The Definitive Guide On Ad Tech

By Jacki Kilbride - Published on April 1, 2020
Advertising Technology (Ad tech) explained

Data is like gold to a marketer. And yet, in an age where companies are constantly collecting consumer information, 76% of marketers(1) don’t make use of data in their online marketing and targeting. This represents a huge wasted potential– the failure of marketers and advertisers to adequately take advantage of ad tech.

AdTech seeks to fix that. Using AdTech, marketers can target individuals, serve relevant ads, maximize profits, and increase the efficiency of an ad campaign. But what exactly is AdTech, and how can your business take advantage of it?

What Is Ad tech?

Ad tech includes:

  • The Demand Side (the advertiser)
  • The Supply Side (the publisher)
  • Ad Exchange (the central hub that facilitates the buying process) 

AdTech is a term that encompasses all software and technology used by marketers to advertise digitally. Using ad tech, advertisers are better able to target certain audiences, obtain market information, and gain valuable information on a campaign’s ROI.

What Is Programmatic Ad Buying?

Traditionally, advertising campaigns are negotiated by people. Programmatic ad buying, on the other hand, is a newer form of ad buying that utilizes computers and mathematical equations to purchase digital ad space. With programmatic ad buying, you are only buying the places your target audience is likely to be, as has been determined through an automated process.

What Is Programmatic Direct?

Programmatic direct adds a human element to programmatic ad buying. Under programmatic direct, advertisers and marketers deal directly with publishers to negotiate a contract. Usually, that contract will be based on Cost Per Thousand (CPM,) and it will outline how many impressions (or views,) an ad will receive. It will also usually specify the audience the advertiser is trying to reach.

Once the contract has been fully negotiated, ad tech is used to automate the campaign. This method of ad buying is useful for publishers who need to carefully curate the content on their website to appeal to a more upscale audience.

What Is Real-Time Bidding (RTB) and How Does it Work?

Real-Time Bidding is a type of programmatic ad buying that involves purchasing ad space through a digital ad exchange, in real-time. RTB automates the process of purchasing to a point, with the automated system selling ad space on behalf of the publisher.

RTB begins immediately after a user clicks a link to visit a website. Data on the visitor is gathered– your interests, demographics, recently visited websites, and anything else relevant and available. That information, along with a list of avails (available inventory) is sent to the Supply-Side Platform (also known as SSP, it allows publishers to sell ad space).

The SSP communicates this information to the Demand-Side Platform (DSP). The DSP is like a central hub where advertisers are able to target consumers and purchase digital ad space. The DSP presents the information to advertisers, who then bid on the ad space.

The DSP collects the bids and presents them to the SSP, which then selects the highest-paying bid that is relevant to the site’s users. Note that this entire process is automated and instantaneous.

( Also Download – Whitepaper  What Is Programmatic Advertising? )

How Does Ad Tech Work?

AdTech involves tailoring the digital advertising process to the consumer, based on consumer data. This is accomplished first by gathering data. One way to obtain data is by purchasing it from a third-party company.

Another is to collect it from the consumer themselves– search terms, for example, can tell you what new visitors to your site are really looking for. Often websites will gather information such as demographics, time spent on site, mouse movement, browser specs, and other relevant data.

Once consumer data is obtained, marketers are better able to tailor an advertising campaign. One of the primary goals of ad tech is to bring in repeat visitors by retargeting them after they leave the site. These are users that you already have data on, so they are that much easier to reach.

The Adtech Ecosystem

  • Media agency

    The media agency purchases ad space for an advertiser. Media agencies aren’t concerned with the creative behind the campaign– they focus entirely on the placement. Note that media agencies have access to multiple mediums and will often place buys for digital and traditional media.

  • Agency Trading Desk (ATD)

    Within the media agency, there is an ATD that actually purchases the ad space. Sometimes this is done using a Demand-Side Platform, and sometimes it is done using internal technology within the agency.

  • Supply-Side Platform (SSP)

    The SSP serves a number of functions, including:

    1) Distributing ads whenever they are called for (e.g. when a page loads)

    2) Monitoring and adjusting campaigns as needed

    2) Ensuring the optimal amount of impressions is reached

    3) Managing inventory levels

    4) Collecting demographic information

    5) Gathering and making use out of visitor information

    5) Obtaining analytics on the ads after they are served

    6) Bringing it all together to create a pleasant and seamless user experience

Also Read: The Role of Supply-Side Platforms in Programmatic Ads )

  • Demand-Side Platform (DSP)

    Likewise, the DSP serves several functions:

    1) Using consumer data to pick and distribute the most relevant ad

    2) Monitoring the overall success of a campaign

    3) Keeping an eye on the customer’s experience

    4) Saving advertisers money by only serving ads that are relevant to a consumer

    5) Maintaining a brand’s consistent image by ensuring ads are only placed on appropriate sites

    6) Ensuring the maximum results are achieved for each campaign

  • Ad Networks

    Ad networks house all available inventory for a group of websites. Think of it as a central depot where advertisers and media agencies can go to find open ad space.

  • Ad Exchange

    The ad exchange is where the actual buying and selling of ad space takes place. This is typically an automated process done using RTB.

  • Data Management Platform (DMP)

    A DMP is a hub where consumer data is housed and analyzed. Salesforce is one example of a DMP.

  • Customer Data Platforms

    Customer Data Platforms source data from multiple areas, and consolidate it into one place. These platforms create a single customer profile that is then available to other marketing platforms.

There are 3 Major Players in Ad Tech:

  • Advertisers

    Advertisers represent the demand side of the equation. They require ad space to promote a product or service, either for themselves or on behalf of a client.

  • Publishers

    Publishers represent the supply side. They have access to ad space, usually on their website. Examples of publishers include blogs and news websites.

  • Ad Exchanges

    Ad exchanges allow advertisers and publishers to connect. They are a place where the selling and purchasing of ad space take place.

Why Do Advertisers Buy Ads?

Advertisers buy ads for two primary reasons:

  • Brand Awareness:

    Advertisers purchase ads for branding purposes. Branding is important because it increases consumer recognition, builds trust, and promotes a consistent consumer experience. A branding campaign doesn’t focus so much on a specific sale or product– rather, it sets a tone for who you are as a company.

  • Direct Response:

    Direct response ads are meant to elicit some type of response from a consumer. Usually, that response is to purchase a given product. The success of a direct response campaign is generally measured by the percentage change in sales.

Techniques To Generate Revenue From Ad Tech

  • Cost Per Action (CPA)

    CPA is based on the number of times a user performs a given action, such as downloading an e-book or installing software. The goal of the ad campaign is to inspire the consumer to interact with the ad in some way.

  • Cost Per Impression (CPI)

    CPI is usually expressed as CPM (the cost to reach one thousand people). Advertisers are charged per impression. The success of the campaign is measured by how many people who saw the ad that clicked through.

  • Cost Per Click (CPC)

    CPC is tied directly to the click-through rate. When a visitor clicks on an ad to visit the website, the advertiser is charged. Like with CPI, the success is measured by the click-through rate. In this instance, however, the price is also determined this way.

  • Cost Per Lead (CPL)

    CPL is similar to a direct response campaign on television or radio. Advertisers are charged per viable lead.

Final Thoughts

AdTech represents a huge amount of potential for advertisers to maximize profits and increase efficiency in ad campaigns. While it is still necessary to have compelling and engaging copy, AdTech allows advertisers to better monitor the success of a campaign and make adjustments as necessary. It also helps advertisers target individuals and find better leads.

If your business is not yet taking advantage of advertising technology, there is no better time than the present to start.

Jacki Kilbride | Jacki Kilbride is a freelance writer and marketing nerd who recently earned her MPA. When she’s not writing or diving into research, she can usually be found hiking or traveling with her family.

Jacki Kilbride | Jacki Kilbride is a freelance writer and marketing nerd who recently earned her MPA. When she’s not writing or diving into research, she can usuall...

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