Digital advertisement has surpassed 50% of total advertisement spending in 2019 and it has reached more than 60% as of 2021. Parallel to that, since 2020, investment in new advertisement technologies and companies in this space has doubled. In this research, we listed the essential tools of the advertisement technology ecosystem in 2022 and what technologies are used for each one of them.
What does the ad tech ecosystem mean for advertisers?
Ad tech ecosystem stands for the tools and technologies that enable digital advertisement end to end from planning, buying, and tracking. Today’s digital advertisement sphere is very cluttered. The emergence of big social media platforms creates ecosystems that are independent from other publishers. Therefore, we need to examine the ad tech ecosystem with the distinction of where the ad is shown: the big platforms, namely walled gardens, or other digital publishers.
1. Walled Gardens
Major platforms like Facebook, Google, or Amazon offer an end-to-end process in which advertisers need to go to the ad management platform of these websites, plan and launch the campaign, and track the performance directly on the tool. For the sake of allowing independent measurement, these platforms allow third parties to track their ad performance if an advertiser works with such partners, however, they already offer their measurement reports which provide a handy view for the advertiser to manage all steps at one interface.
Figure 1. Ad management platform
2. One-to-one Deals and Programmatic
Digital advertisement is not limited to walled gardens. For the rest of the digital publishers, advertisers either manage one-to-one deals directly with the platform or use programmatic advertising as an automated solution. The ad tech ecosystem mostly revolves around programmatic since one-to-one deals is more of a traditional way of buying advertisement.
What are the essential ad tech tools for advertisers?
1. Ad Verification and Tracking Tools
The ultimate objective of digital advertisement is to reach and engage with target audiences. However, showing an ad doesn’t guarantee that these two objectives are achieved. Unlike traditional advertisement, digital advertisement has more ways to measure whether an ad was delivered to the right audience, free of ad fraud and had a chance to be seen. These measurements are standardized by Media Rating Council and Interactive Advertising Bureau (IAB). For example, for a digital video to be counted as “viewable”, 50% of the creative should be on the device screen and played for at least two continuous seconds.
Ad Verification and Tracking Tools to Consider
Out of the three essential tools we explain in this guide, this step may be the most feasible one to build in-house solutions for. Firstly, walled gardens report these metrics themselves and if the majority of an advertiser’s digital ad spending is on these platforms, it may be sufficient to use their built-in reporting. For other platforms out of walled gardens and also to track walled gardens with an independent tool, advertisers can work with independent ad measurement providers such as. A final option advertisers can consider is building an internal tracker by leveraging web crawling. This technology downloads the content of the websites where an advertiser’s ad is shown and compares it to the expected standards of the advertiser.
2. Data Management Platforms (DMPs) and Customer Data Platforms (CDPs)
DMPs store third-party customer data, namely cookies, and cross reference cookies to show a digital ad to the targeted audience. The first step was for an advertiser to collect and store cookies of online users that fit their targeted audience on their DMPs. The following step was for this advertiser to buy digital ads from a platform and match these cookies with the audience of this platform as much as possible. The data collected at this level is completely anonymous.
Third-party cookies are phasing out with the latest personal data collection regulations in multiple countries and major companies like Google, advertisers looking for new solutions for personalized advertisement. One solution is to leverage CDPs, which is the platform that enables advertisers to store and use customer data that is collected with customer’s explicit content. As seen in Figure 2, the level of data collected at CDP is much more granular than a DMP since the data is collected upon the customer’s consent. On the other hand, data collected in CDPs is likely to be much less than DMPs, because not all customers give consent to share their data or even spend time to read and approve data collection terms.
Figure 2. The difference between a CDP and DMP
DMP and CDP Solutions to Consider:
DMPs and CDPs are essentially databases, however, building this level of functionality for a database is burdensome work to build in-house. A data management platform for advertisement should maintain API connections with platforms you collect customer data from and also DSPs that you send the data to (more to come on that in the next section). Moreover, these databases also need to operate complex queries and classification tasks to group customer data based on different segments and audiences. Finally, especially for CDPs that leverage personal data, there is a high level of security and anonymization requirement. Therefore, we recommend businesses leverage external DMP / CDP services that provide this costly technical infrastructure to multiple clients and offer a more affordable solution.
3. Demand Side Platforms (DSPs)
Demand side platforms are the mediums that the advertiser launches and manages their digital ads in an automated manner. Advertisers can specify a certain audience, budget, and duration for their campaign which they upload the creative for. They can make detailed adjustments such as determining the frequency of how many times a unique user can see their ads or filtering certain publishers and media platforms out of mediums that they want to appear. DSPs are the key platform that enables programmatic advertising to keep its promise and deliver the most optimized digital ads for advertisers. DSPs manage the bidding process, displaying digital ads at the desired format and to the desired audiences at the least possible cost.
DSP Solutions to Consider:
Out of the three essential tools we explain in this guide, DSPs may be the most difficult one to build in-house. DSPs are the outlets for digital ads to be shown on multiple platforms. In programmatic advertisements, the exact platforms to show are not even predefined because the process optimizes where to show the ad with the minimum price and maximum potential reach. Building a DSP requires building a relationship with media platforms and publishers. Moreover, it also requires building an in-house optimization algorithm for ad placement. Therefore, we recommend businesses to consider working with external DSP solutions.
For more on marketing technology:
For more on the latest technology trends in marketing, check out our research in:
- Digital Transformation in Marketing: Top Trends & Technologies
- Marketing Automation in 2022: Benefits, Trends & Challenges
- Top 3 In-house Web Traffic Analytics for Marketing
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This article was drafted by former AIMultiple industry analyst Bengüsu Özcan.
Cem has been the principal analyst at AIMultiple since 2017. AIMultiple informs hundreds of thousands of businesses (as per similarWeb) including 60% of Fortune 500 every month.
Cem's work has been cited by leading global publications including Business Insider, Forbes, Washington Post, global firms like Deloitte, HPE, NGOs like World Economic Forum and supranational organizations like European Commission. You can see more reputable companies and media that referenced AIMultiple.
Throughout his career, Cem served as a tech consultant, tech buyer and tech entrepreneur. He advised businesses on their enterprise software, automation, cloud, AI / ML and other technology related decisions at McKinsey & Company and Altman Solon for more than a decade. He also published a McKinsey report on digitalization.
He led technology strategy and procurement of a telco while reporting to the CEO. He has also led commercial growth of deep tech company Hypatos that reached a 7 digit annual recurring revenue and a 9 digit valuation from 0 within 2 years. Cem's work in Hypatos was covered by leading technology publications like TechCrunch and Business Insider.
Cem regularly speaks at international technology conferences. He graduated from Bogazici University as a computer engineer and holds an MBA from Columbia Business School.
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