The Mandel Marketing Guide to Ad Tech
In recent years, technology has affected all sectors of business and nearly everything else in the world, from communication and medicine to learning and entertainment. Sometimes technology has positive effects; sometimes negative. Advertising, like almost everything else related to commerce and work, has also been affected by technology, and in a major way. If you’ve ever wondered how some big (and small) brands are able to target their audience so specifically, as well as make effective sales from this hyper-targeting, then you’re already thinking about ad tech and marketing automation, which plays a huge role in much advertising these days.
Ad tech is short for Advertisement Technology, and in this guide, we will dig deep into the the past, present, and predictable future state of ad tech, the key differences between AdTech and other traditional means of advertising, as well as the benefits and the drawbacks of investing resources and money into this sector.
The Definition of Ad Tech
So what is meant by “ad tech,” anyway? We hear it everywhere, but the term can be vague. This is because “ad tech” encompasses a large swath of tools and software that are used by thousands of brands and companies\ to plan, strategize, and manage all their digital activities to reach the right audience and make sales. The world of digital advertising is becoming more complex, and more businesses are looking for effective ways to reach their target audience. This need is what is being met by the ad tech industry.
The ad tech industry is rapidly expanding and does not seem to be hitting the brakes anytime soon. A report from Global Data predicted the probability for ad tech to drive the internet advertising industry to $1 trillion by the year 2030.
Evolution of Ad Tech
Before the advent of ad tech, advertising and media buying were done manually, with measurements such as GRPs and Nielsen Ratings, showings (for outdoor ads), and third-party magazine audits. The first online display ad was a banner ad that appeared on HotWired website in 1994. The ad lasted for three months, and during its term, about 44% of viewers clicked on the ad.
The process back then was a direct sales process between the publisher and the advertiser. The advertiser would reach out to the publisher and buy ad space on the publisher’s website. This ad space was to be paid by CPM (cost-per-thousand), where a certain price was to be paid for every 1000 impressions the ad made.
The advertiser would send an Insertion Order to the publisher, which contained details such as:
- The objectives of the campaign
- Line items with campaign execution terms (pages to display the ad, the size of the banner to use, etc.)
- Business terms (Price)
The Current State of Advertising Technology
It is 2022, and a lot of digital advertising–perhaps the majority–is now largely done completely automatically with the help of Ad exchanges. An ad exchange is a digital marketplace that automates advertisement deals between advertisers and publishers. With these advancements, publishers can automate, optimize and maximize ROI.
The process of automatically buying and selling ad space is known as Programmatic Advertising, and this is a huge sector for ad tech. Why? Well, here are some of the benefits of Programmatic Advertising:
- Scaling ability: Once an ad inventory is available, an advertiser can purchase ad space from it. This has removed all limitations for advertisers related to audience reach. It’s like traditional media planning and buying on a massive scale, with steroids and protein powder.
- Efficiency: Because programmatic advertising is strategically streamlined, advertisers can be sure that their money is being put to the most effective use. Advertisers now have access to a wider group of publishers. Also, because their ads are well-targeted (using more targeting technology that is from direct publishers as well as other digital networks), they can generate strong ROI (relative to less-targeted media).
- Flexibility: Programmatic advertising allows advertisers to adjust their ads in real-time. This means that from impressions collated; advertisers can find lapses and make corrections to improve the effectiveness of their ads. Real-time optimization has been one of the most important parts of ad tech and digital advertising since the beginning.
The Future of Ad Tech
We have a handful of predictions about advertising technology–but the gist is that it’s going to keep growing and evolving, since it has already proven so effective and efficient. The digital world is constantly changing, and this, of course, is going to affect the ad tech industry. However, according to statistics, the total digital time is expected to surpass 8 hours per day by the end of 2022. With expectations like this, advertisers are tripling their efforts on ad tech. A study by Statista has shown that digital ad spending will reach $616 billion in the United States this year (a 15% YOY growth).
Ad tech has a very intriguing future. Ads are expected to reach the target audience at the right time and within the best context for the situation. As technology is advancing, it is also affecting end-users. Before this time, servers were fully capable of tracing and storing people’s data, and this made it easier for ads to target a suitable audience.
However, there is a catch: people are not very comfortable with their data being traced and stored. A recent Apple study was conducted, and about 73% of Apple users prefer not to have their data traced and stored. This means that the ad tech industry will need to innovate other strategic and creative methods of reaching its target audience without raising privacy concerns and other red flags.
Some of the predicted methods that the ad tech industry might implement in the future include:
Contextual Targeting
This will allow advertisers to display their products on the most relevant web pages based on search keywords.
Fee Transparency Calculator
The International Advertising Bureau has a calculator that fully evaluates ads for advertisers and publishers. Advertisers and publishers need a transparent medium, and the IBA has provided this. Both advertisers and publishers will be able to access all fees, costs, and charges.
CTV (or “Connected TV”)
Also known as OTT or “Over The Top” technology, Connected Television continues to gain popularity and is without a doubt going to be one of the next big thing for ad technology. CTVs are televisions that are connected to the internet. Research has shown an 81% increase in the time spent watching CTV. The numbers are rapidly surging, and advertisers are looking for effective ways to capitalize on this surge.
Increase in Ad Fraud
Unfortunately, not everyone in this business is a good egg. With the increase in digital technology and fragmentation in the industry, ad fraud is also predicted to be on the rise. Ad fraud includes fake traffic, fake leads, fake clicks, and ineffective ad placements. It is the act of deceiving advertisers into believing that the fake activities going on on the website is real user behavior when in fact, it is not.
If you’ve ever bought Google Search ads, you’ve probably experienced click fraud. It happens, and there are a lot of companies doing great work to try to stamp it out, or deal with it in other ways.
Even Better Geo-Targeting
With the help of programmatic geolocation signals, advertisers can easily combine data from online and offline usage to connect better to their audience.
The Ad Tech Ecosystem
The ad tech ecosystem can broadly categorized into two areas:
- The demand side, which includes the advertiser, the agency, brands, and other companies
- The supply side, includes the publishers, websites, ad networks, and technology companies
But wait. there’s a lot more to it.
Here are some definitions of the other elements in the ad tech landscape:
Demand-Side Platform (DSP)
A demand-side platform allows advertisers to buy inventories from different ad exchanges and supply-side platforms. It is a single, organized marketplace that is open to advertisers and gives them access to inventories where they can buy videos, display ads (banner ads), and mobile ads. Advertisers use DSP to search for the right audience at the right time within their budget.
Once you set up a DSP, there is no need to negotiate prices with publishers. You can simply set your CPM and your target preferences and launch your campaign. DSPs allow you set bidding rules and optimization tools that can help you effectively run your ads without close monitoring.
Supply-Side Platform (SSP)
On the opposite side of the DSP is the SSP. An SSP is used by publishers to automate the process of selling digital ad impressions. It is driven by the publishers that are looking to sell their inventories. With SSPs, publishers, ad networks, and ad exchanges can sell impressions to a wider range of buyers at a price that is suitable for them. SSP works on real-time bidding, making it unnecessary to carry out lengthy negotiations of prices and terms with advertisers individually.
All you need to do as a publisher is embed an ad tag. This notifies the browser to request an ad in that spot on the website. The publisher has a data list, and when a tag is forwarded to the SSP, it immediately selects a suitable ad from the DSP, following the data list.
Agency Trading Desk (ATD)
These are tools used by the many media agencies in the world to aid their planning, buying, and managing of the advertisement process. Organizations and individuals that do not have a DSP installed may use ATD services. Most media agencies use ATD, while individual advertisers or smaller agencies use ITD (Independent Trading agencies). Agencies can manage the programmatic purchases across many channels.
Ad Server
As the name implies, an Ad server provides ads to websites or apps. They are also responsible for reporting the performance metrics of the ads they provide. They serve as a bridge between advertisers and publishers, launching and managing ad campaigns.
Ad Exchange
Ad exchanges are used by ad tech providers to connect a DSP to an SSP. The ad exchange is a medium for transporting information between both parties. Publishers and advertisers usually have no access to the information shared in the ad exchange. The traffic and inventory of the advertisers pass through the ad exchange on the way to the publishers and vice versa.
Data Management Platforms (DMP)
So many acronyms! A DMP, or “Data Management Platform,” sources data from websites, apps, social networks, CRMs, and other places. They collect this data, organize them and activate first, second, and third-party audiences. With these data, DMPs build detailed customer profiles that drive targeted advertising.
DMPs allow an organization to understand its customers effectively. As more data are collected, marketers begin to lose track of them and do not know what to do with them. The data is no longer effectively used. To capture these valuable data, transform them into effective insight, and use the insights to drive results, DMPs need to be used.
Programmatic Advertising
Somewhat of a overarching term to encompass much of what we’re discussing in this article, programmatic advertising is the use of technology to buy and sell digital ad space. Before this, ads had to be organized and sent out manually, and the process was complex, time-consuming, and inefficient. Programmatic advertising is still quite complex, but it connects publishers that have a website with ad space to sell with advertisers that need ad spaces to push their brand on the internet space in a quick and efficient manner.
Big Data Management
“Big data” is a very broad concept. It includes the policies, procedures, and technology that is used to collect, store and organize large data. Big data has a huge impact on the digital advertising industry.
Big data enables you to effectively use the information received from a form to make the right decisions and solve problems. Here are some examples of key challenges that advertisers face that can be handled using big data:
Targeting The Right Audience
Big data allows smart segmentation. You can divide your audience into several groups using specific metrics and then target them accordingly.
Displaying The Correct Ad to That Audience
Big data allows hyper-personalization. You can discover useful information like geographic location, demographics, and preferences of the audience. 60% of the market believes that personalization is a key factor in improving campaign results.
Measuring The Results of Your Campaign
Big data enables robust attribution models. Attribution gives a clear evaluation of conversion rate and how it is distributed across all channels. Advertisers are more interested in the actions of people that lead to them clicking on the ad link. With this knowledge, they can predict results more accurately and put out more effective ads targeted at the right audience.
Improving (Optimizing) Campaign Performance
Most times, there is so much data collected, and if one is not careful, you will be left with unstructured data that has limited uses. With the help of big data, you can convert unstructured data to structured data that can be easily understood and used to the advantage of both the advertiser and the publisher.
The Benefits of Ad Tech
Ad tech simplifies digital ad campaigns and makes them more effective. Broadly speaking, here are some key benefits of ad technology:
Ad Buying Efficiency
With the help of programmatic advertising, the speed and scale of the ad buying process are greatly increased. Campaigns can be properly planned before they are put out into the world. Also, advertising technology you can better predict the result of the marketing campaign overall. There are several ad tech tools available, and these tools can be used by advertisers to track their ads, know the results the ads are generating, and effect changes in real-time to improve the effectiveness of the ads.
Better Use of Funds
Advertisers can deliver the right content to the right audience at the right time. Ads like this are bound to produce results, thereby maximizing the funds put into the entire advertisement process. The advertising system is controlled now, so advertisers can plan their advertisements according to their budget. There is no guesswork here; if you plan your ads properly, you will see good results.
Ad Targeting Relevancy
With ad technology, advertisers can collate large amounts of data from different sources. Users will be able to see relevant ads based on their demographics, geographical locations, interests, and preferences. Ads like this have a higher chance of getting results. Users are even grateful to come across these ads as they help them in their daily activities.
The Drawbacks of Ad Technology
Despite much of this article extolling the virtues of ad tech, there are some drawbacks–or at least potential red flags–we need to consider. For example:
The Rate of Ad Fraud
Let’s face it: fraud exists, and it’s not going away. According to research, the total cost of ad fraud in 2022 is $81 billion, and this rate is predicted to increase to $100 billion by 2023. The landscape of programmatic advertising is filled with bots. A lot of ad buyers are worried about the high rate of ad fraud. Because ad tech is an automated activity, there is an increased chance of ad fraud.
For advertisers who base the success of their ads on impressions and views, this could easily be fake. Each year ad frauds cost advertisers billions in revenue. Including Ads.txt is an effective method of minimizing bot responses.
Inconsistent Measurements For Some Agencies and Ad Tech Companies
49% of companies are struggling with inconsistent measurement and metrics in programmatic advertising. Some advertising teams are not certain about the metrics to measure. Other teams are uncertain about the metrics that carry the most weight. Optimization of performance is a general problem in marketing areas.
However, because ad tech uses artificial intelligence and machine learning, it might get a bit complicated. In addition, there is a current shortage of data scientists presently, and this negatively affects the ad tech industry because the industry will lack the ability to effectively measure tangible and real insights from a large amount of data available.
Too Much Data (aka “Analysis Paralysis”)
The availability of too much data can sometimes make it difficult to leverage this data effectively or to make decisions. The actual winning is the correct conversion of these data into insight, and this is not happening fast enough to accommodate the growing number of data available. Holding on to these data is quite expensive and can cost the organization a lot of money.
Many Platforms Have Difficult or Overly Complex UI (User Interface)
Some people have complained that the UI of most ad tech platforms is too difficult to be understood quickly. They require extra time to take it all in before understanding how to use it. The UI of the platforms and tools for ad tech should be easier, or else we’ll end up with a small niche of folks who are able to use it, thereby abrogating the benefits of a seemingly-democratized media and marketing technology and putting it back in the hands of specialized agencies who know how to use it.
Final Thoughts on Ad Tech
Despite what we discussed in the previous section, we believe that ultimately, ad tech is an excellent addition to the world of advertising and marketing, and has a lot of potential. The industry is constantly evolving, and there is a high probability that many of these drawbacks will be solved in a few years. (Of course, almost assuredly new red flags will arise.)
In the meantime, using ad tech in your business can help you reach the right audience with the right ads at the right time, and this is the ultimate goal of every business. For more information or to discuss how Mandel Marketing can help you grow your business, give us a call at (512) 655-9179 or email us directly at sales@mandelmarketing.com and we’ll respond ASAP.