Ad Tech: What is Advertising Technology and Why is it Important?

Advertising technology, or Ad Tech, has become a staple in the advertising industry for digital ad buying and selling. It underpins the digital marketing strategy used by advertisers to reach their target audiences and facilitates the buying and selling of online advertising.

By handling transactions between buyers and sellers in real-time, it allows advertisers to optimize their ad spend and publishers to maximize their ad revenue.

In this article, we’ll explain the various components that make up the Ad Tech infrastructure and how they work together for digital advertising.

What is Advertising Technology (Ad Tech)?

Advertising technology includes software and tools that are used to find, target, deliver, and measure online advertising campaigns. Rather than having to individually negotiate with multiple publishers, Ad Tech allows marketers and ad agencies to streamline the process of buying digital ads across multiple sites at the same time.

Not only does Ad Tech facilitate the buying process, but it provides the tools marketers need to define target audiences, place the campaigns using real-time bidding (RTB), acquire ad space, and measure performance. This allows marketers to highly target their campaigns across sites to a segmented audience and then optimize campaign performance.

Advertising technology guides the process of programmatic advertising using:

  • Demand side platforms (DSPs)
  • Supply side platforms (SSPs)
  • Agency trading desks (ATDs)
  • Ad servers
  • Ad networks and ad exchanges

Ad Tech makes it easier to plan and optimize campaigns, manage budgets, and evaluate ROI

What are the Different Types of Advertising Technology?

Working together, these tools make up the entire programmatic infrastructure for online advertising. It allows advertisers to buy a variety of ad formats on multiple publishers, track attribution, and use automation to optimize online advertising placements. For publishers, it handles the transactions to sell ad space and optimize the user experience.

The ecosystem works efficiently to deliver ads when users visit a website or app, matching buyers and sellers together in real-time. It works exceptionally well but can be a bit confusing. So, let’s break down the key components and the most common ad tech stacks being used.

What is Programmatic Advertising?

Programmatic advertising is the umbrella term applied to the process of buying and selling digital media ads. It includes an array of options available for advertisers, from website ads to mobile ads to streaming video ads and more. Whether marketers want to place display ads or video ads, ad tech companies use programmatic ad tools to make it all happen.

For publishers, programmatic means selling ads at scale, allowing the Ad Tech and ad servers to handle the buys and delivery. This lets publishers monetize ad space, augment their own in-house sales teams, generate revenue from otherwise unsold ad units, or use programmatic as their primary source of revenue.

Ad Tech is integrated with buying, selling, and delivery systems using multiple providers.

What is a Demand-Side Platform (DSP)?

A demand-side platform is an automated system for the buying process for advertisers to be able to buy various ad units, including display ads, mobile ads, or video ads. Advertisers define their campaign objectives, targeting options, demographics, and pricing on the DSP platform. Budgets are developed and creative elements are uploaded.

The demand-side platform then connects with supply-side platforms to find available ad inventory that is available and matches the criteria. When a match is found, a deal is struck.

All of this happens with real-time bidding in milliseconds when a user visits a site or app and an ad call is initiated. It’s a cost-effective and efficient way for advertisers to purchase inventory with precision targeting.

As ads are served, DSPs can also report and manage performance in real-time. Instead of waiting for a campaign to conclude and measure results, advertisers can make adjustments while campaigns are running to optimize performance.

What is a Supply-Side Platform (SSP)?

While a DSP facilitates the ad spend for advertisers, a supply side platform (SSP) handles things on the publisher’s side of the equation. An SSP automates the selling of digital ad units.

Driven by publishers who want to sell their own inventory, a DSP allows a publisher to maximize their revenue by offering their ad units to a significant number of potential buyers, including advertisers they would otherwise not have a relationship with. This could include display advertising, video advertising, or other types of ad units.

Publishers can decide what ad inventory to offer, set bidding ranges or floor prices, and let the automation handle the transactions. 

For publishers, programmatic advertising using ad networks provides a mostly passive way to generate ad revenue with a significant return on investment.

What is an Agency Trading Desk (ATD)?

An agency trading desk (ATD) is a digital marketing management platform used for media buying and media planning. ATD tools are used alongside DSPs to provide additional services to help manage an advertiser’s programmatic media purchases.

An ATD provides additional tools for account managers, designers, and software developers to work on behalf of their clients to further refine media buying. While operating similarly to a DSP, there are key differences. For example, agency trade desks often purchase ad inventory from ad exchanges for reselling.

The AdTech industry uses ATDs as an additional ad manager, sitting between the advertiser and the DSP.ATDs often work side-by-side with multiple DSPs to provide more inventory options for advertisers.

Agency trading desks offer a range of services, including deeper levels of:

  • Planning: Targeting, placement, flight dates, budgeting, and pricing models (CPM, CPC, etc.)
  • Execution and Optimization: Launch campaigns and optimize performance
  • Reporting and Analytics: Detailed tracking and performance metrics

ATDs also include Ad Tech and marketing specialists that handle campaigns for brands rather than doing it themselves.

What’s the Difference Between Ad Tech and MarTech?

There are only slight differences between ad tech and MarTech and many consider them all part of the same marketing ecosystem.

Ad Tech includes the systems used to buy and sell ads and get them in front of their intended audience, using DSPs and SSPs.

MarTech is the technology used to execute digital marketing strategies that encompass a brand’s entire marketing. MarTech includes things like social media accounts, email marketing, content marketing, lead generation, demand generation, and lead nurturing.

MarTech also leverages a data management platform (DMP) that collects and manages audience data, including first-party, second-party, and third-party data along with intent data to help create buyer personas and ideal customer profiles (ICPs) to narrow targeting. This allows marketers to personalize outreach to buyer groups and individuals to maximize conversions, using automation to do it at scale.

What are the Benefits of Using Advertising Technology?

Using advertising technology can massively improve a digital ad campaign and simplify complex processes for advertisers and publishers.

Targeting and Placement

AdTech solutions help advertisers deliver the best content to the right place and people, so money isn’t wasted. Advertisers can plan campaigns and manage the results with real-time visibility into ad placement and performance.

These tools also allow campaigns to scale across large audiences on multiple sites or apps that advertisers would otherwise not be able to access.

Publishers can accept buys from more advertisers without having to sell them directly and have access to a large pool of advertisers.

Deep Audience and Buyer Insights

Advertising technology also brings together data from various sources to improve targeting. For example, Amazon has a wealth of data on customer behavior due to the massive amounts of people that shop on their eCommerce platform. This information can help refine campaigns to make them more effective when using Amazon’s DSP. This allows ad placements to highly targeted and segmented audiences to maximize efficiency even outside Amazon’s walled garden.

For publishers, these metrics can help to optimize pricing and ad units and understand buyer behavior. 

For example, publishers can track the impact of price floors or see trends based on changes to the ad inventory being offered. In addition, these insights can help you find the best ad placements on your website to maximize revenue.

Conclusion

As you can see, programmatic advertising includes a variety of platforms that are all part of the Ad Tech ecosystem — from agency trading desks and data management platforms to DSPs, SSPs, and ad networks.

The advertising industry has come to rely on Ad Tech to handle the buying and selling of ads at a scale that would otherwise be unattainable. Because transactions occur in real-time as visitors visit websites and apps, it provides a seamless experience for users while algorithms manage the negotiations between buyers and sellers.

Advertisers can highly target their campaigns and automate the buying process. 

Publishers can optimize their ad units and automate the selling process. As such, Ad Tech has become an indispensable tool for both advertisers and publishers.

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