Advertising technology, or adtech, is defined as a range of software and tools that brands and agencies use to strategize, set up, and manage digital advertising activities. The adtech ecosystem tends to have two major entities—the advertiser and the publisher. Advertisers tend to want to get the most out of a budget through effective advertising campaigns to reach a target audience, optimize the campaigns, measure return on investment (ROI), and gather customer insights. Where publishers cater to the requirements of advertisers and generate revenue through ads by displaying these ads on publications, increasing ad impressions, maximizing bids for the ad slots, and gathering visitor insights. Publishers work to take care of all of this through the platform user interface.
One of the largest technologies in advertising, programmatic adtech pertains to the use of technology and data to automate and streamline the online media transaction process. Which means the introduction of programmatic adtech eliminated the need for publishers and advertisers or agencies to sit across the table to discuss and negotiate contracts and replaced the process with algorithmic buying. Programmatic adtech has represented the primary method of buying digital media in the United States. Estimates suggest that 88 percent of all digital advertising dollars in the United States are transacted programmatically.
Google and Facebook are two of the largest players in digital advertising, but Amazon has been on the rise with a number of improvements in its ad-buying interface:
- Improved usability of DSP
- Extended reach of sponsored products
- Introduction of their reward program tools
- Incorporation of customer acquisition metrics
- Enabling of dynamic bidding for sponsored product ads
Part of Amazon's growth has been due to newer over-the-top (OTT) and connected TV advertising. And OTT is expected to be a large space for digital and programmatic ad growth as more people leave traditional broadcasting contracts in favor of digital and OTT media consumption.
Programmatic direct works to add a human element to programmatic advertising purchasing. This is a scheme where advertisers and marketers deal with publishers to negotiate a contract based on cost per thousand (CPM) and work to outline how many impressions (or views) an advertisement will receive. Programmatic direct will also work to specify an audience that an advertiser is trying to reach. Once a contract is negotiated, the adtech is used to automate the campaign. This is a method useful for publishers who are working to curate content on a website to appeal to a specific audience.
Another type of programmatic buying, real-time bidding (RTB) involves purchasing advertising space through a digital ad exchange in real time. RTB automates the process of purchasing to a point, with automated systems selling advertising space on behalf of the publisher. RTB begins after a user clicks a link to visit a website. Data on the visitor is gathered, including interests, demographics, recently visited websites, and anything else relevant and available. That information, along with a list of available inventory, is sent to the supply-side platform (SSP), which allows publishers to sell ad-space. The SSP communicates the information to the Demand-Side Platform (DSP), which is a central hub where advertisers can target consumers and digital advertising space. The DSP presents the information to advertisers who, in turn, bid on the advertising space.
With the growth of programmatic advertising, there is a growth in technologies to ease pain points in the process. These include problems related to quality, auction transparency, and fees. Supply path optimization has been a response to this, allowing programmatic advertising inventory buyers to view the channels they purchase their impressions from while they buy inventory. Advertisers have begun to use supply path optimization (SPO) to access the inventory of a publisher and offer transparency regarding programmatic buying, publisher's pricing, and discounts on cost per thousand impressions. In using SPO, buyers can bypass DSPs and reduce the number of ad exchanges used. And with SPO, demand-side platforms (DSPs) can simplify how they work with SSPs to see improvement and an increased number of buyers looking to reduce the sell-side vendors they operate with.
There has been an increase of safety-focused initiatives to support efforts to reduce programmatic advertising fraud. One of these efforts, ads.txt, was launched in 2017 and lists ad sellers in a file placed on a publisher's site. DSPs can crawl the public listing of authorized sellers to remove unauthorized impressions. A lot of publishers have integrated these and similar safety focused features and often only allow other users with similar features to publish ads on these and related sites. These technologies have also helped companies and advertisers meet different compliances around data and privacy.
Digital advertising has a history of open standards without governing or regulating bodies. However, as the industry has matured, there has been increased demand from advertisers and brands to standardize the ways of measuring the effectiveness of advertisements funneled through an ad exchange. Viewability tracks ad impressions that appear "in-view" on the screen, while providing an opportunity to be seen by consumers, as opposed to impressions served. For publishers, selling inventory on a viewability basis enables them to offer higher quality inventory at a more competitive price.
Other growing trends include chatbots, voice search, data analytics, machine learning/AI, social media marketing, virtual reality, and user experience.
The use of chatbots has increased and 69 percent of surveyed United States consumers have preferred using chatbots when engaging with a brand. This can be especially true of the chatbot yields a speedy response and can answer basic customer questions at all times. This can be used to market and advertise a product or service from a website through the simple questions being answered, regardless of the time of day or a businesses operating hours.
With the increasing popularity of voice-based searches on mobile and connected devices and services, using voice search advertising is another growing opportunity for a business. This can be as simple as increasing the chances a person will find a website or content marketing materials through a voice search.
Data analytics offers a chance for marketers, businesses, and brands to access data beyond basic demographics. This can include consumers' online and offline behaviors and preferences, locations throughout a given day, purchase history, and promotion sensitivity. This can help customize a marketing demographic, accordingly refine images and messages, and offer insights into consumer activity and advertising effectiveness across channels. For example, a business might find that banner ads work better than short advertising videos for creating click-through and visits to a product site.
With the increase in raw data and the increased desire for analyzing that data, the use of machine learning and AI is increasing. This is especially as they offer advertisers and marketers insights into predictions, PPC campaigns, and craft targeted campaigns based on the data. As well, AI can, especially when used with chabots, generate data from relevant conversations into what consumers are looking for in sale and advertising materials, as well as funnel sales, and execute direct response marketing.
Social media has itself been a fast-growing industry, and marketing on social media platforms have grown as a major revenue provider for those platforms. And social media remains a growing market opportunity as more people continue to engage with social media platforms. Growth in marketing on social media platforms could see companies emphasize one-on-one communication with customers via social media and use social media platforms as a living embodiment and representation of their brand. The use of two-way communication can also increase customer engagement and increase overall customer satisfaction with a brand. It also offers a way to solve customer complaints or concerns in a more authentic way, and in a public way.
There has been an increased adoption of various extended reality technologies. These include augmented reality, virtual reality, and mixed reality systems. As more companies develop these technologies, they offer a new way for companies or brands to engage with consumers and help shape impressions and perceptions about that brand, while using these extended reality systems to increase awareness of a product can increase sales of a given product. As a company like Facebook works to develop augmented reality glasses, it gains an opportunity to run advertisements as a wearer goes throughout a city, such as highlighting a specific nearby store as a point of interest. And there could be advertisements similar to those already used on Facebook's virtual reality headsets under the Oculus brand.
User experience offers a way for websites and brands to engage customers and offer a user-friendly and smooth online experience. Whether it's with an e-commerce shop or a website, creating user friendly and intuitive web experiences can increase user engagement, especially if that's done with an emphasis on personalization and speed.
With an increased number of individuals and households in the United States accessing streaming video streaming services through OTT devices—such as the Amazon Fire TV, Apple Tv, or Google Chromecast TV devices—advertising for these OTT devices offers a new chance for brands to reach directly into living rooms, in similar but different ways than traditional advertising. OTT advertising offers a chance for advertisers to use a variety of advertisements, including banner ads, short advertising clips, and advertising screens that users click past. OTT advertising offers media companies a freedom of movement without pre-planned broadcast schedules or geographic limits.
OTT advertising offers ad targeting, dynamic ad insertion, and advanced analytics, with easier methods to access inventory in the future. As well, unlike traditional TV commercials, OTT offers shorter ads, with the ability to make them more personalized through targeting capabilities absent in traditional TV, with geolocation, demographic data, and device information to create a data-rich environment. This advertising can be done through the device itself or through a streaming service or application hosted and accessed through the device. For example, if Netflix decided to show ads, they could communicate with the OTT device or Smart TV to identify the viewer and offer tailored advertising for that viewer, rather than just running advertising based on what is the believed demographic watching the content.
OTT ads require some consideration of how a streaming platform communicates with OTT devices. For example, via Video Ad Serving Template (VAST) or Video Player-Ad Interface Definition (VPAID) tags, and the ad-insertion method, whether they will be served client side (CSAI) or server side (SSAI). The general delivery process is the following:
- An audience is created based on the platform's subscription data, and enriched with additional household information, including first- and third-party data for the users preferred category of shows on a platform
- The campaign is pushed with audience matching stats to ensure the advertising is pushed to specific TV's subscriber lists
- Ads are displayed via OTT platforms, where OTT devices are communicated with using VAST or VPAID tags
- Reporting takes place, where the OTT operator sends back ad-exposure results after the campaign and the platform generates the reports for the advertiser, which can also be enriched with the first- and third-party data.
OTT ad-insertion methods are split between client-side ad insertion (CSAI) and server-side ad-insertion (SSAI).
CSAI is a legacy method, where ads are loaded within the OTT box before being displayed to the viewer. This method does not provide an effective way for displaying ads to viewers and is susceptible to ad blockers, but it is the leading method in OTT devices in the advertising industry.
In SSAI content delivery, the ads are served as a seamless stream. The process creates, in near real time, a mix of ads and core content streamed to the client device. Because ad blockers have no possibility to discriminate which frames are ads and which are not, SSAI is an effective remedy for ad-blocking software. SSAI allows a seamless video experience, even for live feeds, as it stitches the content together with ads and eliminates the pauses between the actual video and ads. If clickable ads or viewability measurements are needed (through the support of VPAID tags), those capabilities can be added on the client side—although this requires some additional development on the OTT producer's end.
OTT communication tags are used to communicate with OTT devices; they include the VAST tags and VPAID tags.
VAST tags provide instructions for the player about how to handle a video ad, how it should show in a player, how long it should display, if the user can skip it, where the ad is located, and the ad server information.
VPAID tags are an improvement on the legacy VAST tags. The VPAID tags make ads interactive and adds viewability measurements. They do not support stitching, which entails bypassing more than half of all video pre-rolls served in Europe. VPAID tags are relied upon to measure the viewability and verification mentioned, and in some cases offer interactivity, which has some agencies and advertisers preferring VPAID tags over VAST tags.
In order to keep advertising frequency manageable, and not scare users away from a streaming service, the services can use data that can be collected from profiles on streaming services in order to allow advertising and content targeted towards individuals. The use of third parties to collect and develop this data offers a chance to personalize advertising across multiple devices or streaming services and help these service to consistently identify users. This can increase the personalization and engagement in advertisements for a platform and increase the value of the advertising for that platform, while not necessarily running afoul of data privacy laws and regulations as they increase.
For streaming services or OTT devices that want to push ads through a streaming service, they can use overlay ads, similar to banner ads on a webpage or the lower-third graphic often used for promos on traditional television. These overlay ads, when paired with the relevant user IDs and data, can offer targeted or personalized advertisements. As well, in a data-poor environment, these overlay ads can be contextual to the content being viewed and increase engagement with an overlay ad. The ad format also offers publishers additional video inventory to monetize. As well, it offers a chance for streaming services to promote their own content.
The growth of streaming services, which has accounted for 60 percent of time spent watching television or content in 2020, offers a growing opportunity for advertising. As the streaming services offered continue to grow, more services are looking to develop ad-supported low-payment or free tiers.
This is both to increase viewership, as studies have shown that viewers are not as sensitive to advertising so long as they have a chance to find content they want and are more likely to leave a subscription service if content they enjoy is removed. This also increases the importance for OTT devices that can display content from multiple streaming services, because a common pain point described by viewers is the difficulty to find content they want to watch across multiple services. And advertising can support streaming services to reduce subscription fees or halt scheduled increases in subscription prices, as the increase in price is the most cited reason for users to leave a streaming service.
Some of the challenges associated with OTT advertising are generally technical challenges. For example, much of the Smart TV and OTT inventory available programmatically can only be accessed directly, either from the manufacturer or the service provider. There is little to no support for third-party ad serving and measurement. OTT advertising is still fragmented and lacks industry-wide standards and guidelines. Most OTT devices lack certain capabilities compared to a web browser, including a lack of cookies and a lack of flash support, which limits the ability for advertisers to target viewers and attribute conversions. And due to the closed nature of many OTT devices, digital ads and third-party tags from other platforms can be incompatible and lead to measurement discrepancies.
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