What is Ad Tech?
Advertising Technology (Ad Tech) is the term that describes the systems of analyzing and managing tools for programmatic advertising campaigns.
It includes the full ad delivery process, from picking an ad’s subject and place to selecting its target. Ad Tech solutions enable you to view the overall picture of your campaign and exploit it to its full potential.
The direct benefits of this tight knot of diverse processes include increased operational efficiency, which means increased brand recognition, which leads to increased earnings. This indirectly leads to an increase in interest.
Ad Tech, on the other hand, can be tough. Digital advertising is expensive, and you must ensure that every cent is working towards your goal. From a technological and logistical standpoint, the whole operation is quite demanding. It requires a massive amount of data and therefore massive computational power. As a result, you require the services of Ad Tech businesses that understand it inside and out and can turn it upside down to get through. AdTech firms are, in this sense, cavalry.
The key advantage of using it is that it reduces budget spending and makes the entire process considerably more cost-effective.
The company requires a properly customized system for its needs to get the most out of the Ad Tech modified campaign. The procedures for processing and categorizing incoming data must be precisely defined. It should fit exactly to make the process of organizing, delivering, and targeting advertisements as efficient as possible. It assists you in making sense of the data acquired and putting it to use. It discovers and connects the dots.
The advertising ecosystem, which includes advertisers, demand-side platforms, ad exchanges, supply-side platforms, and publishers, is at the heart of Ad Tech’s operation. They work together to create a revenue-generating loop of ad supply and demand, which is accomplished by collecting and processing data on user activity on a certain platform.
The Basics – the relationship advertiser-publisher
In a nutshell, advertising technology connects advertisers with publishers in a way that benefits both parties by allowing them to receive what they want and need:
- Advertisers: effective ad campaigns aimed at high-value audiences
- Publishers: ad inventory sold at the best possible price
In general, this has always been the aim of advertising, and the interaction between the advertiser (demand) and publisher (supply) sides dates back as far as the concept of advertising itself. To connect the two sides of the advertising equation, technical solutions that could handle the massive number of advertisers and publishers seeking to do business together were required.
That is why AdTech exists because it is required.
The primary goal of any ad tech solution is to assist publishers and advertisers in conducting profitable and efficient media trading arrangements through programmatic algorithms. That is why advertising technology exists. To better understand how various ad tech solutions function for the demand and supply sides, let us examine each challenge and see how ad tech software responds to it.
The demand side, which is typically represented by advertisers, is looking for the most efficient technique to reach their target audience at the lowest feasible cost. This is often accomplished by conducting and constantly optimizing personalized programmatic campaigns, ad targeting, and retargeting your prospective customers. Ad tech solutions serve the demand side by enabling the development of a full-funnel marketing plan based on programmatic software.
The supply side, which includes publishers and inventory resellers, aims to monetize their digital assets by running adverts on ad placements (and getting measurements on engagement and other user data). To do all of this, inventory must be arranged in such a way that it fulfills the demand side’s requirements. With the help of ad tech, publishers can manage inventory monetization and keep track of all necessary assets from a single interface.
The supply and demand sides of the digital advertising ecosystem come together in the neutral environment of an open advertising marketplace, which is backed and facilitated by ad tech software. This platform develops ad tech space that is intended to improve communication between parties and make media trading as useful to both as possible. Many of the procedures associated with data collecting and processing are also handled by Adtech. All of this is done to ensure that the user receiving a digital ad receives an ad as quickly and precisely as possible.
Many companies assist the interaction between media buyers and digital media owners, so the system may appear overly convoluted at first glance. It all becomes a lot clearer, though, when we examine the following parts of the ad technology environment one by one:
The term “ad exchange” refers to a platform that connects the supply and demand sides and facilitates transactions between them. Advertisers and marketers, brands, ad agencies, ad networks, and DSPs are common on the demand side, whereas publishers, resellers, and SSPs are common on the supply side. Publishers may use this platform to ensure that their residual inventory is sold at the best possible price, while advertisers can benefit from the ability to conduct highly-focused campaigns.
An ad network is a company that aggregates and selects ad inventory and allows advertisers to communicate directly with publishers. Depending on the parties’ preferences, it can also be used to strike other types of deals (for example, auctions).
An ad agency is a company that assists businesses in marketing their products or services and managing their campaigns. Ad agencies gather information, pair customers with appropriate suppliers, and can even assist with marketing budget management. The method is comparable to outstaffing ad tech services in that a dedicated professional team handles a portion or all of the brand’s marketing efforts.
A Content Delivery Network (CDN) is a platform that stores ad creatives and improves user experience by reducing page load time. This method is especially important for video advertising because it necessitates the distribution of large files, which might slow down the entire process.
When a user hits the supplier’s channel, the ad server automatically serves ad creative from the Content Delivery Network. It may also track the performance of adverts by measuring impressions, clicks, conversions, and other analytics.
In a word, thanks to ad tech, today’s advertisers don’t have to contact each inventory source and spend hours negotiating a contract. Publishers, on the other hand, have the option to successfully manage and fill multiple ad positions across platforms. As a result, the ad tech area has become a critical technical solution for these parties’ connections.
Ad tech mechanisms – the advertisers’ point of view
The demand-side platform is the primary tool used by marketers all over the world for automated media buying (DSP). Some advertisers are interested in reaching out to more suppliers, while others are concerned with gaining valuable insights from their data. There are numerous hurdles, but the good news is that DSPs are meant to assist marketers in addressing each of these issues as well as providing solutions for additional needs.
Advertisers can efficiently address the following pains and aim with the help of DSPs:
Getting to the intended audience. Getting people to recognize your brand is a critical responsibility for every business’s growth and a significant issue for advertisers. The true problem, though, is getting the correct individuals to know about your business. Finding and delivering a message to a brand’s target audience is one of the most important aspects of an ad tech solution.
This is where the DSP comes in, as it enables you to launch a tailored ad campaign in line with your marketing strategy. This includes locating the appropriate publishers with high traffic and well-defined audiences, as well as purchasing the necessary ad impressions at the lowest possible cost.
Performance evaluation. When a marketer is ready to launch a campaign, they must also check and test it. To arrive at informative findings, they must collect a large number of data points such as impressions and conversions, click-through rates, and so on. These figures must also be precisely studied and correctly attributed, as they will have an impact on the success of future advertisements.
To overcome this issue, demand-side solutions provide real-time reporting – all measures are available for additional analysis within the same interface.
Optimization that works. With all of the essential data, one may finally generate meaningful discoveries and, more importantly, use them to create outstanding results. Most advertising initiatives could perform far better if they were analyzed and optimized on time. This section is very crucial for firms with minimal ad spend because it can greatly increase campaign performance, reducing the need for further money and efforts.
In terms of solutions, DSP is an excellent instrument for the job. Throughout the campaign, these systems continuously assess and analyze data about performance and methods to improve it. Advertisers may instantly improve their results by fine-tuning their plan based on this information.
DSPs are supplying source agnostic, connecting advertisers to different SSPs, ad exchanges, and ad networks to select the best-fitting inventory from this pool. They also support a wide range of digital advertising formats, including banner and display ads, video formats, native advertising, rich media, and so on. Finally, on the demand-side platform, advertisers can select from a variety of deals:
- Open Exchange – Possibly the most prevalent business model in the market, this form of contract involves automated real time bidding (RTB) auctions as well as other exchanges between any advertiser and publisher. During an open RTB auction, virtually any advertiser can bid on any qualified impressions while an ad is loading in front of a real user. The highest bidder wins and receives the ad space in milliseconds.
- Private marketplaces follow a similar structure, although the participants in such an exchange are usually pre-selected. Typically, a select group of advertisers bid on inventory offered by a select set of publishers. Private marketplaces enable publishers to prioritize specific advertisers, frequently providing them with exclusive access to ad inventory before it is offered through open RTB.
- Programmatic Direct – This type of contract is similarly based on automatic media trading, but this time the publishers and advertisers are dealing one-on-one. Advertisers can acquire a guaranteed volume of impressions for a fixed fee this way, while the process is hosted and handled by a real-time bidding platform. This technique gives both parties more control over their budgets and makes media trading more efficient for organizations who have a set list of trustworthy partners.
- Preferred Deals are a type of direct trade that also includes one-to-one trading, but there is no fixed volume of impressions this time. As a result of preferred arrangements, advertisers gain exclusive access to inventory at a fixed price.
Ad tech on the supply side
Typically, the primary suppliers’ business purpose is to efficiently manage all of their ad inventory and maximize revenues from selling it to advertisers. The goal itself isn’t difficult, but achieving it in real life amid a crowded digital environment might be difficult, especially for suppliers with various sources.
Fortunately, there is a one-of-a-kind ad tech solution created expressly for these requirements: the supply side platform SSP. SSP, like DSP, is a sophisticated platform where you can access all of the tools you need to sell your digital assets from a single interface. A good supply-side platform will often provide the following opportunities to publishers:
Inventory management in real-time. To maximize profit, each ad placement available to the publisher should be filled up as soon as the visitor accesses a channel that contains it. And in order to do so, they must identify interested marketers and negotiate conditions for each campaign of these demand sources. In the fast-paced world of digital advertising, attempting to accomplish such a massive amount of labor manually makes little sense, especially when it comes to handling different inventory sources.
Publishers can simply handle their inventory with the help of supply-side platforms in a quick and effective manner. Depending on the type of transaction agreed by the sides, SSPs match their inventory with interested advertisers and deliver an ad placement to the highest bidder or the specified demand partner.
Increasing revenue. With ever-increasing competition among digital publishers, it’s likely that many of them are struggling to sell all of their inventory. Non-premium goods are especially vulnerable to this problem, as it can be difficult to break through the noise in such a busy atmosphere. Furthermore, even if you locate interested consumers for selling your ad inventory, you must still negotiate the best price for each placement at your disposal.
Thankfully, the majority of SSPs and other ad technologies use complex algorithms that are particularly designed to ensure publishers earn the most income out of their inventory. Integration of extra ad technology, such as header bidding, also aids in more successful monetization. Publishers will no longer have to worry about unsold impressions or poor demand as a result of them. Instead, they can enjoy a fair and consistent wage without having to spend hours bargaining.
SSPs collect and analyze audience data from visitors to your digital channels to do this. It then combines it with information about your ad placements and price floors. These data sets are subsequently sent as requests to demand-side platforms for further analysis and auctioning.
To begin generating revenue from their assets, digital publishers need first to select a business plan. When it comes to effective monetization strategy, there are numerous business models to select from (such as CPC, PPC, CPM, and so on):
- CPM (cost per mille or cost per thousand) – the price is calculated in terms of the number of impressions served; the advertiser pays a set fee for each thousand ad impressions.
- CPC is an abbreviation for cost per click, and it generally signifies that the advertiser is paying for the exact number of clicks their ad creative receives, thereby sharing the risks between the supply and demand sides. It is usually determined by the click-through rate and a variety of other parameters.
- CPA, or cost per action, is a broader business model than cost per click because it indicates that the advertiser pays for each specific action the user does after seeing an ad. This can include filling out “contact us” forms, submitting their email address, taking part in a survey, and a variety of other activities.
There are several business-specific models that may be effective in particular situations (for example, cost per lead or cost per installation), but these are the most common ones that are commonly utilized on ad exchanges and other platforms.
Advertising Technology: in conclusion
A demand-side platform is ideal for any brand or marketer looking to generate effective targeted ad campaigns. In turn, a supply-side platform connects publishers with the most interested and well-paying demand partners. Tools such as ad exchange and ad server serve as the foundation for auctioning and ad distribution, while a variety of data providers and analyzers aid in maximizing revenues on both sides of the trade.
Advertising technology isn’t rocket science; it all comes down to skills and the ability to apply them appropriately. To prevent information from leaking and to avoid fraud, the breadth of operations relies on proven and tested methods and trusted platforms.