Your ultimate guide to digital Advertising Technology (AdTech)

AdTech, or Advertising Technology, covers the software, platforms, and tools that publishers, agencies, and advertisers use to run digital ad campaigns. It is what allows the open web to operate as a marketplace, one in which billions of ad impressions are transacted daily. This guide sets out what AdTech is, the processes and platforms that make it work, and the way those components connect.

Key takeaways

• The entire advertising technology ecosystem is built around a single purpose: connecting advertisers who want to reach high-value audiences with publishers who want to sell their inventory at the best possible price.
• Programmatic media-buying, real-time bidding, header bidding, and cookie-syncing automate what was once a slow, manual process.
• Each AdTech platform plays a distinct role in the value chain. Understanding what each platform does and how they integrate is essential to building a stack that delivers measurable results.
• Strategic selection and integration determine business outcomes. The competitive advantage in digital advertising is determined by how effectively they are chosen, connected, and managed.

The AdTech fundamentals

Let’s start with the fundamental question: Why do we have AdTech anyway? What exactly is the purpose of having a complex system of platforms and technology for advertising?

In a nutshell, advertising technology brings together advertisers and publishers in a way that helps both sides get what they want and need:

• Advertisers (Successful ad campaigns targeted at high-value audiences)
• Publishers (Ad inventory sold at the best possible price)

In essence, this has always been the point of advertising, and the relationship between the advertiser (demand) side and publisher (supply) side goes back as long as the concept of advertising has existed.

The first online advertisement, which set off what has since grown into a multi-billion-dollar industry, appeared on October 27, 1994, on a site called HotWired. The ad ran for roughly three months and posted an average click-through rate of 44 percent. For comparison, banner ads today land somewhere between 0.02 and 2 percent.

Keeping in mind that all the various elements of the AdTech ecosystem exist to meet the needs of either the advertiser or the publisher, let’s analyze what the different platforms are and how they work together.

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How AdTech processes meet demand- and supply-side needs

Let’s take a closer look at the core processes that underpin AdTech. A clear grasp of these mechanisms is fundamental to making informed decisions about technology investments and optimizing campaign performance.

1. Programmatic media-buying and –selling. At the heart of the AdTech system is programmatic media-buying (and -selling). It means an automation of the process whereby publishers sell their inventory, and advertisers (or agencies) buy it. Instead of direct contact between two salespeople, both sides use a technology platform to place an order, purchase ads, as well as select and offer an appropriate creative.
   
   How it helps: Using technology to speed up the process of buying and selling ads helps both sides keep up with the pace of digital interactions. It also makes it possible for advertisers to connect with publishers who aren’t close enough to contact them personally.
   
2. Programmatic direct. Two of the main varieties of programmatic media-buying and -selling are programmatic direct and real-time bidding. The first of these provides a way for brands and publishers to buy and sell ads in an automated way but still in a one-to-one relationship.
   
   How it helps: Publishers welcome direct agreements with trusted brands, particularly when premium inventory is involved. They can usually charge a set (often premium) price, and they can also get more control over which ads show on their pages, which makes for a better user experience. Both advertisers and publishers benefit by being able to accurately predict their cash flow, because the price (per thousand impressions served) and inventory volume are set in advance.
   
3. Real-time bidding (RTB). The other main kind of programmatic advertising involves real-time bidding, in which ad slots are sold on an “on demand” basis, usually through an ad exchange where different advertisers have access to inventory from different publishers.
   
   How it helps: Real-time bidding originated as a means for publishers to sell their remnant inventory, and it continues to offer this advantage. RTB reduces the risk of unsold impressions for publishers. Real-time bidding also helps publishers monetize their audience data by letting them connect with advertisers who want to target the publisher’s traffic based on that data.
   
4. Header bidding. As an improvement to the waterfall auction process used to connect multiple demand sources on the publisher’s site, header bidding eliminates the sequential prioritization of demand sources. It gives all advertisers an equal chance to “see” the inventory being sold and bid on it.
   
   How it helps: By removing the preferential treatment involved in waterfall auctions, publishers have the opportunity to make sure that they receive all the possible bids for an ad slot and, therefore, truly get the highest price. Advertisers get an equal chance to reach their target audiences if they are willing to pay the highest price.
   
5. Cookie-syncing and data exchange. Because advertisers and publishers track their traffic separately (using cookies), the process of cookie-syncing and data exchange allows different AdTech tools to communicate with each other. Without this ability and the data involved, digital display advertising would be one big guessing game.
   
   How it helps: Without cookie-syncing, publishers would struggle to attract advertisers, as advertisers would have no way of knowing whether a site visitor was worth targeting. Cookie-syncing helps advertisers optimize their campaign spend by buying only that inventory which will be viewed by valuable potential customers. Audience tracking also enables advertisers to attribute sales and conversions accurately, as well as measure overall campaign performance.

How AdTech platforms meet the needs of advertisers and publishers

Let’s take a look at the key components of the advertising technology ecosystem, the building blocks that power every digital ad transaction.

Ad server

To place ad creatives on their site, publishers can use a first-party ad server (if there is a direct publisher-advertiser relationship) or a third-party server that is used by advertisers to serve and measure campaigns across multiple publishers and sites.

How it helps: Ad servers help automate the process of placing the ad creative in the ad slot that needs to be filled when a visitor loads a publisher page in their browser. The ad server can also count impressions and, in the case of clicks on an ad, redirect a visitor to an ad landing page and record the conversion if the visitor decides to perform a certain action on that page. Without ad servers, the whole process of media-buying and selling would have to be done manually by modifying the HTML code of the website.

Supply-side platform (SSP)

When publishers want to serve their inventory on ad exchanges (to maximize impressions sold), they need a tool to make inventory available for bidding by DSPs. This tool is an SSP. It helps the publisher set a price floor (minimum price) for its inventory, receive, and accept bids and communicate with the DSPs involved. The SSP is also responsible for adding additional information about the visitor (if possible) so that the advertiser can tell if that person is worth targeting.

How it helps: Obviously, an SSP allows the publisher to quickly sell inventory, often non-premium, so that it doesn’t miss out on revenue. The auction process that the SSP plays a part in makes it possible for demand-side technology to make real-time decisions so they can offer the best price and helps the publisher maximize the value of audience data by matching it with interested advertisers’ campaigns.

Content Delivery Network (CDN)

When creatives are served on web pages or in apps, they should be loaded quickly and smoothly (all in the time it takes to open the page). A CDN hosts the creatives until the moment the browser receives the ad markup from the advertiser’s ad server, and there is a call for a creative.

How it helps: A CDN further supports the real-time delivery of ads, accelerates page load times, and contributes to an improved user experience. With the advent of programmatic video ads (with much bigger creative files), the role of a CDN becomes even more important.

Ad networks

Ad networks (such as Google AdSense or Taboola) bring together ad inventory from several publishers and give advertisers a wider range of choices than they would have in a direct, one-on-one relationship with one publisher. Ad networks can support both open auction buying and “guaranteed” media buys.

How it helps: Advertisers gladly make use of ad networks to increase the reach of their campaigns. With the help of media-buying platforms such as a DSP and in conjunction with a DMP for data-driven decisions, advertisers can access an ad network’s inventory and make intelligent choices about what to buy.

Ad exchange

Ad exchanges are platform that connect advertisers (with their DSPs) and publishers (with their SSPs) and allow them to make an ad inventory transaction. Exchanges also offer publishers the possibility of setting up private marketplaces for restricted media-selling.

How it helps: Ad exchanges allow publishers to get rid of any remnant inventory while getting the highest possible price. Advertisers can serve targeted, real-time campaigns through ad exchanges, taking advantage of the data that SSPs provide about the visitor who will be viewing the ad.

Agency trade desk

Ad agencies play a central role in the AdTech ecosystem, as many brands rely on them to plan, execute, and manage their advertising campaigns. Agency trade desks buy ad inventory, repackage it, and connect their clients with publishers using DSP-like technology.

How it helps: Advertisers who work closely with their ad agencies expect them to be able to help serve targeted campaigns, gather insights, and manage their budgets. For brands that don’t want to invest in a DSP or a large in-house team to handle their campaigns, trade desks offer the advantages of stand-alone AdTech tools (with knowledgeable staff who are qualified to run campaigns on them) plus the possibility to connect with premium publishers that might not work directly with the brand itself.

Data Management Platform (DMP).

DMPs are becoming a more essential tool for both advertisers and publishers. They combine data from online and offline sources to create specific audience segments for ad targeting, track campaign data, connect with ad exchanges to buy ads, and report data on campaign success.

How it helps: A DMP can help a publisher monetize their audience data by letting them gather behavioral data about site visitors, segment it, and sell the segments through a DSP. Advertisers benefit from a DMP because they can combine 1st-party and 3rd-party data to find out exactly who to target when buying ad space. They can also use it to measure which audience segments perform the best and analyze their customer journey.

Demand-side platform (DSP).

Demand-side platforms are the tools that advertisers use to communicate with ad exchanges and ad networks to bid on advertising space. They can integrate and import data about which audiences are targeted from a DMP, as well as information from the supply side about what kind of user the ad is being served to.

How it helps: Without a DSP, advertisers would lack the means to place informed, data-driven bids on the inventory made available by publishers and ad networks. They wouldn’t know whether their ad spend was delivering value. Additionally, they might be cut out of the 3rd-party data available through a DSP, meaning that they would have no way to intelligently extend the reach of their campaigns beyond the 1st-party data they possess.

Perhaps most importantly, thanks to a DSP, brands get access to worldwide ad inventory through a single platform. They don’t have to coordinate with AdOp teams from individual publishers and can manage all their campaigns across a range of channels in one place.

FAQ

What is the meaning of AdTech?

AdTech, short for Advertising Technology, refers to the software and platforms used to plan, buy, deliver, and measure digital ads. It powers the entire AdTech industry and connects advertisers with publishers.

What are AdTech examples?

Common examples include DSPs, SSPs, ad exchanges, DMPs, ad servers, and agency trade desks. Leading AdTech companies like Google or Magnite provide these tools to advertisers and publishers worldwide.

What are AdTech solutions?

AdTech solutions are the platforms and services that automate ad placement, audience targeting, and campaign measurement. They help businesses deliver the right message to the right person at the right time.

How does AdTech work?

AdTech helps advertisers and publishers exchange inventory through automated auctions. It makes it possible to use customer data to match each impression with the most relevant ad.

Your next move in the advertising technology ecosystem

The advertising technology ecosystem has become increasingly complex, and this reality is likely to persist in the future. Yet the processes and platforms covered in this guide likely form the foundation of your digital strategy, and how you select and integrate them will define your campaign performance. In the end, with the right approach, AdTech becomes your ultimate competitive advantage.

Let’s discuss how AdTech can drive growth for your business. Book a consultation with our AdTech specialists.