The ad tech industry has changed significantly from a decade ago. Long gone are the days of negotiating ad placements between publishers and advertisers. Ad tech makes it possible for giants like Google and Facebook to make billions in revenue, and online publishers and developers generate income from their digital properties. But what is exactly ad tech and how it is shaping media trading?
Ad Tech brief definition
Is an umbrella term that stands for advertising technology. It refers to the stack of software and tools advertisers, agencies, publishers, and other industry actors use to plan and manage their advertising and monetization strategies.
Evolution of the Ad Tech Industry
Before the advent of ad tech, media buying and advertising was a manual, complex process that required a lot of time and effort. Then, in the ’90s, e-commerce exploded, and advertising agencies found themselves helping to select websites for their client’s ads. This involved researching, checking metrics, and choosing which website would bring the maximum ROI for advertisers.
The first significant change came with the creation of the first ad server. A software that would automatically serve ads, ended manual ad placement and started the automated advertising revolution. This first ad server would later become the Google Ad Manager.
From then, the ball rolled quickly, and soon other technologies appeared driven by the market needs. Google AdWords, ad exchanges, and real-time bidding are only some of them.
There was a need to improve ad targeting and choosing the most relevant real estate for the ads, thus demand-side platforms were born. On the other side, publishers needed to gain some measure of control over their impressions prices while ensuring their ad space reached the coveted higher-paying advertisers, giving way to supply-side platforms. Other solutions that provide the user data for all this ecosystem to work properly appeared, as Data Management platforms, data analysis solutions, etc.
The state of Ad Tech in 2021 in numbers:
- Ad Tech market value (eMarketer): $134 billion.
- Market share distribution:
While the biggest single player is Google, there are other companies that are looking to join the marketplace, whether with proprietary technology—like Apple—or other strategies.
- U.S companies have increased the spending on programmatic advertising since 2020
In 2019, e-marketer forecasted that by 2020 the % of digital display ad spending will reach 83.9%. The reality surpassed the expectations, and as of May 2021, the percentage had reached 86%.
This change may happen because of the increase in the number of companies adopting automated solutions and undergoing digital transformation derived from the 2020 crisis. The market will continue growing and they expected companies to spend 91% of their advertising budget on digital display ads and programmatic advertising.
- Companies spent $129 billion in programmatic advertising in 2020.
This figure is expected to reach $155 billion in 2021. (Statista)
So, what is Ad Tech, and why do we need it?
The Ad Tech industry includes all tools, resources, and software platforms that demand and supply sides use to interact, buy and sell ads and optimize advertising efforts.
- Publishers use ad tech platforms to optimize their monetization activities through advertising.
- Organizations use ad tech to plan and execute media buying and advertising optimization.
- Advertisers use ad tech to deliver their ads to potential customers.
Without adtech, programmatic advertising wouldn’t exist. Ad Tech enables the delivery of highly targeted ads, implementing omnichannel marketing strategies among other techniques.
To understand why we need adtech let’s think about the way advertising was done years ago before the ad tech industry was born. Adverts were published with the goal to reach as large an audience as possible without almost no personalization.
While a massive reach can be useful to create brand awareness, this type of ad is less relevant for individual viewers. Adtech makes it possible to deliver advertisements to the most relevant audiences, at the right time and in the right context. Marketers then save time, money, and effort. Publishers, on the other side, can monetize their digital assets while giving end-users the most relevant offer for their queries.
The Ad Tech Solutions of CodeFuel
CodeFuel is an adtech company dedicated to providing monetization solutions for publishers and app developers. Our solutions include:
Search Mediation
CodeFuel offers optimized landing pages that maximize revenue for publishers. Regardless of the platform, you buy your media, our solution can help you increase your revenue. The monetization page is fully tailored for your business needs and the buying platform you use.
Media traders then can monetize search and achieve higher revenue by leveraging the mediation platform.
Website monetization
CodeFuel monetization solutions are designed to transform intent into revenue.
The user-intent-based search enables you to monetize your website with contextual ads. By matching the audience’s intent to the right ad, you enhance the user experience and earn higher revenue.
Search queries
Search queries give a customized search results page (SERP), hosted on your website, with paid text ads, optimized by search technology.
Shopping ads
When you sign up for your website with CodeFuel, your users are served shopping fuel ads related to their intent. For example, when a user clicks on an ad for a new cell phone, the system directs them to a results page with relevant ads for this specific cellphone model.
Newsfeed
You can also add a news feed to your website. Powered by MSN, it includes over a thousand premium news publishers. This increases your user’s engagement, by encouraging users to have a longer dwell time on your site. Ultimately, this translates into more conversions.
App Monetization
CodeFuel uses intent-based search to monetize your mobile app or browser extension. Add search capabilities to your application, which returns a customized SERP with relevant text and shopping ads.
Key features of CodeFuel solutions
- Simple integration: easy installation and integration with search engines and ad networks.
- HUB Analytics: get the information you need to improve your performance with the analytics hub.
- End to End Support: complete account management with strong business intelligence.
Ad Tech Basics
Advertising technology analyzes, manages, and delivers advertisements according to the requirements of the advertiser and target audience. Campaigns look to maximize the effect of ads, ultimately increasing ad revenue.
Who are the actors in AdTech?
The ad tech ecosystem consists of Advertisers, demand-side platforms, ad exchanges, ad networks, supply-side platforms, and publishers.
Publishers make their impressions and ad space available through supply-side platforms and ad networks at ad exchanges. Demand-side platforms bid on those ads through real-time bidding, selecting the most relevant ad types and placements for the target audience. Thanks to adtech, this supply-demand loop takes place in seconds, in the time that takes a page to load.
The role of user data
This loop of supply and demand generates revenue thanks to a key component: user data.
Understanding the user behavior and activity on a particular platform is the core of the effectiveness of programmatic advertising. User data is what makes it possible, via sophisticated software algorithms, to deliver the right ad to the right person at the right time.
You can buy user data or you can gather it on your own. But, the goal is to gather actual data from actual people (behaviors, interests, attitudes, and attributes) to be accurate in your targeting. The more you can refine ad targeting to the user, the better your bottom line will look. Why? Because the more the user relates to the ad, the more inclined they will be to click on it. That’s simple.
For publishers, the more your website, application, or extension marketing efforts apply to your target audience, the higher the value of your digital real estate for advertisers.
Advertising Technology for advertisers
Advertisers conform to the demand side of ad technology. Solutions geared for them aim to reach the target audience in the most efficient way and for the lowest possible price. These solutions help advertisers to run and optimize personalized programmatic campaigns, targeting and retargeting potential customers.
The advertiser’s ad tech stack may comprise some or all these types of tools:
- A remarketing/ retargeting tool
The fast pace of digital communications and the short attention span of customers means that sometimes a consumer will have interest in an ad but not follow through. Later, the consumer cannot find the ad or recall the name of the company (didn’t happen to us all?). Therefore, retargeting is essential for marketers to push consumers down the funnel.
- Prospecting tools
Expanding their customer base is a priority for most companies. Thus, machine-learning-powered prospecting tools help companies find their target audience in ad networks and ad exchanges. The more marketers use the tool, the more the system learns and refine the prospecting process.
- Data management platforms
As we mentioned above, leveraging user data is a basic concept of programmatic advertising. Gathering, processing, and analyzing consumer behavior and transactional information makes it possible for companies to pinpoint the ads to the users to the dot.
- Demand-side platforms
This is the technology that facilitates finding, bidding, and placing the ads at the right placement automatically. The system works automatically, serving the ads according to relevance for the end-user, the budget, and the criteria specified by the advertiser. Some of the top demand-side platforms are:
- Rocket Fuel
- Amazon
- AppNexus
Advertising Technology for publishers
Ad tech for publishers aims to achieve the highest price for the ad placement or impression from the most relevant buyers.
The right supply-side platform, like CodeFuel, can maximize the revenue of your digital property, whether is a website, an application, or an extension by delivering the most relevant ads to high intent users. It uses contextualization and intent-based technology to ensure the right ad gets to the user most likely to click on it.
This enhances the user experience, increasing the value of the website or app for advertisers, thus ensuring higher bids.
Elements of the Ad technology Ecosystem
Image credit: Nagle
Ad exchange
This solution works as an intermediary in the real-time bidding process. Ad tech providers use ad exchanges to connect DSP to SSP. Publishers and advertisers don’t usually have access to the information shared in the ad exchange. However, their traffic and inventory pass through the ad exchange on the way to the advertiser or publisher, respectively.
Ad networks often buy both traffic and inventory from ad exchanges to sell on their own.
Ad network
Content delivery network
A CDN is a distributed network of servers deployed in multiple data centers. The goal of a content delivery network is to serve content to end-users with minimal latency and load times. CDNS are used in adtech to host ads so they are served to users from the closest server, minimizing the time to load the ads.
Ad server
These were among the first ad tech developments, used to host and store ads, then serving them on the publisher’s website. Nowadays, ad servers are full ad tech platforms for launching and managing ad campaigns, connecting publishers and advertisers.
Ad servers also collect data on ad performance to optimize campaigns. This technology is what makes it possible for media buying automation.
Agency Trading Desk (ATD)
Is a set of tools used by media agencies to plan, buy and manage to advertise. Organizations that are not yet ready to install a DSP or justify an in-house team use ATD services. The downside of using an agency trading desk is that advertisers don’t have direct access to the inventory.
Demand-side Platform (DSP)
Is a platform that allows users to buy inventory from various ad exchanges and supply-side platforms (SSP). Unlike an ad server, with DSP advertisers don’t need to negotiate prices with publishers. They set their CPM (Cost per Mille), target preferences, and can launch the campaign. A DSP also lets you set bidding rules and optimization tools that help run your media buying without having to be on top of it.
Supply-side Platform (SSP)
Is the publisher’s side of a DSP. This ad software enables publishers to make available, manage, sell and optimize inventory on their websites and applications. SSP also works based on real-time bidding. That means you don’t need to negotiate rates with advertisers. You only need to embed an ad tag and or a header to the website, which will allow the browser to request an ad for that place in the website. The tag is forwarded to the SSP, which automatically selects a suitable ad from the DSP according to the publisher’s data.
Data Management Platform (DMP)
A data management platform enables advertisers to understand in-depth their audience’s behavior. The DMP collects data from different sources, hashtags, mobile apps, cookies, APIs, etc. The platform uses third-party cookies to define the user profile and develop behavioral targeting in a DSP or ad server.
Customer Data Platform (CDP)
Customer Data Platforms go a bit further than DMP. Not only collects third-party data but also personally identifiable information (PII). Thus a CDP can create a complete profile with a name, company email, and other data, gathered under consent, from analytics tools, Customer Relation Management tools, subscriptions, newsletter signups, transactional systems, etc. This technology will probably be very popular once third-party cookies are phased out by Google in 2022.
Inventory and Ad Quality Scanning Tools
These tools are critical to prevent ad fraud, which affects around 37% of ads. Inventory and ad quality scanning tools help prevent traffic bots, malvertising, and ad fraud by scanning the ads before being served on the website.
How Ad Tech simplifies media trading
Without ad tech, programmatic advertising wouldn’t exist. By automating the media trading process it takes the negotiation out of the hands of publishers and buyers, simplifying the process. Ad tech enables advertisers to bid on the most relevant ad placements for their campaign without having to check site by site. Simply input the requirements and budget and the platform will find, bid, and acquire the best ad placements at the best possible price, then serving the ads immediately.
On the supply side, ad tech helps publishers to sell ad space without having to find and negotiate with advertisers. It also makes it possible to sell impressions and inventory in seconds. Thus, ad tech is taking the hassle out of media trading.
The current trends in the Ad Tech Industry
Where is Ad Tech going in the next few years? The industry has grown by leaps and bounds over the last 20 years and is not willing to stop evolving. Here are the top trends that are shaping the ad tech industry:
Artificial Intelligence and Machine Learning
These two technologies help advertisers analyze massive amounts of user data, incorporating behavior analysis to predict the actions of a user online. This data is processed and correlated to serve the right ad according to the user intent at this moment.
Post cookies optimization
Google’s phasing out third-party cookies by 2022 is causing major upheaval in the programmatic industry. Some markets report significant drops in buyer’s bid rates as a consequence. In Germany, buyer’s bid rates decreased by 40%.
Companies are trying to find a viable user identity alternative that doesn’t affect them so much. Some alternatives may include storing data without using cookies by opt-in forms, universal ids, data pools, among others.
Programmatic everything
When Netflix and Amazon Prime changed the way we consume multimedia content from cable to digital, advertisers needed to transition with them. Now, programmatic advertising is making its way to television, audio, and podcasts to take advantage of the power of data for this segment of the market.
Ad Tech or MarTech?
While often confused, adtech and martech are two different industries. Is true, they intersect in some features and functions but each one has a different approach. Putting it simply is the same difference between marketing and advertising.
Advertising implies using paid media and content for promoting products and services. Marketing is a more broad approach to promotion, and inside the marketing mix of activities is advertising.
Make the most of your media trading with CodeFuel
CodeFuel ML and AI capabilities facilitate media buying while improving the revenue for publishers. Getting the right monetization solution is critical for success. Leverage user intent in your digital property by using search, shopping, and news to engage users and improve their experience, serving them ads matched precisely with their queries.
