Advertising Technology (adtech) is defined as a range of software and tools that brands and agencies use to strategize, set up, and manage their digital advertising activities.

In this primer, we look at the concept of advertising technology, the world of programmatic (including ad buying, direct, and real-time bidding), the adtech ecosystem, and future trends in adtech to watch out for.

In Digital Advertising, we briefly looked at the beginning of the digital advertising industry, and how a 468*60 px banner marked a revolution in advertising in 1994. Rapid developments in e-commerce eventually led to agencies helping their clients place ads on websites that would yield clients the maximum Return on Investments (ROI).

The growth of online advertising was guaranteed when, in 1995 the Interactive Advertising Bureau (IAB) was established to regulate the industry. And now, almost twenty years after the dot-com boom, this democratization of digital advertising has never been more stable. All thanks to adtech.

As brands are increasingly relying on adtech to create a stir, capture audiences and boost brand presence, its time we take you through what adtech is, the adtech ecosystem, programmatic, and the advertising technology trends to look forward to.

Table of Contents

• What Is Advertising Technology (Adtech)
• The World of Programmatic
• What Is Programmatic Ad Buying?
• What Is Programmatic Direct?
• What Is Real-Time Bidding (RTB)?
• The AdTech Ecosystem
• 7 Advertising Technology Trends to Watch Out for

What Is Advertising Technology (Adtech)?

Adtech is a portmanteau of Advertising Technology. It covers a range of software and tools that brands and agencies use to strategize, set up and manage all digital advertising activities.

The adtech ecosystem has two major entities, viz. the advertiser (the demand-side) and the publisher (the supply-side).

Advertisers want to get the most out of their invested budget by running effective ad campaigns to reach their target audience, optimizing these campaigns, measuring ROI, and gathering customer insights.

Publishers cater to the requirements of advertisers and generate revenue through ads by displaying these ads on their publication/s (website, app, etc.), increasing ad impressions, maximizing bids for the ad slots, and gathering visitor insights. Publishers need to take care of all these things in keeping with the platform User Interface (UI).

Adtech helps advertisers and publishers achieve their goals by offering applications that meet the specific demands of both parties.

Popular adtech platforms include SmartyAds, TubeMogul, Simpli.fi, MediaMath, and PubMatic. Features such as transparency, interface, flexibility, and real-time analytics, are what you need to look for in an ideal platform.

The World of Programmatic

When reading about adtech and its peripheral concepts, youll often come across terms such as programmatic buying, programmatic direct or RTB. So, before we dive into the adtech ecosystem, lets discuss all things programmatic.

1. What Is Programmatic Ad Buying?

Programmatic pertains to the use of technology and data to automate and streamline online medias transaction process. Which means, with the introduction of programmatic, publishers and advertisers or agencies dont have to sit across the table to discuss and negotiate the contract. Ad buying is done through algorithms.

2. What Is Programmatic Direct?

Programmatic direct is a method of programmatic media buying. Programmatic direct is a digital replication of the traditional media buying process where advertisers strike a one-to-one deal with publishers to display their ads. The negotiation involves both parties agreeing on a fixed Cost per Mille (CPM) pricing.

This method is viable for high-end ad inventories or publishers. Advertisers go for programmatic direct with publishers who have the most potent user bases. Publishers choose this method because they can display ads while maintaining the user experience.

Although the initial process may not sound too programmatic due to human participation, the rest of the process, including ad placement is done programmatically.

3. What Is Real-Time Bidding (RTB)?

Real-time bidding (RTB) is the second type of programmatic ad buying. RTB is perhaps the most commonly used method of media buying because of its scalability and flexibility.

RTB involves advertisers bidding on ad inventory in real-time through an ad exchange. Its a feasible method for publishers as they can now sell unsold inventory without actively getting involved in the process. Although publishers may not get premium value from RTB, they still get a fair deal as the bids are determined based on demand for the ad inventory.

Learn More: What Is Programmatic Advertising? Definition, Types, Channel, and Advantages

The Adtech Ecosystem

The traditional media value chain is straightforward. An advertiser looking to get their ad printed in a newspaper or a magazine would get in touch with an ad agency, inquire about suitable publications, their reach, ad rates, and so on. Upon negotiation and shortlisting the publications, the advertiser would place an order and wait for their ad to be published in various publications.

1. Media Agency

Media agencies are responsible for allocating the advertisers ad expenditure across multiple channels, i.e., they purchase media for their clients. They are different from ad agencies as they do not venture into the creative aspects of ad campaigns.

2. Agency Trading Desk (ATD)

An agency trading desk is a set of services provided by media agencies. The ATD plans, buys, and manages ads across different platforms. ATDs serve as a toned-down version of demand-side platforms for advertisers who are not ready to invest in a DSP or set up an in-house team just yet.

3. Demand-Side Platform (DSP)

Demand-Side Platforms enable advertisers to buy ad placements in real-time at optimized costs. Commonly used for remarketing ads, DSPs allow advertisers to buy search, display, video, and mobile ads. DSPs communicate with ad networks, ad exchanges, supply-side platforms, or publishers to secure ad slots from the ad inventory.

So, marketers can use a DSP to access a vast ad inventory in a single window without having to get in touch with individual publishers.

Some of the key DSP players are:

1. DoubleClick Bid Manager
2. AppNexus
3. SmartyAds
4. Adobe Media Optimizer DSP
5. Simplifi

Learn More: Top 5 Demand-side Platform Companies

4. Data Management Platform (DMP)

Advertisers and marketers rely on DMPs as they centralize first- and third-party data. DMPs collect data from sources that include websites and mobile apps, CRMs, marketing automation platforms, other transactional systems, advertising campaigns, social networks, and so on.

DMPs use big data analytics and AI/ML technology to identify trends and consumer behavior, create audience segments, analyze profiles, and learn about users purchase intentions.

Here are five widely used DMPs:

1. Lotame
2. Oracle BlueKai
3. Salesforce DMP
4. Adobe Audience Manager
5. SAS Data Management

5. Ad Networks

Advertising Networks are the companies that work as an intermediary between advertisers and publishers. Ad networks consolidate ad inventory from multiple publishers and provide advertisers with a range of options to choose from.

Advertisers can use DSPs and DMPs to gain insights about their ideal customers or buyers and choose slots from an ad networks inventory to optimize their digital ad efforts.

Lets look at the top five ad networks:

1. Google DoubleClick Ad Exchange
2. Taboola
3. Baidu
4. Rocket Fuel
5. Infolinks

6. Ad Exchange

An Ad Exchange is a platform that facilitates the buying and selling of ad inventories from various ad networks. The transaction takes place through the real-time bidding (RTB) process where the price of the ad space is decided by the demand and supply of that slot in real-time.

There are two types of ad exchange open and private exchange. An open ad exchange allows anyone to participate in the bidding process, and the price of each impression is disclosed.

A private exchange is an invite-only auction where the publisher can choose advertisers to bid on their inventory.

Here are the five major ad exchanges:

1. Google Ad Exchange / DoubleClick
2. OpenX
3. AppNexus
4. Rubicon Project Exchange
5. Microsoft Ad Exchange

7. Supply Side Platform (SSP)

Simply put, an Supply Side Platform (SSP) is a counterpart to a DSP for publishers. SSPs allow publishers to understand the real-time demand for their ad slots from ad networks and exchanges, manage their ad inventory, and earn revenue through ads.

SSPs consolidate the ad inventory and allow publishers to determine a price floor (the minimum price for ad inventories), facilitate the auction process, and communicate with DSPs.

Here are some widely used SSPs:

1. AerServ
2. MoPub
3. Google Ad Manager
4. OpenX
5. AppNexus Publisher SSP

8. Ad Server

Ad servers are used by advertisers, publishers, ad networks, and ad agencies to run their ad campaign. An ad server is an application responsible for automating ad placement followed by displaying them on websites and collecting ad performance

data that helps advertisers evaluate the performance of their ad campaigns.

Ad servers are hosted either on the provider’s ad server or on your local premises (own server).

Here are the five most popular ad server platforms:

1. DoubleClick for Publishers (DFP)
2. OpenX Ad Server
3. adColt Ad Server
4. Atlas
5. AdButler

Learn More: Ad Network vs. Ad Exchange: Key Differences and Similarities

7 Advertising Technology Trends to Watch Out for

What developments can advertisers and publishers expect in the adtech ecosystem? Here are the seven advertising technology trends to keep an eye on.

1. The Industry Is Moving Toward Consolidation

One prominent trend that has commonly been observed among martech and adtech industries is that giant corporations are acquiring promising independent companies in their respective niches to strengthen and scale their offerings. This trend enables bigger companies to aggregate multiple offerings in a single platform through which their users can pick and choose necessary features.

While this poses a threat to relatively smaller players, as the industry will be dominated by 3-4 players, advertisers and publishers need to gain expertise in the leading platforms and identify how these tools can be integrated within their existing martech/adtech stacks.

2. Companies With Niche Offerings Will Be Successful

While the adtech industry is moving towards consolidation, this trend shouldnt necessarily seal the fate of new entrants or existing startups. Companies that offer niche products, or that support the major companies in the adtech ecosystem, will gain an upper hand.

Here are three reasons that support this:

1. Native advertising has become an effective way for advertisers to spread their message. Apart from Facebook and Google, advertisers are also experimenting with native ad platforms such as Taboola, Outbrain, Playbuzz, etc.
2. Publishers and app developers want to break away from the oligopoly of Facebook, Apple, and Google.
3. Advertisers prefer using third-party attribution tools than relying on Facebook and Googles native solutions.

3. The Adtech Ecosystem Will Promote More Transparency

Advertisers, publishers, and end-users are expecting the components of the adtech supply chain to be more transparent.

GDPR enforces the privacy and transparency aspect on end-users part by making it mandatory for publishers to disclose how their data is used and reinstates the power in the hands of users through the eight rights for individuals.

Advertisers are tracking the placement of their ads and how each ad is contributing toward revenue generation. Similarly, publishers are keen to understand how users navigate through their websites, interact with ads, and how much revenue the website is generating for advertisers.

Companies are working towards building an environment where advertisers and publishers dont have to deal with high-quantity, low-quality traffic, and advertisers have access to superior ad inventory.

4. Advertisers Will Tell Stories Through Their Ads

Advertisers have had this notion that getting more eyeballs is more important than conveying a compelling story through ads. Over time, users have developed banner blindness, which has made them immune to ads, and although advertisers are getting impressions, the ROI is just not the same.

Marketers now need to tell stories through ads that can lead to meaningful interactions between the consumer and the brand. So, its no longer just the aesthetics of the ad, its the content, the medium, the message, the story, and the design that will decide whether users connect with your ad emotionally.

To serve this effectively, advertisers will experiment with simulated and immersive experiences, i.e., AR and VR, to better gauge customers responses.

5. Mobile Will Grow

Mobile has undeniably become our first source to consume information due to convenience and portability. This shift in consumer behavior has made mobile responsible for generating 63% of digital ad revenue. It is also partly due to the wide advertising opportunities available on mobile devices. You can target a consumer in a short time span through search, email, social media, videos, games and mobile apps, and thats enough to leave an advertisers mark on their minds.

Video is the most commonly used ad format regardless of the medium. To cater to changing habits and attention spans, advertisers are creating vertical and short duration ads. Telling a story in under a minute, indeed in a few seconds, is a challenge worth accepting.

6. Advertisers Will Tap Into New Ad Channels

Smart TVs and over-the-top OTT platforms such as Netflix, Hulu, Amazon Prime, HBO Now, and Roku have amassed an enormous user base. The U.S. alone has over 181 million OTT video service users, and advertisers are ready to bank on this opportunity. As reported by Magna, OTT ad revenue from the U.S. is predicted to grow up to $5 billion by 2020.

While OTT video service is just one of the new channels, advertisers are also evaluating the potential of direct-to-customer (DTC) brands and digital out-of-home (DOOH) to expand their advertising efforts.

7. MAdTech: The Consolidation of Martech and Adtech

David Raab introduced the term MAdTech in 2015 to explain the growing convergence of MarTech and Adtech. These two technologies can feed off of each other by utilizing the common thread between them, that is, customer data.

By tearing down data silos, marketers can analyze customer insights collected from their Martech stack and utilize them during the media buying process and eventually optimize (reduce) their ad expenditure.

David Raab sums this up perfectly by saying:

Martech deals with known individuals. As anonymity becomes increasingly unavailable, marketers will know exactly who is receiving their advertising messages. Martech targeting techniques will, therefore, be used in adtech as well. Conversely, some adtech features will become standard martech practice.

Adtech: The Road Ahead The ad spend on digital media (exclusively) will reach $329 billion in 2021, according to Zenith Media, but the adtech space is still vexed with plenty of challenges. Ad fraud, transparency, and privacy issues have always been an Achilles heel of the industry.

The expertise advertisers and publishers have can certainly tackle these challenges effectively before they are resolved for good.