Digital advertising has reached new heights of complexity. Today’s omnichannel ad campaigns reach across many different platforms at once, from publisher websites and mobile apps to search engines and social media. Yet paradoxically, campaigns have become more and more personalized, using highly tailored, targeted ads to reach specific audiences.
All of this makes for an intricate process with many different participants, from advertisers and publishers to third-party vendors.
As you move further into ad tech, you’ll find yourself navigating a complicated and ever-changing ecosystem. Here are some of the most important types of technology you’re likely to encounter, including important differences in function and usage.
1. Demand-Side Platforms
As the name suggests, demand-side platforms (DSPs) serve people who want to purchase ads from publishers. If you’re in marketing, that means you.
A DSP is an automated system that vastly simplifies the buying process for advertisers, who can purchase targeted ad impressions from many different sources through a single interface. DSPs usually use real-time bidding – that is, automated auctions that take place in just milliseconds.
To make targeted ad buys, DSPs may use audience data from other sources such as publishers, advertisers, and external data providers. A DSP can use these datasets to guide targeted ad buys. The system can also track campaign performance and use this data to improve ad targeting and media buys.
So where do DSPs find ad impressions to buy? DSPs may buy ads directly from publishers, supply-side platforms, and ad exchanges.
In recent years, DSPs have come under pressure to provide more transparent pricing, better ad quality, and more reliable data about campaign performance. Ad fraud continues to be a major challenge – as it is for the entire industry – and leading DSPs have tried to differentiate themselves by providing buyers with better protection against phony publishers and malicious ads.
2. Supply-Side Platforms
While DSPs serve advertisers looking to buy ad inventory, supply-side platforms (SSPs) serve publishers looking to sell ad inventory to generate ad revenue from their websites or apps.
Publishers use SSPs to sell ad impressions through various external platforms. These may include DSPs, ad exchanges and ad networks. An SSP integrates with all of these technologies, so publishers can manage and fulfill all of their inventory sales through a single interface.
Ad impressions are only a means to an end, though. What publishers really offer is access to audiences. And that requires data.
Through an SSP, a publisher can share a wide range of data with different buyers, including advertisers, ad networks, and DSPs. For example, publishers can share information about the type of content being displayed, or concerning the demographics, location, and purchase behavior of website visitors. Such information helps advertisers segment their audiences and hone their targeting.
Like DSPs, SSPs have faced complaints about low-ad quality, high pricing, and fraudulent ads. These trends have pushed large providers to develop better auditing technologies, more transparent fees, and better industry standards – although these efforts are very much works in progress.
3. Ad Exchanges
An ad exchange is an online system that provides a marketplace for ad buyers and publishers. Such platforms operate a lot like online stock trading platforms. On an ad exchange, publishers auction off the inventory they haven’t already sold to ad networks. Buyers then compete to acquire these unsold ad impressions, often through real-time bidding.
All transactions are highly automated, since it’s extremely difficult for humans to perform the calculations required to trade so many targeted ad impressions in real time. While making their trades, buyers and sellers also exchange data that allows advertisers to segment and target their audience.
Some ad exchanges provide open marketplaces for buyers and sellers. But this model makes it hard for publishers to control what kind of ads their audiences see. That’s a drawback for companies that want to protect their brands.
As a result, publishers are seeking alternatives to open ad exchanges. In some cases, they are using private exchanges that limit entry to select buyers, so they can prescreen who places ads on their properties. Other publishers are turning to a “programmatic direct” model. This method uses automated systems to enable more efficient publisher-to-advertiser sales, without any auctions.
4. Data Management Platforms (DMPs)
Data management platforms (DMPs) enable their users to store, manage, and analyze data about ad campaigns and audiences. Unlike a DSP or SSP, a DMP does not help you buy or sell ad inventory. Instead, a DMP feeds useful data to these other platforms, enabling both marketers and publishers to make more effective decisions.
For marketers, a DMP and a DSP complement each other to make more effective ad purchases. The DMP provides information that helps the DSP manage and direct ad buys. The DSP, in return, sends back valuable campaign performance data. Some DSPs include DMP functionality, creating hybrids that fuse aspects of both systems.
Using a DMP, marketers can create temporary user profiles and target audiences based on demographics, behavior, or other characteristics. As advertising platforms, DMPs are restricted in their ability to use personally identifiable information. As a result, they mainly use anonymous, short-lived data acquired from third-party vendors to build their profiles.
Recent privacy laws have limited the usefulness of platforms that rely on third-party data, forcing DSPs to change how they operate. In particular, the European Union’s General Data Protection Regulation (GDPR) has made it harder to acquire and use certain kinds of data for targeting. Meanwhile, the most advanced DMPs continue to add features and develop new capabilities – for example, the ability to use richer sources of first- and second-party data.
5. Customer Data Platforms
Like a DMP, a customer data platform (CDP) ingests data from other systems and builds profiles that can be used to target audiences. The difference is that a DMP is primarily designed to improve ad targeting for new prospects, while a CDP provides insights into your existing customers’ journeys and informs every aspect of your marketing.
A CDP (such as Arm Treasure Data) consolidates all your customer data and presents a single, actionable view of every individual customer. That enables you to develop more targeted, effective, personalized experiences for audiences on all channels.
Unlike a DMP alone, a CDP helps you build complete profiles of known individuals based on personally identifiable information from any source. An enterprise-level CDP can collect and store unlimited amounts of data from every system that interacts with customers, both online and offline. In addition, it continually maintains and enriches its data, giving you a full history of every customer. The best ones are integrated with more than 100 off-the-shelf integrations with data coming from sources as diverse as CRM and ERP.
With its detailed customer insights, a CDP can enhance the performance of personalized ad campaigns. For example, a CDP can be used to identify the company’s most valuable customers and create a lookalike audience based on their behaviors and attributes. It can then push this information to a DMP to use in making targeted ad buys from SSPs, ad exchanges, and ad networks.
In short, a CDP doesn’t replace other ad tech platforms. Instead, a CDP can activate and orchestrate such systems, improving the reach of your ads and integrating your campaigns with the rest of your marketing. Some companies, such as Subaru, Wish.com, and Kirin, are already using CDPs this way.
As the preceding discussion makes clear, ad tech is growing increasingly diverse, and it is automating much of the drudgery of campaigns, often at a pace faster than humans can hope to operate. Some martech, such as CDPs, is evolving to help produce better control and higher-quality marketing insights. Find out more about your options for increasing efficiency, targeting and insights.