The Impact of Data Regulations on Adtech

If you’ve spent any amount of time on the public internet, you’ve encountered adtech. The underlying technology responsible for ads that follow you across the web and appear at the top of your search results is becoming a larger and more important industry every day.

Adtech is, of course, fueled by data. In an age where increased data collection is the norm, and concerns about privacy and security are on the rise, we thought it would be useful to take a deeper dive into this industry. This is a companion piece to our previous post about martech. While there are some in the marketing industry who consider adtech to be a subcategory of martech, the breadth and intricacies of the industry warrants a separate in-depth post.

What is Adtech?

Adtech, a combination of the works “advertising” and “technology,” refers to the technology, systems, and tools that drive digital advertising. Hubspot adds to this definition, saying that adtech “is designed to help advertisers make better use of their budgets.” 

The Adtech Stack 

In its annual Marketing and Technology Landscape, The Chief Marketing Technologist Blog lists more than 800 advertising technology solutions. Many are related to programmatic advertising — the automated buying and selling of digital ad space in real time. 

We’ve broken down the tools into common categories, along with listing the major players in each. Some of these will be specific to advertisers (the businesses paying to get an ad shown), while others will be specific to publishers (the promoter of the product who reaches the end user). 

Demand-side platforms (DSP)

Advertisers use DSPs to purchase ads automatically. DSPs connect with multiple ad and data exchanges presenting information to the advertiser in one interface. Some DSPs are specialized in specific formats like mobile platforms or video, so companies often use more than one. 

Major players: DoubleClick Bid Manager (DBM Google), DataXu, MediaMath, AppNexus

Supply-side platforms (SSP)

Publishers use SSPs to manage and sell ad space to advertisers. SSPs connect with ad exchanges, data exchanges, and sometimes data management platforms (DMPs) directly to automatically request bids for a specific ad space and then choose the winner. SSPs also include data and analytics functionality to provide further insight into how well ads perform. 

Major players: Google Ad Manager, AppNexus, PubMatic

Data management platforms (DMP)

DMPs are mainly used by advertisers to collect and synthesize consumer data. Data from multiple sources are used to build profiles and place customers into segments with the end goal of driving better customer experiences and providing relevant ads. DMPs export audience information to DSPs and SSPs to facilitate in ad buying. 

Major players: Adobe Audience Manager, Oracle BlueKai, Nielsen DMP

Ad Servers 

Ad servers facilitate communication between publishers and advertisers while a web page is rendering in order to serve the most profitable and appropriate ad to a user. Ad servers also store information about the ad’s performance providing insight to both publisher and advertiser to help with profitability and campaign management. While many DSPs also perform the work of ad servers, they are still a useful central hub of information, especially for advertisers who use multiple DSPs. 

Major players: OpenX, Broadstreet Ad Server, Google Ad Manager

Retargeting

Retargeting is a tool that helps advertisers connect with individuals who have already interacted with one of the company’s digital properties. It was originally used for “abandoned carts” in the e-commerce sphere, but is also used in B2B to drive content marketing efforts. Retargeting works by adding a piece of code or pixel to a brand’s website. The pixel captures data about website visitors and creates audiences based on that behavior. This information is used to serve ads on other sites whose audiences have the desired profile. While many DSPs also have retargeting capabilities, there are many popular standalone products.

Major Players: StitcherAds, Outbrain, Go by district m

Fraud Detection 

The digital marketers lose $8.2 billion per year due to digital advertising fraud. Most of this cost comes from non-human traffic (bots) and publishers engaging in unethical behavior like stacking hundreds of ads on a page. Fraud detection software blocks suspicious activity and traffic from regions known to engage in fraudulent activities.  

Major Players: WhiteOps, Integral Ad Science, DoubleVerify

Adtech data sources

First-party data

First-party data is considered to be the most valuable type of data and can be a company’s competitive advantage. It is information that the brand or advertiser has collected itself and owns. This includes customer or prospect email addresses, CRM data, and cookie data captured from their own digital properties. First-party data is often used to create audiences and segments of non-users who have similar characteristics as their current customers. 

Second-party data

Second-party data is information that comes from another verifiable source. It’s essentially another company’s first-party data that they sold or shared directly with you. It’s particularly valuable if you are trying to expand your reach to a group of consumers who are different from your typical customer demographic. 

Third-party data

Third-party data is the most abundant and possibly the most controversial type of data around. This is data that is aggregated from websites and publishers and sold to advertisers by brokers. Like second-party data, it is used to reach new audiences, but possibly with less accuracy. To use third-party data effectively, advertisers need to spend some time investigating how the data was obtained and learn more about its accuracy.  

Privacy Concerns and Compliance

Web cookies are domain-specific, so building accurate profiles of mostly anonymous users requires some communication between different trackers and adtech platforms. One way to reconcile user information is through cookie syncing, mapping user IDs from one platform (like a DMP) to another (often a DSP). 

Because of cookie syncing’s browser limitations, companies also use identity resolution tools to capture data and behavior generated on mobile devices. 

With the growing number of data privacy and security laws on the books, both cookie syncing and identity resolution are coming under increased scrutiny. The EU’s General Data Protection Regulation (GDPR) allows individuals to completely opt out of data collection. The California Consumer Privacy Act (CCPA) will allow consumers to say no to the selling of their personal information. 

While neither of these laws is likely to put adtech out of business, advertisers and adtech companies will need to re-evaluate the types of data that they are collecting and how it is being shared and transmitted to third parties. Like in the martech industry, the need to limit—or even eliminate—data outsourcing creates an increased demand to protect data in-house, where you can leverage the tools you need and maintain the boundaries you’re certain are secure.

If you’re looking for ways to better protect your data while leveraging valuable martech or adtech tools, MetaRouter is here to help. Reach out anytime to learn more about the additional layer of security (through total control) we offer through our Enterprise Edition.