What is AdTech and How Does it Work?

The latest marvels in data analytics make it easy to create, manage, and expand advertising efforts to convert more consumers, optimize budgets, and measure their footprint. Brands and marketers try to make their digital content visible on social media, eCommerce websites, mobile apps, and other places where their target users spend time. 

With more and more users joining the internet, you can hardly find a company that hasn’t tried promoting its offerings online. Users have also gotten used to seeing digital ads everywhere. But the big question is whether there’s an understanding of the inner workings of ad serving, selling, and management process.

Luckily, today we are going to illuminate these issues and decompose them into manageable chunks of information. Our years-long practice with expert AdTech solution development enables us to explain the processes in depth and define AdTech for novice entrepreneurs and experts from adjacent fields.

What is AdTech industry's current state? The previous couple of years were not the best ones from the perspective of investments in the Ad tech ecosystem. In 2023, AdTech projects represented only a 7% share of all new businesses funded by venture capital. If we take the statistics for the last 5 years, we will see a 29% drop in AdTech startup funding.

Nevertheless, after not very successful years, investors seem to have regained their interest in AdTech when it comes to early-stage financial support. Experts predict that in late 2024, the industry will see a row of significant mergers and acquisitions.

But we can already observe some positive changes in this sphere today. In February 2024, France-based Vibe.co announced raising $22.5 million in funding for its project, which it describes as “the Google Ads of streaming.”

Although the flow of investment dollars has reduced over the previous years, the interest in AdTech and its ecosystem of tools is on the rise. Analysts expect that the industry will likely grow from $518 billion in 2023 to $1.1 trillion by 2032. It means that the CAGR for the period from 2024 to 2032 will be almost 9%. As for ad spending in digital advertising, it is expected to reach $870.85 billion by 2027, according to the data provided by Statista.

What is Advertising Technology?

It relies on insightful data and employs specialized algorithms to serve the correct inventory type to the right end user. In this context, answering the question “What is ad tech company?”, we can say that it offers such solutions.

Besides, such companies can provide brands and agencies with a big picture of their campaigns' outcomes and equip them with the functionality to fine-tune their performance. However, this approach to campaign management took time to appear.

Buying advertising spaces used to be manual but has evolved into an automated process. Traditionally, specialists needed to decide which ads to buy and how much to pay for them one by one. This approach worked for some time, but connecting the dots between buyers and sellers became hard when the number of impressions started to surge.

That is where programmatic advertising had to step in and put the ad selling and buying process on automation.

Most of the programmatic deals today occur using two approaches: Real-Time Bidding (RTB) and Direct Deals.

• Real-Time Bidding uses algorithms to determine the price of the inventory, taking into account the demand and supply of the ad space, data that is available for a particular use, and their campaign goals in a real-time auction. Advertisers place their bids for an impression opportunity and let the system choose a winner that places the highest bid. 
• Direct Deals occur when publishers want to sell premium ad slots to advertisers directly and provide guaranteed impressions for them.

What is the AdTech Industry's Importance?

AdTech platforms enable interested parties to navigate the complexity and scale of daily online interactions on every medium and device. Massive amounts of information obtained from each online ad campaign require timely processing to be put to actual use. Programmatic advertising continues to acquire new adopters, and new phenomena like OTT TV advertising are gaining traction in the digital space.

What value does the AdTech technology hold in this regard? Let’s find out.

1. Optimized ad investments. With AdTech, brands and advertisers have complete control over the inventory and ad placements. Relying on first-party and third-party data and relevant contextual information, they can collect valuable insights about their prospects and determine their interest in the product or service. Eventually, it helps allocate ad budgets more efficiently and reach better ROI from every advertising dollar.
2. Optimized performance of campaigns. Thanks to AdTech, planning and measuring advertising efforts become more transparent and efficient. Advertisers can access a 360-degree view of their online campaigns, assess what’s working and what isn’t, and optimize each effort using verified information.
3. Customized impressions on each ad channel. Imagine you are on TikTok and see an ad that hits on target and responds to your current preferences. Next, you return to your favorite mobile app game while driving in Uber and see the exact ad you’ve seen before. Then you come home and watch the documentary on YouTube while the same ad that seems to be copy pasted from previous sources strikes back. Sounds frustrating?

What is Ad Tech's response to this situation? It does away with the universal way of ad serving. Instead of displaying generic content across different media, AdTech platforms help serve unique brand messages depending on where their target audiences are. This also implies refining ad campaigns depending on the stage of each consumer on the shopping journey and re-engaging the users that have previously seen and liked a piece of advertising.

To make the most of the AdTech value proposition, one must navigate a complex ecosystem of AdTech tools and follow its changes. Let’s have an overview of the basic AdTech stack, which includes a set of moving parts united by the umbrella of digital advertising.

Integral Parts of AdTech Ecosystem

Demand-Side Platform

Demand-Side Platform (DSP) stands for a complex digital platform that facilitates the media buying process for advertisers, agencies, or any other interested party via RTB. DSPs can purchase the inventory from various Ad exchanges and SSPs in one interface on an impression-by-impression basis.

The automated nature of DSPs means that media buyers can set up, manage, and adjust advertising campaigns without manual work. All these activities can happen in real-time and eliminate any sort of disruption when it is necessary to pull badly performing campaigns or invest more resources into the successful ones. 

Besides, media buyers can fine-tune targeting by pulling the data from Data Management Platforms or data brokers and adjusting bidding rules, optimization parameters, and multipliers in a single system.

Supply-Side Platform

Supply-Side Platform (SSP) is an AdTech platform that directly helps publishers sell their inventory on Ad Exchanges and Ad Networks. By using this type of solution, publishers can consolidate available inventory, manage their distribution, and sell ad spaces at the most optimal prices. 

A supply-side platform is equivalent to a DSP and is part of the RTB flow. Publishers can connect to Ad Exchanges and DSPs and open up ad impressions to numerous potential buyers at scale. This enables publishers to gain the best yield for their inventory without manual effort, as the process is automated and efficient.

In most cases, SSP connects with DSP using an OpenRTB protocol and transacts directly through RTB auctions.

Ad Exchange

Ad Exchange is a dynamic  AdTech marketplace that unites media buyers and sellers and facilitates transactions between both parties. It is a standalone platform that mediates between the buy- and sell-sides and implements programmatic purchases using RTB mechanisms.

In other words, advertisers use a DSP to decide which ad slots to acquire and at what price, while publishers use an SSP to sell ad inventory to the highest bidder. These two platforms are then matched up in real-time using an Ad Exchange.

An Ad Exchange provides rich functionality for both media buyers and sellers. Not only it enables an instant bidding process, but it also grants full control over the inventory for both parties in the following ways:

Ad Server

Ad Server is a platform responsible for housing information about ads and delivering them to a publisher’s online property - a website, an app, or any other digital resource. Before a user’s web page loads, an Ad Server instantly decides which ad to serve and where it should be based on ad campaign settings.

On the one hand, Ad Servers can meet the goals of ad inventory owners and help monetize their digital properties. Such Ad Tech industry platforms are known as first-party Ad Servers. They provide an interface for publishers to connect with demand partners, add an unlimited number of ad slots, track the efficiency of ad placements, and much more. Apart from standard features, modern-day first-party Ad Servers provide the following features:

• Set targeting, priority, and pacing options;
• Integration with direct partners and RTB platforms such as SSPs and Ad Exchanges;
• Analytics and forecasting tools, etc.

Apart from first-party Ad Servers, advertisers can use third-party Ad Servers to manage campaigns at scale. It is a demand-side platform counterpart that enables advertisers to match the most relevant creatives with the publisher’s available ad slots. Here’s what functionality it has to offer to provide value to advertisers:

• Support of pricing options, including custom ones;
• Various targeting options;
• Optimization of creatives and campaigns;
• Standard and advanced capping options;
• Integration with direct and programmatic partners;
• Templates for ad generation
• Analytics dashboard covering campaign performance, etc.

Data Management Platform

Data Management Platform (DMP) is a platform that collects, stores, normalizes, segments, and activates customer and ad campaign data for publishers and advertisers. Advertisers and marketers use DMPs as a central place for storing and managing information related to individual brands while having a systematic view of all the data at their disposal.

There are different ways for DMPs to collect the data since multiple data sources can exchange information with the platform. The most common ways include pixel and tag tracking, piggybacking, server-to-server data integration, and first-party data anonymizing and onboarding. 

With a DMP, it is easy to build and analyze customer profiles, identify buying intents and develop the most appropriate tactics for reaching target customer types. The data collected with DMPs don’t have personal information but rather contain anonymous profiles of each customer.

Next, advertisers can activate this data by integrating audience information with other AdTech tools and platforms, so they know how and where to serve certain pieces of advertising.

Customer Data Platform

Customer Data Platform (CDP) is a platform that retrieves third- and first-party audience data from various online sources and builds persistent customer profiles, aka single customer view (CSV). A CDP collects PII (personally identifiable information) and can contain demographic, transactional, and behavioral data.

When users provide consent to collect and use their personal data, specialists can unify and organize it into customer profiles. Next, marketers and advertisers can push this data to the rest of the marketing systems and tools to take action on it. For that, it is necessary to reformat the data to make it understandable for other systems and make it possible to add new data from multiple sources on a regular basis.

AdTech Main Players

An Ad Tech industry overview would be incomplete without mentioning those involved in a loop of supply and demand and consuming the ad content as an outcome of media buying and selling processes. Here’s what the list of key AdTech players looks like:

• Publisher prepares and posts content via online sources like websites, blogs, podcasts, video platforms, mobile apps, etc.  These sources come with a certain amount of available ad space, which Publishers sell to anyone interested in promoting their products or services to the publisher’s readers or audiences.
• Advertiser is a buyer of an ad inventory on a publisher’s online source. As the AdTech definition implies, an Advertiser is a party that generates the demand for an ad space or slot and takes care of its acquisition and tracking. In simple terms, an Advertiser can be anyone willing to promote their services or products to target audiences. 
• An advertising agency is a company that specializes in the development and promotion of ad campaigns for their clients. An advertising agency may have a department that focuses on buying ad space. Programmatic media buying is an area of specialization for agency trading desks (ATDs). This unit is responsible for optimizing, acquiring, and allocating programmatic advertising.
• Ad networks are businesses that aggregate publishers’ ad inventory in one place and enable direct communication and negotiation between a group of media buyers and a group of sellers.  
• An AdTech solution provider is a company that develops, promotes, and delivers an AdTech platform or a tool to designated business users. As AdTech trends constantly evolve, solution providers are on the constant hunt for the most optimal routes to address their clients’ challenges.
• Users comprise Internet audiences that consume online ad content generated by AdTech ecosystem elements.

What’s Geomotiv Approach to AdTech Development?

Our AdTech developers will be in charge of every aspect of platform development. We are ready to implement technologies for real-time bidding, data collection processing, and targeted ad serving. Vast experience with data-intensive solutions and in-depth knowledge of the AdTech industry allow us to provide the most optimal combination of technologies and tools for your next project. 

We’ll now describe how we can develop an AdTech solution from start to finish for your particular business needs.

1. Gathering requirements.
   We start by collecting all the information related to the project to identify the objectives and future vision of the software solution. This stage includes eliciting initial requirements and detecting potential technical challenges and limitations. 
   As a client, you may wonder: What is the Ad Tech industry missing right now? What value can our company bring to this domain? At this stage, we’ll help you decide what type of Ad Tech product you can develop and what market needs it can potentially satisfy.
2. Defining tech stack.
   Like with any software development project, selecting the right tech stack is necessary to meet the project’s goals. Depending on the complexity of projected features and functionality, we’ll go through a careful selection of programming languages, databases, software architecture, and frameworks.
3. Assembling functional specifications.
   Our team gets down to documenting the functionality of the future AdTech solution. It includes information about the project scope, risks, assumptions, user stories, site maps, process flows, exceptions, and so on.
4. Solution development and launch. 
   We leverage the development plan that’s been derived in the previous stages to design, build, and release the solution on production servers. Here’s what the team is up to:
   - MVP development, UI/UX design, testing;
   - Initial user interaction with the developed software;
   - Collecting initial feedback to refine the software.
5. Post-launch iterations.
   We continue the development of your AdTech platform using the best practices of the Agile methodology. As a rule, this involves 2-week development sprints. In the course of each sprint, we build new features and present them to stakeholders for further approval. We take into account the continuous feedback from users and stakeholders to decide what features to build in the next iteration.

Our Case Study: Digital AdTech Platform Development

Goal

To develop a standalone programmatic AdTech Platform that would bring together media buyers and sellers and eliminate legacy procedures from the supply and demand chains. The envisioned platform would comprise the functionality of SSP, DSP, and Ad Exchange.

Work Steps

1. Geomotiv founds Adoppler, a product subsidiary unit within the company. Adoppler team gets down to the development of the AdTech platform from scratch;
2. The platform becomes an Ad Exchange working on top of the OpenRTB protocol; 
3. The platform adds SSP capabilities, collecting inventory from supply channels;
4. Adoppler becomes a standalone company with its own in-house team of specialists;
5. The platform adds DSP capabilities and enables media buyers to transact with media sellers;
6. The platform adds an advanced reporting module.

Result

Adoppler developed a horizontally scalable system that is currently handling 200,000 QPS. Adoppler Trusted Marketplace is a full-stack AdTech solution that supports programmatic, direct, and third-party demand and supply partners on any platform or device. 

We’ve introduced the solution to international markets and serve diverse business needs of clients from different verticals:

AI in AdTech

Today, Artificial Intelligence is one of the technologies believed to have the greatest potential to change the world around us. AdTech is among those industries where AI-powered tools are actively being implemented to ensure the highest efficiency of the offered solutions.

Here are a couple of examples of how AI can be used to enhance AdTech products:

• Predictive analytics for ad placement. AI tools can analyze huge volumes of data, including page content, user behavior, previous ad performance, etc. Based on the results of such analysis, these tools can help publishers detect the most valuable ad placements to boost engagement and conversions. 
• Bidding optimization. AI can change the existing approaches to bid management. Instead of manual adjustments and limited rule-based decision-making processes, advertisers can now rely on AI algorithms. These algorithms process auction dynamics, user signals, and historical data to maximize the publisher’s advertising yield/ad revenue.
• Personalization. Thanks to Artificial Intelligence, advertisers and publishers can successfully implement hyper-personalized ads and enhance user experience. AI tools can analyze user preferences, interests, and browsing behaviors to deliver ads that directly address each person's existing needs.
• Fraud detection. AI is good at detecting trends and identifying deviations from set patterns. That’s why such tools are often applied to detect various fraudulent activities, such as hidden ads or the manipulation of impression metrics.

Final Word

Efficient and reliable solutions to support online media trading is the need of an hour for publishers and advertisers alike. If you wonder: “What is an AdTech company value for them?” we hope this article has shed light on your doubts and questions.

AdTech solutions address the numerous challenges of programmatic trading. Demand-side platforms, Ad Exchanges, and Data Management platforms serve as a foundation for streamlined and automated ad inventory sales and purchases. Moreover, AdTech vendors enable successful campaign management, optimization, and maximized profits for all sides of the trading process.

Feel free to connect with us to learn more about how the latest innovations in the AdTech ecosystem can help you maximize the efficiency of your ad campaigns!

FAQ

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What does an AdTech do?

AdTech is the term for a range of tools used by advertisers and publishers to plan, manage, and analyze digital ad campaigns. The key AdTech meaning is to increase the efficiency of online advertising.

What is an example of AdTech?

Google Marketing platform is one of the most well-known solutions of this kind. It is a comprehensive suite of tools that can help businesses plan, execute, and analyze their digital advertising efforts.