Everything You Need to Know About Adtech

Before programmatic advertising, buying ad space took a ton of time and effort. 

Advertisers would choose which websites or platforms they wanted to place ads on, contact publishers directly, and begin the sometimes lengthy process of negotiating a deal. Once an agreement was made, the advertiser would issue an insertion order specifying the details of the ad campaign. The publisher would serve the ads, and the advertisers would wait for the results. 

Buying ad inventory at scale was difficult unless you were a massive agency or brand, and advertisers lacked the targeting capabilities and insights needed to get the most out of campaigns.

Now, advertisers can use advertising technology (adtech for short) to deliver content at the right time to the right customer with less wasted ad spend.

For that, they often turn to programmatic advertising platforms, which automate the buying, selling, and placement of digital ads. 

As a result, US programmatic digital display ad spending is expected to grow three times that of non-programmatic digital display ad spending in 2024, with more than 9 out of 10 digital display ad dollars being spent programmatically.

Whether you’re new to programmatic advertising or need a refresher, here’s everything you need to know about adtech, its benefits, and its future.

What Is Adtech?

Adtech refers to the software, tools, and systems that agencies, brands, and publishers use to facilitate the buying, selling, delivery, and analysis of digital advertising. It includes a range of technologies that help target, deliver, and measure the impact of ad buys and online advertising campaigns.

Adtech vs. Martech: What’s the Difference?

Adtech describes the technology and platforms used to plan, execute, and measure digital advertising campaigns across various channels. Martech, on the other hand, primarily refers to the technology used to manage and improve marketing processes, customer relationships, and the overall customer experience. 

Examples of martech include content management systems (CMS), customer relationship management (CRM) software, email marketing software, analytics and reporting tools, social media marketing tools, and marketing automation solutions.

The main difference between adtech and martech is who they target and where their ideal customers are in the marketing funnel. Adtech is often used to build brand awareness, generate demand, and increase conversions, while martech can help manage and nurture customer relationships. Advertisers often use adtech and martech solutions together to streamline processes, optimize their funnel, and achieve campaign goals more efficiently. 

Common Types of Adtech

The adtech ecosystem comprises several technologies that streamline the digital advertising process. Here are some of the most common ones:

Demand-Side Platforms (DSPs)

DSPs are adtech platforms that allow advertisers, agencies, and brands to buy digital ad inventory programmatically from websites, mobile apps, and other digital channels.

This is done through real-time bidding (RTB), which uses machine learning to automatically bid on ad impressions that match an advertiser’s precise targeting criteria. Unlike a walled garden, DSPs provide access to the open internet and aren’t restricted to purchasing ads through a single platform or ecosystem (for example, Google, Meta, or Amazon). 

With the right tech partner, advertisers can manage their ad campaigns and deliver highly targeted, personalized ads more efficiently, increasing engagement and conversions.

Supply-Side Platforms (SSPs)

SSPs are used by online publishers and digital media owners, such as websites, mobile apps, and streaming service providers to manage, sell, and optimize their ad inventory. They help them connect with multiple ad networks, ad exchanges, and DSPs to maximize revenue by automatically selling ad space to the highest bidders in real-time auctions.

Data Management Platforms (DMPs)

DMPs collect and organize different types of audience data, including 1st-party and 3rd-party data, to build detailed user profiles. These profiles are then shared with other adtech platforms, like DSPs and ad exchanges, enabling advertisers to target audiences more accurately and expand their campaign reach.

Customer Data Platforms (CDPs)

A CDP is an adtech solution that collects, integrates, and stitches together customer data from multiple sources, including online and offline interactions. It creates comprehensive customer profiles that integrate with martech and adtech platforms for personalization, targeting, and marketing automation.

Ad Servers

Ad servers work with DSPs and SSPs to manage the distribution, tracking, and reporting of digital ads. They store ad creatives, such as display banners and videos, and deliver them to websites, mobile apps, and streaming services. Ad servers select which ads to display and help ensure that they are delivered to the right users at the right time.

Ad Exchanges

Ad exchanges are centralized platforms that connect advertisers with publishers. They facilitate the automated buying and selling of digital ad inventory through real-time bidding. Advertisers access these exchanges via DSPs, whereas publishers make their inventory available through SSPs.

Understanding the Adtech Ecosystem

Adtech automates and streamlines digital advertising—from targeting, creative asset building, and ad buying to delivery, measurement, and optimization across channels and devices. 

Here’s a refresher on each player’s role in the process:

• Advertisers are companies that want to promote their products or services. They create advertisements and allocate budgets for their ad campaigns. Their goal is to reach potential customers and drive sales.
• Publishers are websites, apps, or other digital properties that provide the space where ads get placed and shown to users. Their goal is to monetize their available space and earn revenue when ads are displayed on their platforms.
• Adtech platforms, like DSPs, SSPs, and ad exchanges, act as intermediaries between advertisers and publishers, helping facilitate the buying, selling, placement, measurement, and optimization of ads in real time.

Here’s a step-by-step breakdown of how the whole process works:

Step 1: Campaign Creation and Targeting

An advertiser wants to promote a new product or service and sets a specific goal for their campaign, whether it’s increasing brand awareness, driving website traffic, or maximizing conversions. 

The advertiser uses a DSP to create and manage the ad campaign, setting the targeting criteria and budget to ensure the ads reach the desired audience at an ideal price. They may also use a DMP to refine their targeting.

Step 2: Ad Inventory Management

A publisher makes ad space available on their website, app, or streaming service and uses an SSP to manage and optimize the sale of their ad inventory to potential buyers through an ad exchange.

Step 3: The Ad Request

A user visits a publisher’s media property. The SSP detects which ad space is available and sends an ad request to the ad exchange, including the type of inventory available and pseudonymized details about the user.

Step 4: The Bidding Process

The ad exchange facilitates a real-time auction, where multiple DSPs bid for the available ad space on behalf of the advertisers. Each DSP evaluates the ad request based on the advertiser’s targeting, campaign goals, and budget, and submits a bid request for the ad space based on the criteria.

Step 5: Ad Delivery

The ad exchange selects the highest bidder from the participating DSPs, and the winning advertiser’s ad is displayed to the user on the publisher’s website, app or platform. Ad servers manage the delivery of the ad and track user interactions, providing performance data to both the advertiser and publisher. 

If the user clicks on an ad, watches a video, or completes another action relevant to the advertiser, that information is shared with them through the DSP. 

The ad is shown to the user, and the publisher earns a certain amount of revenue based on its performance. The whole process happens in a fraction of a second.

How Programmatic Advertising Drives Adtech

Programmatic advertising is revolutionizing how digital advertising is bought and sold through increased automation, data-driven targeting, and enhanced measurability, fueling growth in adtech (display ad spend will total $261.76 billion in the US alone by 2028).

Adtech helps advertisers create more effective and efficient advertising campaigns by allowing them to:

• Segment audiences based on specific demographics, interests, and behaviours, and deliver highly-targeted and personalized ads to the right customers, improving ad relevance and user engagement.
• Automate the buying and selling of online ad space through programmatic advertising platforms and real-time bidding.
• Serve ads across various channels, such as native, display, video, connected TV, audio, in-game, and digital out-of-home.
• Measure and analyze ad campaign performance using real-time data and analytics to optimize ad spend, and ensure a strong return on investment (ROI).

Adtech Trends to Watch

It’s impossible to predict the future, especially in adtech, where recent advancements in AI and evolving regulations continue to greatly impact the industry. These four trends will undoubtedly shape adtech for the foreseeable future. 

1. 1st-Party Data and Cookieless Alternatives

Cookies are seemingly going away. With increasing privacy regulations and the ongoing phase-out of 3rd-party cookies, 1st-party data and ID-less solutions have never been more crucial for targeted advertising. 

Adtech platforms that allow advertisers to leverage them—whether through 1st-party data collected from customer interactions, website visits, loyalty programs, or contextual targeting solutions—will help advertisers deliver more personalized and relevant ads.

2. AI in Adtech

For years, AI algorithms have been used in adtech to determine optimal ad placements, bid prices, and targeting parameters to help advertisers maximize conversions and ROI. But AI and machine learning are increasingly used in everything from customer segmentation and fraud detection to generating snappy ad copy and creative assets. 

As StackAdapt co-founder and CEO Vitaly Pecherskiy recently told EMARKETER, “not everything has to use AI to create value,” but it can offer marketers “a more intelligent way to strategize around their campaigns.”

3. CTV Trumps Traditional Linear TV Advertising

People are spending more time watching CTV. According to EMARKETER, CTV is the fastest-growing major ad channel in the US of all the formats they track. The rise of CTV has fueled demand for specialized ad platforms and DSPs tailored for programmatic CTV advertising. 

Adtech solutions that provide a premium inventory, support interactive and engaging CTV ad formats like shoppable ads, and address the unique challenges of CTV advertising, such as audience identification and fraud detection, will become indispensable for marketers aiming to maximize ROI and stay competitive in the evolving digital landscape.

4. White-Label Solutions and Consolidation

EMARKETER analyst Evelyn Mitchell-Wolf says that adtech is “long overdue for a cycle of consolidation,” citing factors, such as the rising demand for transparency and control, the lingering effects of cost-cutting initiatives, and the collapse of vulnerable identity providers.

Adtech companies can differentiate themselves by offering more specialized, transparent, customizable, and personalized services to help clients enhance their advertising capabilities or open up additional revenue streams on the platform and agency side.

Next Steps

Now that you know more about adtech, what it can do, and where it’s headed in the future, read our primer on martech. 

Want to see how StackAdapt can help you achieve your marketing and advertising goals? Request a demo to learn more.