can put campaign collateral out to bid in fractions of a second, you can launch a relevant campaign quickly, cutting out lengthy negotiation and placement. This brings you brand exposure, leads, and sales in a shorter time frame.
Programmatic advertising: The core of AdTech
AdTech is essential for programmatic advertising — an automated ad-buying process that allows advertisers to buy access to precisely segmented audiences in real time. Programmatic has been dubbed the future of online advertising: Allied Market Research valued the programmatic advertising industry at $451 billion in 2021, and estimated it will grow a further 36% by 2031.
Here’s how AdTech makes it all possible:
- The advertiser engages an ad network to start a campaign. Through a demand-side platform (DSP), they tell the market what the advertiser is looking for: their desired audience and number of impressions.
- The advertiser delivers their ad content (primarily display, video, social, and audio) to the network.
- Meanwhile, the publisher uses a supply-side platform (SSP) to list their available ad space (inventory).
- The ad exchange connects the two sides, and uses real-time bidding (RTB) to run an open auction for ad content. The SSP bids on ad content on behalf of ad networks and publishers. Auctions take just fractions of a second.
- The winning bidder publishes the ad on their platform, and shares analytics back to advertisers through the ad networks.
All of the various intermediary parties and infrastructure used in programmatic advertising can be described as AdTech. We’ll explore them in more detail below.
The AdTech ecosystem
To help you understand the complexities of AdTech, we’re going to unpack each of the different components that make up the AdTech ecosystem.
Agency trading desk (ATD)
This is the part of an advertising agency that handles media planning and buying on behalf of clients. While brands can manage this directly through a DSP, ATDs offer expert guidance and agency buying power. Since they represent many clients, ATDs can work with multiple DSPs and negotiate in bulk to bring prices down.
Demand-side platform (DSP)
A DSP is an automation platform that allows advertisers to bid for, buy, and place online advertising. It lets advertisers manage multiple ad exchange accounts through a single interface and make real-time changes based on campaign performance.
Supply-side platform (SSP)
An SSP is a platform that manages a publisher’s ad inventory (the advertising space it has available) across ad exchanges. SSPs help publishers sell and manage their inventory at scale, earning revenue through real-time programmatic selling.
Ad network
Publishers manage their inventory and earn revenue directly through ad networks. An ad network pools together bids and inventory from multiple exchanges to mediate sales between publishers and advertisers. Ad networks use algorithms to match advertisers with publishers that best fit their target audience.
Ad exchange
An ad exchange is the technology that brings together the DSP and SSP sides of programmatic advertising in a neutral and transparent environment — similar to how the stock market connects buyers and sellers. It’s essentially an open pool of impressions that uses algorithms and machine learning to facilitate the bidding process in milliseconds.
Ad server
An ad server is a platform that stores a campaign’s creative assets, selects which version to serve to the user, and collects data about the campaign performance.
Data management platform (DMP)
A DMP is a centralized database that collects, stores, and deploys user data for online advertising. DMPs collect data from multiple sources to build a profile of a user’s demographics, interests, and behavior online.
AdTech trends and challenges
The AdTech industry has grown and matured over the past twenty years, adding new technology and providers to make ad buying and selling faster and more efficient. During that time, the technology has adapted to reflect user preferences and an ever-changing regulatory environment.
Let’s take a look at the top trends and challenges shaping AdTech today, and how the landscape could evolve.
1. Privacy and data security
Programmatic advertising was largely built on cookies for matching IDs and re-engagement. However, consumers and regulators have mounted opposition to cookies and cross-device tracking due to privacy concerns. Ever adaptable, the AdTech industry has been developing alternative tracking methods that will still allow advertisers the data and analytics they crave — without compromising user security.
First, Apple implemented its app tracking transparency (ATT) framework, limiting the data available to advertisers. Next, Google announced it would eliminate its dependence on third-party cookies by 2024. Now, advertisers are braced for more change as Google, whose Android advertising is heavily based on Google Account ID (GAID) tracking, prepares to phase out GAID in favor of Privacy Sandbox.
Starting in 2024, Google will transition a portion of its users to Privacy Sandbox. Instead of recording and storing individual behavior, Privacy Sandbox pools users into anonymized groups with similar interests and serves them ad content based on their group demographics and interests. Google will seek input from advertisers and developers throughout the transition process, as it attempts to protect customers while giving advertisers the insights and impressions they want.
2. CTV measurement
Streaming reigns supreme: 87% of U.S. households now own at least one connected TV (CTV) device. CTV devices include smart TVs, streaming boxes, and connected video consoles.
With streaming comes the opportunity for ad networks to deliver targeted video ads between shows, rather than linear ads for a general audience. CTV offers advertisers the chance to reach valuable audiences based on their interests, demographics, geography, and time of day.
In addition to targeted brand exposure, CTV offers powerful measurement options for advertisers. With cross-device data, advertisers can track CTV-to-mobile attribution to measure app installs and post-install events in a customer lifecycle. And in today’s economic climate, it’s more important than ever to understand the true impact of every marketing dollar spent.
3. In-game advertising
Another fast-growing trend area in AdTech is in-game advertising. While mobile games soared in popularity during the pandemic, the buzz has died down and gaming app marketers are going all out to boost user acquisition. Global ad spend for gaming app installs totalled $26.7 billion in 2023.
Watching a video ad to get another life or a reward is just one example of how in-game advertising works. This partnership benefits both advertisers and publishers, though app developers need to balance in-game ads with user experience. AdTech facilitates bidding and delivers ad content to apps, just as it does to websites and video platforms.
4. DOOH advertising
If you saw a billboard near your office, chances are that an ad rep worked directly with the billboard owner to manually select each billboard placed in your city, street by street. AdTech can seriously streamline this slow, manual process.
Experts value the global DOOH (digital out-of-home) market at $18.8 billion and predict growth of 11.6% by 2030. With programmatic advertising, advertisers can launch a DOOH campaign at any moment. They can also target audiences with specific factors like weather or time of day for a powerful impact.
Key takeaways
- AdTech is the infrastructure that supports programmatic advertising – the future of digital advertising.
- With programmatic buying and selling, advertisers can automate the entire ad delivery process, gather detailed user insights, and bid for the most relevant ad placements in real-time.
- AdTech allows brands to launch campaigns faster, scale quickly with automation, and optimize their ad spend with more precise targeting.
- AdTech companies are adapting to changing user preferences and regulations, making changes that embrace customer privacy and limit tracking. Initiatives like Google’s Privacy Sandbox reflect the shift away from tracking with cookies.
- Alongside in-game ads and DOOH, CTV is a powerful AdTech tool that allows advertisers to reach their ideal audience through smart TVs, gaming consoles, and streaming devices. CTV offers precise targeting capabilities, interactivity, and measurable results, making it an attractive option for brands wanting to stay ahead of the curve.
