AdTech seems to still be a fairly ‘hot’ industry, though I don’t understand the appeal. Regardless, working in the industry gave me some insights into the workings of – so here are my notes. They are a few years out of date (last year in the industry was 2014) but I wanted to write them down before I forget!
What is AdTech?
AdTech is the technology that powers and interacts with digital advertising. Typically AdTech companies are things like online ad exchanges, ad buying solutions, ad selling solutions, analytics and companies that try to generate new advertising opportunities (called inventory).
How does it work?
Roughly speaking, the AdTech landscape is an ecosystem of many layers between digital ad sellers (usually publishers) and consumer (usually advertisers). Here’s a brief overview.
- Ad Exchange – this is the heart of the Adtech ecosystem. On the exchange, publishers connect directly or indirectly to sell their ad ‘inventory’ (ad spaces) which can be bought or sold programmatically. It is a bit like a stock market and shares some similar terms, with the people (companies) doing the active trading having to pay for relatively expensive ‘seats’ to access the exchange directly. Famous examples of these exchanges include AppNexus.
- Ad Networks – these guys are media ‘middlemen’ who line up relationships with multiple publishers and help them montetise their inventory. I’ve seen them to do well where their networks are geographic or industry/vertical specific. E.g. political blog networks or health website networks. They can sell the inventory they have relationships with directly to advertisers or basically push that inventory to the exchange.
Buy side AdTech refers to the tools that make buying advertising easier for advertisers, such as brands or marketing agencies.
- Programmatic ad buying – this is buying ads using software like Google Ads, which connect eventually to the exchange, versus the traditional method of using an agency or calling publishers and buying it, called placing an Insertion Order (‘IO’).
The supply-side of AdTech helps people who can create ad inventory sell it. Usually these are publishers or app developers, such as MyFitness pal (notice the ads?) or other iPhone apps, for example.
- Supply-side platform – these are platforms that make it easier for publishers to connect into the exchange. An example most people are going to be something like Google Adsense.
- Adsevers – these are servers that are specifically run the ads of a website or app. Adblockers work often by blacklisting these servers from running on your browser, effectively breaking the chain so that the adserver can’t send ads to the site you’re viewing. Examples of these include DFP (DoubleClick for Publishers), now called Google Ad Manager which help you create and run adspaces on your website.
- Ad inventory verification / providers – this tech can help you create more or unique ad inventory out of an existing website. Example companies include OnScroll which enabled publishers to create and sell ads in spaces that were previously under monteized, such as below the fold or at the bottom of websites.