Saumya Khanna, business analyst at Happiest Minds Technologies

Many exciting things are happening at the intersection of advertising and technology.

Advertising technology, or AdTech, is a term used to describe the technology used in programmatic advertising campaigns. AdTech is thriving, propelled by innovations and disruptive tech like artificial intelligence (AI), machine learning (ML) and the internet of things (IoT).

CMO.com predicts that marketers will spend an average of 87% of their marketing budgets on digital marketing by 2022. Also fueling this adoption is the increased use of mobile devices during COVID-induced lockdowns, creating increased opportunities for strategic ad placements.

According to the Digital Commerce 360 analysis published earlier this year, U.S. consumers spent $791.70 billion online with U.S. retailers in 2020, up 32.4% from $598.02 billion the prior year. Innovations in the gaming industry and the advent of IoT have resulted in video games and IoT devices being looked at as potential ad spaces due to their proximity to consumers. The recent success in over-the-top (OTT) and connected TV (CTV) advertising also indicates that AdTech can do wonders to the traditional ways of advertising on television.

Programmatic advertisement—the core of AdTech

With so many varied options available now to reach targeted consumers, programmatic ads are gaining popularity primarily because they can automate ad placement across different platforms and contexts, unlike the traditional ways of manually managed advertisements. In 2021, experts predict that nearly 88% of U.S. digital display ad dollars, worth $81 billion, will flow via automation. Programmatic advertising allows the sell-side players to use algorithms that can match the specified ad criteria in real time with available ad space for reaching the right audience at the right time.

It enables advertisers to run, manage, measure, and optimize their ad campaigns and lets them define ad campaign parameters that will allow automatic real-time bidding. As a result, virtual ad spaces can be bought and utilized within a fraction of a second, which takes days, if not weeks, in the offline world.

It also enables publishers or digital media owners to showcase and manage their available ad inventories and define parameters that allow the system to attract the right ads for those ad spaces.

Programmatic advertisements use platforms like demand side platforms (DSP), supply side platforms (SSPs), data management platforms (DMPs) and ad exchanges. Together those technologies form the core components of the AdTech ecosystem. Programmatic advertising techniques such as header bidding make ad spaces’ real-time selling and buying highly cost-effective and largely transparent.

Intelligent insights about advertising effectiveness

While AdTech initially made it possible to track consumers across varied platforms, devices, and contexts, it may have also resulted in marketers going overboard, resulting in concerns about data privacy. However, there are tremendous upsides to behavioral and contextual tracking if it is carried out within the confines of regulatory frameworks like GDPR while building in principles of privacy by design. This results in developing hyper-targeted advertisements based on each user’s unique patterns, signals, and preferences.

AdTech also facilitates the consolidation of various advertising efforts and provides real-time insights about the performance of ad campaigns in an effective manner, which makes it possible for businesses to optimize their campaigns and ROI.

What happens when the cookies crumble? 

As the AdTech space evolves, marketers must carefully consider possible challenges and impediments. For instance, Cookie removal is a hot button topic, with Google announcing its plans to eliminate third-party cookies by 2022. As a result, striking the right balance between transparency and user behavior becomes paramount – this would require devising newer ways of data tracking that would be compliant with privacy regulations yet generate insights that would enable targeted advertising. As a result, contextual targeting will rise as it is more respectful of a user’s privacy and fairer while gathering information. Marketers would now have to rely upon probabilistic information to focus on the right audience and get accustomed to a universe of unidentified clients.

Optimal use of marketing budgets and insights to drive personalization

Another challenge is repetitive advertising that results from a lack of intelligence and connected systems. It’s still common for users to see many advertisements of a product after buying it or see ads for products that have been discontinued or have gone out of stock. This is a suboptimal use of marketing budgets for a brand and can hamper their equity with a new prospect or customer. In such scenarios, AI can be of great value by generating connected insights in real time while hopefully evolving to provide rich insights that will aid the creative aspects of advertising with highly personalized touchpoints.

As digital ecosystems evolve, the AdTech world will have to keep pace or stay one step ahead. That means embracing disruptive technologies that power intelligence, automation, and connectivity to ensure marketers have all the tools they need to design advertising campaigns that drive measurable, quantifiable, and visible outcomes.

Happiest Minds Technologies, based in Bengaluru, India, provides IT services focused on cloud computing, social media, mobility, business intelligence, analytics and unified communications.