Understanding How AdTech Operates

The modern digital landscape is constantly changing and quite evidently at that. What has caused it? That will be rapid tech advancement and changing consumer preferences. That's not the point, however. The point is that all this transformation has resulted in opportunities and challenges for businesses. Businesses need a strategic approach to digital advertising. Why? Well, think about all the wealth of information available online. This can make navigating the intricacies of this space a Herculean task. What I mean to say is that to effectively participate in this complex space, it is imperative that you understand the underlying mechanisms. This includes understanding how ads are purchased, the bidding processes used to determine ad placement, and so on.

In this blog, I will discuss the building blocks of AdTech software development. What I mean to say is let us take a closer look at the workings of modern advertising technology.

What Refers to as AdTech?

It refers to the digital advertising software and systems that help plan and execute campaigns. These solutions do a lot more: they also help deliver and analyze campaigns. Think of AdTech as the infrastructure that allows for the purchase and sale of digital ad space. AdTech's primary function is to streamline the sales and purchase digital advertising. Oh, and did I mention it also enables targeted advertising and real time campaign optimization?

Buying Ads in the Age of Digital Advertising and AdTech: How to Guide

I will cut straight to the chase: there exist two main methods for purchasing digital ads. The first one is called direct buys, and the other is programmatic buying. Direct buys are simply direct negotiations between advertisers and publishers for specific placements. These negotiations can also happen via Private Marketplaces (PMPs). In contrast, programmatic buying uses technology to automate the process. On to the key parts of this ecosystem:

Demand side platforms: They are used by advertisers to manage programmatic buys
Ad exchanges: They simply marketplaces that help connect buyers and sellers
Supply side platforms: Used by publishers to manage and sell their ad inventory
Bidding on Ads in the Digital Age

The step-by-step bidding process is listed below:

● A user visits a website/app, creating an ad opportunity

● The publisher's ad server sends a "bid request" to an ad exchange/SSP

● Advertiser's DSPs receive the bid request and, if it matches their target, submit bids

● The ad exchange/SSP runs an auction to determine the winner

● The winning ad is displayed to the user

● This entire process is instantaneous, with bids influenced by target audience, ad placement, and relevance

How Does Advertising Technology (Adtech) Work?

Advertising technology, or AdTech, refers to the range of tools and platforms used to manage, deliver, and analyze digital advertising campaigns. It effectively and efficiently links advertisers with their target audiences through data, automation, and targeting.

It works as follows:

Data Collection: The first step in AdTech is to collect user data via third-party services, mobile apps, and cookies. This includes information about preferences, internet activities, and demographics.

Audience Segmentation: It divides the gathered data into groups according to demographics, interests, or behavior. This allows marketers to use tailored messaging to target demographics.

Ad Creation: Advertisers produce campaigns and ad creatives per their marketing objectives. These can be programmatic or native, as well as display and video adverts.

Programmatic Advertising: Utilizing Supply-Side Platforms (SSPs) and Demand-Side Platforms (DSPs), programmatic advertising is an automated procedure. Advertisers can bid for ad spots using DSPs in real time, while publishers can sell their available inventory through SSPs. The proper audience sees advertisements at the appropriate moment, thanks to real-time bidding (RTB).

Ad Placement: Following purchase via the RTB procedure, an advertisement is shown on target audience-appropriate websites, applications, or social media channels.

Performance Tracking: AdTech solutions allow tracking performance indicators, including ROI, clicks, impressions, and conversions. Campaign performance can be gleaned via tools like analytics platforms and ad servers.

Optimization: Data-driven campaign modifications enhance targeting, creatives, and bidding tactics.

Understanding How Digital Ads Are Displayed

The process of displaying digital advertisements happens remarkably quickly, almost instantaneously to the end user. It begins with ad tags, which are snippets of code embedded within the website or app. These ad tags define specific locations where ads can appear. When a user visits the webpage or opens an app, their browser or app sends a request to the publisher's ad server, notifying it of an available ad slot. This request triggers the ad auction process, where multiple advertisers compete to have their ad displayed.

The auction happens in real time, with bids submitted and evaluated based on factors like relevance, bid value, and user data targeting. Once a winning bid is selected, the ad creative (the actual ad content) and display instructions are sent back to the publisher's ad server. The publisher's ad server then seamlessly delivers the selected ad creative to the user's browser or app. Finally, the ad is rendered in the designated ad slot, becoming visible to the user.

This entire process is fully automated, occurring in a fraction of a second, ensuring a seamless experience for both the user and the advertiser. It highlights the sophistication of AdTech and how advanced systems work together to enable effective ad delivery.

For businesses new to AdTech software development, it may initially seem like a daunting field to navigate. However, with the assistance of an experienced service provider, developing and managing AdTech solutions can be simplified, enabling businesses to harness its full potential efficiently and effortlessly.