By Marketing Brew Staff
less than 3 min read
Definition:
Shorthand for advertising technology, ad tech refers to the complex technology systems powering digital advertising that turn an advertiser’s dollars into, well, advertisements. Though it can also be used to refer to any company on the Lumascape, it usually refers to programmatic advertising, the supply chain of software tools that rely on real-time bidding, where advertisers and publishers buy and sell their inventory instantaneously, or in real time. Typically, advertisers set a price they’re willing to pay, and publishers set a floor for the price they’re willing to sell at; algorithms then go forth and help strike deals across the open web. It’s sort of like the stock market, but for digital ads.
It’s a big market. US programmatic display advertising is expected to surpass $202 billion in ad spend by 2026, according to eMarketer.
How programmatic buying works
For advertisers, the process usually begins with a DSP, or a demand-side platform, which is a platform that advertisers use to bid on advertising ranging from digital banner ads to CTV and streaming inventory. Larger advertisers with big budgets often use these platforms since they require very sophisticated ad tech to reach specific audiences. Google, The Trade Desk, and lately, Amazon have dominated the DSP market, but there are plenty of options across the open web. Yahoo has a DSP, as does Microsoft, and there are specialized DSPs, like Criteo, which caters specifically to retailers. Apple is also reportedly building its own DSP.
Short-side platforms
A DSP’s counterpart is an SSP, short for a supply-side platform, which refers to the software that publishers use to sell their digital inventory programmatically to advertisers. Companies ranging from the New York Times to Netflix operate their own SSPs, and other SSPs operated by companies like Magnite, PubMatic, and Index Exchange compile inventory from a variety of publishers.
Ad exchanges
DSPs and SSPs are connected by an ad exchange, a digital auction house where the bidding between advertisers and publishers actually takes place, and where publishers actually bring their impressions to the market. Ad exchanges aren’t that different from SSPs, although an SSP can let a publisher bid into multiple ad exchanges. Amazon operates one, as does Google, which controversially tied its ad exchange to its business for advertisers, on the other side of the ad-tech ledger.
