What is Ad Tech? How does it work? Is it that good? What are the benefits of its use? An elaborate assorted collection of answers for these and other questions.

In this day and age, the Internet is the ultimate field of opportunities. Just think about it — everything is within a click or two. You can do practically anything. Naturally, you can make money on the web. You can make it out of any user’s move (because duh, why not?). The whole monetizing frenzy is hitting the fever pitch right now, and it’s essential to understand how to “make it” “the right way.”

The advertisement might seem like a logical answer. But it is not that simple — as the fellow said: “be prepared to enter the world stranger than you have ever imagined.” Jokes aside — you will need some serious technology to pull this off. And that is where magic words “Ad Tech” turn up.

Since the digital advertising industry is experiencing a period of bloom due to the increasing amount of time spent by consumers on digital media — it is a logical solution for an issue of monetizing traffic and a sound way of improving interaction with the user on the platforms.

What is Ad Tech?

Ad Tech (shortened “advertising technology”) is an umbrella term that describes systems of analyzing and managing tools for programmatic advertising campaigns. It covers the entirety of the ad delivery process, from selecting an ad’s subject and its position to choosing its recipient. Ad Tech solutions allow you to see the bigger picture regarding your campaign and make use of it to maximum effect.

The direct benefits of this tight knot of broad array processes are the higher efficiency of operation, which means growing brand recognition, which leads to increased profits. That indirectly leads to an expansion of interest.

However, there is a catch. Ad Tech is not something you jump on and ride. Digital Advertising is a costly thing, and you need to be sure that every dime is doing tick-tick-tick. The whole thing is hugely demanding from technical and logistical points of view. It involves an unbelievable amount of data and needs enormous computing capacities. Because of that, you need the services of Ad Tech companies who know it inside out and can turn it upside down to get through. In this sense, AdTech companies are some sort of cavalry.

The primary benefit of its use is that it minimizes budget spending and makes the whole thing much more cost-effective.

The company needs the specifically designed system for its needs to make maximum effect from the ad tech adjusted campaign. The mechanisms that process and categorize incoming data needs to be specified to a tee. It should fit perfectly to make the process of managing, delivering, and targeting the adverts as useful as possible. It helps you to make sense of the collected data and put it to use. It finds the links and connects the dots.

Basics of Ad Tech

Ad Tech’s primary field of operation lies in analyzing, managing, and delivering advertisements according to the campaign’s requirements. The endgame of every campaign is more or less the same — increased effectiveness and growing activity on the used ad space AKA the “do be do be do” part of Strangers in the Night.

The center of Ad Tech’s operation is an advertising ecosystem that consists of Advertisers, Demand-side platforms, Ad Exchanges, Supply-side platforms, and Publishers. Together they form a loop of ad supply and demand that generates revenue. More in that later on.

This effect is achieved through collecting and processing information on the user activity on a particular platform.

The importance of user data

It is essential to understand that in Ad Tech value of information depends on how said information is further collected and used. The primary source of information in Ad Tech is a consumer. His contribution is technically straightforward — it consists of merely hanging around on a particular site. However, it involves a lot of machinery behind the scenes that gather incoming information in one place.

There are two ways of getting data:

  • The third-party — when you buy it from somebody else;
  • The first party — when you gather it on your own;

The endgame is that it refines ad targeting with some fancy data spice, resulting in a substantially more inspiring bottom line. Since we still keep getting “Why? Why? Why? Why?” as if those who ask are competing in Del Shannon tribute competition — here’s snappy reasoning:

  • actual data taken from real people (with values, behaviors, attitudes, and attributes) allows delivering products directed to the target audience accordingly and not approximately.

In other words — you don’t snipe with your eyes closed and hands behind your back. But that valuable information is not lying around waiting to be picked up. It needs to be collected — and it happens pretty much in the same manner as bees collect nectar.

What kind of User Data feeds the Ad Tech Industry?

Thorough and through and through the study employing user tracking (among other things) form the foundation of an ad campaign. Subsequent reaction of the consumer to the campaign leads to further developments. Not only that, but it also helps to calculate the best area for placing ad content.

Among the parameters monitored are:

  • Referring sites — from where the user came from;
  • Overall journey (user experience) on-site — including mouse cursor movement;
  • Events (scrolling, clicks, highlights, media views, other stuff);
  • Search queries;
  • Time of session;
  • Behavior on site:
  • Contextual and thematic preferences to specific topics and pages;
  • Various interactions with the page’s content (downloads, etc.);
  • Transitions to another place through links and ads;
  • Demographics (if not blocked or obscured);
  • Consumer’s gear (browser specs, ad-block on or off, etc.);
  • Interaction with ad content;

There can also be direct feedback (comments, etc.), but it is purely optional, and usually, it is incredibly insufficient.

While gathering these kinds of information can be considered stretching the limits of user privacy — it also allows us to deliver much more relevant and useful content to the user, making the case of a more pleasant user experience with a couple of benefits.

Even though that breakdown makes it seem like a relatively little thing, it is millions upon millions of various events. And that amount of information needs some serious power to be handled properly.

How Ad Tech uses user data?

One of the primary “weapons” used by Ad Tech is retargeting. It is a way of bringing the users back to the site after they left. This method works with the expressed intentions of the users that were registered by the system. It shows ads connected to it throughout the user’s subsequent journey through the web.

This information helps to make ads closely connected to the customer’s interest. Usually, it is one of the two — it is either based on the context of a session and / or preferences of the user. As a result of accordingly adapted content, the ads’ value to the customer increases, and so are the chances of his reaction to it.

You can read more on the subject of retargeting here.

However, the collected data on its own is unstructured and needs to be sorted out. To do this — the data transfers from the site to the Data Management Platform (aka DMP). Its purpose is to go through, analyze, and categorize incoming data. This feature helps to segment the audience and optimize the campaign correctly. Also, DMP ties together activity and incoming results of the campaign into one relatively easy-to-follow interface where it is.

After sorting out the data — it goes to Ad Server, which operates the ads through the ad spaces and directs specific ads to specific users. That is where retargeting kicks in. Data on user interaction with ads are also being collected and sent to DMP. That allows the campaign to adjust according to incoming results.

The basic scheme of Ad Tech operation looks like this:

  • Monitoring of User activity and behavior on-site;
  • Data from the website transfers to Data Management Platform where it undergoes sorting, categorizing, and segmenting according to set specifications;
  • After that, the segmented data goes to Ad Server, which delivers appropriate and relevant ad content to the user. It may be:
  • Personalized according to user behavior and traits;
  • Contextual — based upon user activity;
  • Monitoring of user activity on the ads;
  • Ad Campaign adapts to incoming information and collects the cream of the crop.

If done right — Ad Tech maximizes the efficiency and profits of the campaign.

How Ad Tech generates Revenue?

Revenue is the end goal of any ad campaign. After all — it is all about money. You invest some into something to get out of more than you have spent. Ad Tech ups the stakes considerably by making the process of interacting with ads part of money-making. It is achieved by the diverse system of monetizing where every player involved gets his cut for his services.

One of the most significant innovations brought in Ad Tech is the clarification of the balance of responsibilities in the ad campaign. There are three notable players in Ad Tech:

  • Advertisers — the ones with the adverts. DSP is Advertisers middle-man to the Ad Exchange
  • Publishers — the one with spaces for adverts, i.e., ad inventory. SSP is the Publishers middle-man to the Ad Exchange
  • Ad Exchanges — these serve as mediators between advertisers and publishers. Ad Exchanges operate through DSP and SSP to both sides of the operation. The primary purpose is to provide connections, communication to each of them.

Monetization occurs according to the selected business model. Its general operation includes specific rates divided between involved parties — advertisers, publishers, platforms. In any case, — everyone benefits from everyone.

The most common and useful models are:

  • Cost per impression — more often tied with cost per thousand / cost per mile. Preferred by ad publishers more than advertisers. Usually combined with cost per click ratio;
  • Cost per action — when users more directly interact with ad content, i.e., cause conversion. This process furthers into cost per install, which directly deals with consuming the product;
  • Cost per click — splits the risk between the publisher and the advertiser. Best used for contextual-based content. CPC later evolved into click-through rate — revenue based on the number of clicks divided by the total number of impressions served throughout the campaign;
  • Cost per lead — when ad content brings contacts with consumers;

In conclusion

One of the significant advantages of using Ad Tech is integrating the whole toolset into a single system. Numerous automation and conjunct workflow enable more precise and expedient audience targeting. Thus, it is possible to collect more diverse data that will result in highly relevant and accurate inciting ads.

However, this aspect doesn’t solve the issue with the ads’ quality, which is an entirely different story.

It is important to note that there is no magic behind Ad Tech — it all depends on skills and the ability to use them correctly. The primary scope of operations is leaning on tried and tested solutions and trustworthy platforms. This approach is reasoned by two things: the need to keep the information safe from leaking and the need to stay away from the frauds.

Writer, translator.

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