What is adtech?
Adtech is a broad term that categorizes the software and tools that agencies, brands, publishers, and platforms use to target, deliver, and measure their digital advertising efforts.
Adtech software platforms help brands and agencies purchase advertising space. They also help publishers price and sell their ad space.
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Why adtech is important
$646B
will be spent worldwide on digital advertising by 2024
Adtech is important because of the large amounts of money that is spent on digital advertising. With that amount of volume, adtech helps buyers optimize their budgets and sellers maximize their revenue stream. The goal is to get better ad placements, deliver the right content to the right person, and reduce the amount of wasteful spending. Ad tech also provides comprehensive behavioral data that can be used to target potential audiences better and measure campaign success. Thanks to data-driven insights from billions of consumers' device interactions, it's become more popular as companies discover how cost-effective these solutions are.
Types of adtech
DSP and SSP
A demand side platform (DSP) is used to buy online advertising space through real-time bidding auctions. DSPs connect advertisers with ad networks, assess available inventory, and ensure ads are aimed at the right audience. With a DSP, advertisements can be distributed across multiple websites, saving a lot of time and money and maximizing campaign effectiveness.
Publishers use a supply side platform (SSP) to sell ads programmatically. An SSP can focus on one type of advertising or can provide buyers access to a wide variety of formats. The SSP will connect to the ad exchange and make the publisher’s inventory available for DSPs to bid on. A DSP can submit multiple bids to an SSP. The SSP then selects the highest price bid as the winner and sends the creative (banner ad, video ad, native ad, etc.) to the publisher.
Ad exchange
An ad exchange is a marketplace whose participants include demand side platforms and supply side platforms that facilitate the automated buying and selling of digital advertising spots. Run as a real-time auction, it supports the buying and selling of all forms of digital advertising, including display, video, and native advertisements across all device types.
Search engine marketing (SEM) platform
Search engines, such as Google, let advertisers purchase ad space for specific high-value (or high traffic) keywords that they think will attract new customers. For example, a lawn service in Austin, Texas, might place ads that appear in the search results for "best lawn care Austin."
Data management platforms
A data management platform (DMP) straddles both adtech and martech, serving as a unifying platform to collect and organize all types of audience data from any source. Using this data, people can be grouped into audience segments according to behaviors.
Native advertising platforms
Native advertising platforms help advertisers nonintrusively distribute web content to help with content discovery. A native ad does not look like an ad; it appears to be part of the web content that the person is viewing. Types of native advertising include:
- Content recommendations
- In-feed advertisements
Ad networks
Advertising networks connect brands and agencies (demand side buyers) with publishers (supply side sellers). For example, an ad network will sometimes sell inventory directly to agencies or brands, and at other times, it will buy unsold or remnant ad inventory from SSPs or ad exchanges and sell it for a lower price.
Ad server platform
An ad server is used by publishers, agencies, and ad networks to house their creative assets and then deliver those assets to purchased advertising spots on websites/apps. Its role is to dictate which ad to display, what time to display it, and what website/mobile app it should appear on.
Ad forecasting software
Instead of arbitrarily throwing money at expensive ad space, it's now possible to accurately and efficiently budget for ad buys. Ad forecasting software provides companies with insights into people's media consumption habits and the approximate costs of ad space to optimize their spending based on their goals and objectives.
Other adtech related terms
Programmatic advertising
Programmatic advertising is the automatic buying and selling of digital advertising space. Publishers, advertisers, and brands can automatically buy and sell ad spots using DSPs and SSPs.
Programmatic direct
Programmatic direct is a type of programmatic advertising where a publisher bypasses auctions and reserves some (or all) of their ad inventory for a buyer at a fixed cost. The purchase is still done automatically and ad placement is done programmatically.
Real-time bidding
Real-time bidding uses programmatic advertising and adtech to automate the trading of digital advertising spots. Advertisers need to purchase ad space. Media organizations and/or publishers need to sell their available inventory. With real-time bidding, companies programmatically submit bids to compete for the right to display ads on a publisher's website or app. Advertisers and publishers use ad exchanges to run auctions using demand side and supply side platforms. Millions of advertising spots can be sold and/or bought in seconds, and if a company wins a bid, their ad is instantly loaded onto the publisher’s site.
Adtech vs. martech
Adtech software is designed to help companies and agencies create, run, measure, and manage digital advertising campaigns. It also lets publishers (websites and apps) sell their available ad space to the largest number of advertisers possible. There are even specialized adtech platforms that deal with audience profiling, activation, verification, viewability, and measurement.
Martech software lets marketers create, run, optimize, and manage online marketing campaigns through email marketing, A/B testing, personalization, customer loyalty programs, and web analytics. Martech systems include:
- CRM systems
- Marketing automation
- Email marketing
- Social media management platforms
Both martech and adtech ecosystems are made up of many different platforms. While some exist in both industries—data management platforms (DMPs), for example—most are unique and specific to their respective field.
Adtech, martech and customer data platforms (CDPs)
A customer data platform (CDP) can power next-generation adtech strategies and help marketers unify customer data for segmentation and campaign creation, deployment, and measurement support. Given that third-party cookie-enabled identifiers are eventually going away, first-party data will have an outsized role if marketers have the right strategy and have made the right technology investments. A customer data platform can provide that central location to ingest and house all first-party datasources—from demographic and transactional data—that resides within a CRM system or data lake to online behavioral data collected from websites and mobile apps.
Adtech benefits
Automation for efficiency and scale
For decades, the business of advertising remained largely unchanged—until just recently. Today, the way advertisers place ads, how they pay for them, and the physical nature of the ads themselves has completely changed. But the goal is always the same—to reach a target market of consumers and capture their attention.
Adtech's growth was driven by a need for efficiency and scale in the realm of (now) billions of online interactions. The buying and selling of advertising spots is still done in a marketplace, but the advent of digital advertising has made the entire process more complex. Automated platforms (DSPs and SSPs) are needed to handle the actual buying and selling at scale. Plus, adtech and martech tools are becoming increasingly connected to get brands and/or companies to achieve their monetization and marketing goals.
Benefits of integrated adtech and martech
Adtech and martech do overlap but have primarily remained as two distinct solution sets with a common goal—to provide better customer experiences. Disconnected systems add unnecessary complexity making it hard for companies to know their audience/customers well. Integrating adtech and martech can help with that. More importantly, it helps companies design the right journey for each person, convert more customers, and build stronger, longer-lasting relationships. Additionally, an integrated adtech and martech system helps advertisers in the following ways:
- Optimize your advertising investments. With the right data and context you can get to know your prospects, including what channels they prefer to hear your message on. This, in turn, will help you realize a higher return from each impression.
- Create a customer 360 view. A single view of the customer across business functions lets you create real-time, personalized experiences that can meet rapidly changing customer expectations. With it, you’ll have the most comprehensive customer profiles possible to leverage in your customer interactions.
- Improve targeting. Companies can leverage post-conversion data (from their martech systems) to improve their ad targeting initiatives. Combining previously siloed data points across systems helps with audience targeting and segmentation—much more than with when martech and adtech work separately.
- Make every interaction with your brand matter. Make each customer’s experience simple through intelligent, in-the-moment interactions that occur across advertising, marketing, sales, and service touchpoints.
- Add AI to your tech stack. Reducing complexity will pave the way for the advancement of AI technologies to simplify work processes and tools, creating more efficiencies for your company.