In the current digital era, the internet is a field of endless opportunities. Unsurprisingly, with the number of time users are spending online, the Digital Advertising sector is blooming. Owing to this, the term ‘Ad Tech’ has surfaced with many businesses looking for ways to use AdTech that will give them monetary benefits.
Did you know that digital ads in the US accounted for more than $107bn in 2018, according to the IAB Internet Advertising Revenue report? Additionally, the reports further noted that the UK advertising market is worth £13.44bn, with an increase of nearly 15% y-o-y, the majority of which coming from smartphone advertising.
So, yes, the digital advertising business is flourishing. However, what is Ad Tech’s role in it?
What is AdTech?
Ad Tech, short of Advertising Technology is a term used for systems and programs that help you manage and analyze your advertising campaigns. Basically, it covers the entire delivery process, right from the content of your ad and who it should be displayed to. Using data and analytics, Ad Tech helps businesses see the ‘bigger picture’ and helps them reach a more relevant audience, with lesser budget.
Speaking of purpose, Ad Tech basically focuses on increasing the effectiveness and managing the growing activity on the used ad space.
Ad Tech is basically at the centre of the advertising ecosystem that comprises of the following:
- Demand-side platforms
- Ad Exchanges
- Supply-side platforms
That being said, Ad Tech is only useful when there is sufficient and relevant data. Digital advertising can be extremely costly and before initiating the use of Ad Tech, you need to be sure you have the capability of running ads. The whole set-up of running ads on online platforms can be demanding and require technical and logistical expertise. Ad Tech companies do help in this scenario. With the power of data, they are able to streamline your ads and show it to those users who could actually be interested in your business.
Bottom line, for Ad Tech to work, one thing is extremely important; data, data, data.
The Importance Of User Data For Ad Tech
As mentioned previously, Ad Tech utilizes user data to analyze and create ad campaigns that are sure to drive high revenue. However, this technology can only function with user data. ‘Users’ of a business are the ultimate data required for Ad Tech to function effectively. As and when users visit sites they like, relevant data can be collected. Businesses can either buy this data or collect it on their own.
Once the data is received, Ad Tech companies, use this information to refine ad campaigns, which result in a bigger reach, while keeping the budget a minimum. Basically, by using real data from real consumers, you can direct your ads accordingly instead of approximately.
Type of User Data Needed
Initially, user behaviour is studied using user tracking. The following parameters is studied:
- Sites from where the user was directed
- Overall journey of the consumer on the website, which includes cursor movement
- The common type of search queries
- How much time did the user spend on the site?
- Did the user make any downloads or fill any forms?
- Provided it’s not blocked; demographics
- Consumer’s preferences, for example, ad-block is on or off?
- Ad content interaction
Sometimes, businesses can also choose to provide a feedback form to the consumer which is optional. However, that information is almost always insufficient. This type of consumer behaviour study is the first step. As and when the user reacts with different ads, the study is updated and further edits are made to ad campaigns.
Some arguments are made that the data Ad Tech requires and studies is on the borderline of violated user privacy. However, this is balanced as the technology uses the data to provide relevant ads to users, which will only enhance and improve their experience.
Further questions have also been raised about what Ad Tech companies do with the data collected. After all, so much data is definitely a lot of power, that can be misused.
What Do Ad Tech Companies Do With User Data?
There are many ways to utilize the data collected by Ad Tech companies, like Remarketing. However, these companies have a set structure to follow, along with certain rules and guidelines. Here is the basic flow of what happens to user data collected:
#1: User activity on site is monitored, provided the site is GDPR compliant
#2: Unstructured data is then transferred to a Data Management Platform, where it is sorted and categorized
#3: The refined data is then sent to the Ad Server, which delivers either personalized or contextual data to the user, depending on the user behaviour
#4: User interaction with the ads displayed is monitored
#5: Appropriate adjustments are made to the ad campaigns based on the newfound information
Hence, if done correctly, Ad Tech can generate a lot of revenue for your business, by simply using data.
Techniques To Generate Revenue From Ad Tech
When businesses opt to use Ad Tech for their ad campaign, the stakes have risen as consumers interacting with ads becomes part of the money-making process.
When it comes to the ways to generate revenue from Ad Tech, a different type of user interactions are divided into models. Some of the more popular and common models are:
#1. Cost Per Action (CPA)
This model is referred to when the user directly interacts with the ad and takes the desired action, i.e. make a conversion. This can also be further broken down actions that directly cause the user to consume the product, for example, downloads.
#2. Cost Per Impression (CPI)
This model is mostly combined with the cost per click ratio. Moreover, as this model doesn’t guarantee a conversion, it is preferred by ad publishers, instead of advertisers.
#3. Cost Per Click (CPC)
This model is most beneficial for contextual-based content. The benefits and risks of this model are split between the publisher and advertiser. Over time, CPC has developed into click-through ratio. In this upgraded model, revenue is based on the number of clicks, which is then divided by the total impressions received for the entire campaign.
#4. Cost Per Lead (CPL)
This model is based on when the ad content gets the contacts of the consumer, through their interaction with the ad.
The Difference Between Ad Tech & Marketing Tech
Advertising and Marketing are two very closely related terms. Which is why there is a lot of confusion when it comes to the difference between Ad Tech & Marketing Tech.
There is, however, a very prominent difference between the two concepts. In simple terms, while Ad Tech targets new audiences, Marketing Tech focuses on existing customers.
To further elaborate, it is important to first understand what exactly is marketing technology.
What is Marketing Technology?
Marketing Tech basically comprises of various tools that help businesses manage their marketing processes, workflows, content and analyst customer behaviour. According to Adam Kleinberg, the CEO of an advertising agency, Traction, marketing tech is like an advanced CRM. He says, “Marketing tech targets existing customers and prospects that marketers already have on the hook. Sometimes you know who they are and sometimes they are just someone you’ve ‘cookied,’ but you have them in a database, you have a record of some degree of past behaviour, and you can provide them with customized communications based on that.”
So, the question is, why is there confusion between Ad Tech & Marketing Tech? It’s simple; data. The overlap between the two types of technology exists because companies need to make decisions like using existing or potential customer data? Or, should businesses invest in single interactions, or long-term strategies? Basically, the ownership of data and it should be used largely contributes towards the confusion between the two types of technologies.
In Conclusion – To Invest In Ad Tech, Or Not?
The biggest benefits of Ad Tech is being able to get more precise audience targeting. By integrating all the tools into a single system, Ad Tech is able to collect more data, which are sure to result in more relevant and accurate ad campaigns. So, the answer is simple. If you’re able to find an Ad Tech company that possess the skills and ability to implement the strategy, you should invest in Ad Tech. It is, however, important to conduct a proper background check on the company to ensure your information is kept safe from leaking.
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