What is AdTech? Basics of The Ad Tech Ecosystem Explained
Ads get a bad wrap. Justifiably – they’re often annoying and intrusive.
The average person is estimated to see anywhere between 5,000 to 10,000 ads per day.
Brands spend billions on getting their digital advertisements seen.
Whether on TV, mobile, or even a digital billboard, ads are a prominent part of everyday life.
What’s less prominent about ads is the process used to serve them.
Many people are deeply intrigued by the process of how ads are served online.
In fact, by the end of this guide, you might even be one of them!
Ever wondered what’s going on behind the scenes of that video ad you saw on YouTube?
This guide is your backstage pass to understanding the ad tech ecosystem.
- What is ad tech?
- Who cares about the ad tech industry (and why)?
- Platforms & Tools of The Ad Tech Ecosystem Explained
Ad tech (or “adtech”) is shorthand for “advertising technology”. It refers broadly to the software, systems, platforms, and tools used by publishers, advertisers, and other parties to buy, sell, and manage digital advertising.
The assembly of an “ad tech stack” refers to the selection of various ad platform and tool components that will be used to accomplish objectives within the advertising ecosystem.
For publishers, an ad tech stack involves selecting tools that optimise ad revenue – while for advertisers, it means finding platforms that offer the most cost effective way to distribute ads.
Most ad tech platforms are connected in some way to the programmatic advertising ecosystem – a series of technologies which allow ads to be bought and sold automatically.
Ad tech is indisputably a complicated and confusing landscape to understand – with one engineer interview from industry authority Digiday stating “a lot of it is taped together stuff”.
Despite its bewildering nature, global digital advertising spend stands to exceed US$600 billion by 2022 – making ad tech an enigma worth unravelling for many businesses.
Ad tech and mar tech are often confused as being the same.
Mar tech (or “martech”) is shorthand for “marketing technology”. It refers broadly to software, systems, platforms, and tools used by businesses to market their products and services.
But what’s the difference between “marketing” and “advertising”?
Broadly speaking, marketing is concerned with the identification of customer profiles, and determining how to best deliver key messaging to engage with those customers.
Advertising, on the other hand, is concerned with how to most effectively promote a product or service through the use of paid or “sponsored” channels.
Marketing is a “top level” strategy and practice that involves advertising as one of its component processes.
Some examples of marketing practices and the mar tech tools that support them include:
- Social Media Marketing – Supported by Scheduling & Management Tools
- Email Marketing – Supported by EMS (Email Marketing Services)
- Content Marketing – Supported by CMS (Content Management Systems)
- Interactive Marketing – Supported by ChatBots and Live Chat Systems
Ad tech tools are a little bit different.
It’s not as easy to make a connection between specific ad tech tools and their use-cases.
All functions of advertising ultimately seek to buy and display ad media to users, but there are a wide array of different options available to advertisers to accomplish this objective.
Furthermore, ad tech tools are used not only by advertisers looking to market their products and services, but also by publishers and other third-parties like advertising agencies.
To really understand how different ad tech tools work, it’s important to first gain an understanding of who uses them and what they’re trying to accomplish.
A lot of players have skin in the ad tech game – a fast moving environment with a rapid rate of changes that must be adapted to when compared to other marketing industries.
Keeping up with the current trends in ad tech is important to different parties for different reasons – with different aspects of the ecosystem being the focal point for certain groups.
(The ad tech tools and platforms mentioned in this section will be explained in the next section of this guide.)
The ad tech ecosystem is of importance to publishers because the various tools and platforms they connect to directly influences how much revenue they’re able to generate.
Publishers keep up with the latest advancements and trends in ad tech for a number of reasons, always being on the lookout for:
- The most cost-effective platforms for serving ads (those which have the most affordable subscriptions, and those which take the lowest cut of their revenue).
- New techniques and practices followed by the industry, such as header bidding (this also includes trends in how advertisers wish to engage with their target audiences).
- Networks and business relationships that align well with their typical visitorship.
Publisher ad tech stacks often involve the use of:
- An Ad Server (Referred to as a “first-party” ad server when used by publishers)
- One or more SSPs (Supply-Side Platforms) / Ad Exchanges
- Ad Networks
- DMPs & CDPs (Data Management Platforms & Customer Data Platforms)
- Inventory Scanning & Ad Quality Tools
Advertisers are purchasers of digital advertising space. Buying ad space through automated and manual sales processes allows them to promote their products and services online.
The ad tech ecosystem is important to advertisers because the methods they use to purchase ads have a significant impact on customer engagement and return on ad spend.
Advertisers gain a great deal of value from staying up to date on ad tech, and often focus their attention on:
- Reaching target audiences while securing the best CPC (cost per click) prices on the programmatic advertising platforms they use.
- Audience engagement trends to reach the most effective channels and devices.
- Contacting high-quality publishers to establish direct advertising supply sources, without the use of intermediary technologies and parties (which add to expenditures).
- Maintaining effective ad campaign tracking and reporting records.
Advertiser ad tech stacks often involve the use of:
- An Ad Server (Referred to as a “third-party” ad server when used by advertisers)
- One or more DSPs (Demand-Side Platforms)
- Ad Networks
- DMPs & CDPs (Data Management Platforms & Customer Data Platforms)
- Inventory Scanning & Ad Quality Tools
Advertising agencies, also sometimes referred to as “creative agencies” or simply “ad agencies”, are businesses dedicated to managing the ad trafficking process.
Ad trafficking refers to the complete process needed to launch an ad campaign – from planning, creating media elements and key messaging, through to ad distribution.
Some advertising agencies also manage the broader aspects of marketing (functions outside of advertising) within their service offerings.
Advertising agencies typically focus on designing ad creatives (media elements that make up a finished advertisement), copywriting, and sometimes ad distribution to various outlets.
Agency Trade Desks (ATDs) are a service offered by some advertising agencies.
ATDs are a service that specifically manages programmatic ad buying for their clients.
In other words, ATDs are responsible for the operation of DSPs (demand-side platforms), and are experts at using these interfaces to conduct successful programmatic media buying.
ATD teams are also responsible for monitoring ad campaigns – making adjustments to bidding strategies, audience targeting, and compiling proof-of-value reports for their clients.
The service offerings of ad agencies vary greatly, depending on the size of the agency.
While some ad agencies cover the “full stack” of distributing ad campaigns and managing programmatic media buying, others focus exclusively on creative and planning services.
Advertising agency ad tech stacks sometimes involve the use of:
- An Ad Server (typically provided and used by larger ad agencies)
- One or more DSPs (depending on the scope of an ATD’s services – an ATD may be hired to use a DSP owned by an advertiser, or run campaigns using their own DSPs)
- DMPs & CDPs (depending on which DSP is being used to execute media buying)
- Inventory Scanning & Ad Quality Tools (assuming an ad server is being used)
Ad networks amalgamate and sell publishers’ ad inventory within the ad tech space.
They operate by establishing deals with publishers, bundling their available ad inventory into categories, and offering to sell that categorized inventory to interested advertisers.
Ad tech is of importance to ad networks because they act as an intermediary party within the ecosystem – establishing business relationships with both publishers and advertisers.
While many of the most popular ad networks have become very similar to the function of DSPs, ad networks typically still operate using manual sales and negotiation processes.
Ad network ad tech stacks typically involve the use of:
- An Ad Server (referred to as a “third party” ad server when used by ad networks)
- Sometimes SSPs & DSPs (these are only used by ad networks that offer programmatic inventory – a somewhat complicated concept we’ve covered here.)
- DMPs & CDPs
Not surprisingly, companies that provide ad tech solutions to their clients are interested in the ad tech ecosystem!
Ad tech service providers constantly face new challenges as technologies and policies evolve.
For example, the end of third-party cookies has forced the necessity of many DMP service providers to rebrand their service offerings into CDPs to meet the rising popularity of first-party data strategies.
For ad server, DSP, and SSP providers, keeping up with the latest techniques like header bidding and trends in how publishers and advertisers are interacting with one another allows them to develop new tools to better meet client use-cases.
In many cases, ad tech service providers also face interesting choices while developing their products and services too, as many technologies overlap with one another.
It’s not uncommon to see service providers that offer a combination of different ad tech tool solutions under the same brand – which while convenient, produces a difficult situation for brands trying to distinguish and describe their role in the market.
That’s right – ad tech is sometimes even of interest to regular internet users.
Primarily, the internet is concerned with how changes to the ad tech ecosystem will influence their online browsing experience, as well as how their information privacy will be protected.
The discontinuation of third-party cookies was primarily an evolution which took place because of privacy movements from the general public.
Additionally, users are concerned with ad relevance and a positive experience online.
In a past survey and report compiled by business wire, 73% of consumers feel that contextually relevant ads compliment their content experience.
Because of these consumer values, ad tech has adapted, and techniques like contextually relevant advertising have become a popular technique for engaging users with ads that seek to provide a positive browsing experience.
There were a lot of acronyms mentioned in the previous section.
For anyone new to ad tech, these terms can understandably be overwhelming.
Here’s a breakdown of the most popular ad tech tools and platforms:
An ad server is a piece of ad tech used by publishers, advertisers, ad networks, and sometimes ad agencies.
As the name implies, the role of an ad server within the ecosystem is to deliver ads to a publisher’s website.
There are two “types” of ad servers, first-party ad servers and third-party ad servers.
First-party servers are used by publishers, while 3rd-party servers are used by other parties in the ecosystem (advertisers, ad networks, and ad agencies).
Both “types” of ad servers originated around 1995-1996 with the intent to help all parties to more effectively manage the process of storing and delivering ads to website visitors.
In the modern ad tech ecosystem, ad servers are a versatile component found in almost every tech stack – responsible for ultimately delivering an ad to a user visiting a website.
SSP stands for “supply-side platform”.
SSPs are interfaces that publishers use to connect to the programmatic ecosystem – or in other words, the platform that they use to automatically sell their remnant (ad space not sold through direct deals) inventory.
In the modern ad tech ecosystem, major SSPs also include an ad exchange as one of the components that comprise the platform – though traditionally, ad exchanges were separate platforms that SSPs connected to.
SSPs offer a robust set of options for publishers to control their ad space – including setting price floors, determining which advertisers can bid on ad space, and determining which ad spaces (or “zones”) should display which ads (along with many other options).
DSP stands for “demand-side platform”.
DSPs are the advertiser counterpart to SSPs. They allow advertisers to connect to the programmatic ecosystem, allowing them to configure an automated ad buying process.
In the modern ad tech ecosystem, DSPs are considered to be an evolution of ad networks, though due to the confusing nature of ad tech and its history, this is a transitionary process that’s still gradually taking place over time.
DSPs offer a wide range of options for advertisers to manage their advertising campaigns, including adjusting the frequency at which certain ads are displayed to the user (frequency capping), defining budget and bidding strategies, and targeting certain audience categories.
DMP stands for “data management platform”.
The traditional role of DMPs in ad tech has been to store data about users as a third-party, and cross-reference that data by connecting with the database components found in SSPs and DSPs – creating a holistic user profile which can be accurately targeted by advertisers.
However, with third-party cookies being phased out in the near future, DMPs are forecasted to all but “go extinct” when the update is made.
Many DMPs are pivoting and rebranding to CDPs in order to remain relevant within the ad tech ecosystem.
CDP stands for “customer data platform”.
Like DMPs, the role of CDP is to store data about users. However, CDPs are focused on storing first-party data, meaning the data is collected directly by the businesses that are engaging with users that visit their websites
In the modern ad tech ecosystem, CDPs are forecasted to serve as a “stop gap” solution to the end of third-party cookies, and may serve as a replacement to DMPs moving forward.
While other solutions are actively being sought within the ad tech industry, first-party data strategies have become an immediate “go-to” answer for publishers and advertisers that seek to retain access to data that lets them target their audiences accurately.
Also referred to as “brand safety” tools, ad inventory scanning and ad quality tools are sometimes offered as features within ad servers, or as standalone software solutions.
The role of ad quality tools is to ensure that security and undesirable ad content themes are addressed and controlled, safeguarding the reputation of publishers and advertisers.
These types of tools and features focus on scanning ads for malware prior to serving them, and preventing ads with illegal or otherwise inappropriate subject matter from being displayed on a website.
By scanning the ads being served to a website, publishers are able to maintain a positive reputation as trustworthy content producers and website owners.
Every participant in the ad tech ecosystem has different objectives.
Understanding all of the different tools and platforms is just the beginning of assembling a successful ad tech stack.
Maximizing yield optimisation, like any software purchasing process, requires giving consideration to the following aspects of each platform in the tech stack:
- The subscription price and fees associated with serving ads
- The uptime reliability of the service provider’s technology
- The development roadmap for the platform (especially important in ad tech)
- The responsiveness and expertise of support teams (especially important in ad tech)
- The service’s audience reach (relevant to SSPs and DSPs)
Due to its complicated and ever-changing nature, the ad tech ecosystem is a subject that always benefits from consultation and discussion prior to moving forward with a new vendor.
We’d love to share a conversation with you. Ask us a question today!