Does Adtech cost money or make money?

We have all heard of the term “Adtech” but are we sure what it exactly means? One way to define the term “Adtech” is to say that it broadly refers to all the analytics and digital tools used in advertising.

Today the internet is the ultimate field of opportunities. Everything is just a click away, and much of the online users’ data is either public or with advertisers, publishers, and brands. The monetization frenzy is on, and it is essential to understand how to “make it” “the right way.” This is where Adtech takes the centerstage.

Adtech covers the entire process of the advertisement delivery, right from selecting the ad subject and its positioning to choosing its recipient. Adtech solutions allow marketers to see a broader picture regarding their campaign and to maximize its impact.

Adtech tools, technologies, and practitioners are not cheap. They demand investment. 70% of the participants in a study conducted by emarketer said that the setup cost and maintenance is an important factor to consider when evaluating whether or not to build their own ad tech.

But is that investment worth it?

The digital advertising industry is experiencing a period of massive growth due to the increased time spent by consumers on digital media. And due to the recent Covid-19 epidemic, internet usage has increased by as much as 70% in recent times.

By observing the internet using habits of users, advertisers have gained more insights about their products that have better chances of succeeding and the message that will make it so. Each click on social media or in a browser creates a digital footprint of the user. Adtech helps brands leverage that to understand the customer’s interests and behavior.

By leveraging modern tools and technologies like Big Data, Analytics, and AI, Adtech has improved and widened the brand’s reach and enabled targeted marketing.

Consumers generate millions of bytes of data every day through visits to social media sites, browsing through websites, consuming content online, and through their engagements and search history. This data is analogous to insights on consumer interests, current needs, and feedback to previously purchased products.

Companies like Google, Facebook, and LinkedIn are owners of that data, acting as Adtech companies by monetizing those insights. Brands and marketers use the insights available from these platforms for better customer acquisition and retention through targeted delivery of promotional content for their products and services. These brands also resort to retargeting strategies driven by the past interactions of customers. The brands that are reputed to spend the most on Adtech are Charter Communications, Ford Motor Company, Verizon Communications, General Motors, AT&T, and Procter & Gamble.

But what are the trends driving Adtech now? Where is the action?

Nowadays, e-commerce companies are looking to become Ad companies. Alibaba, an e-commerce company, is often referred to as an adtech company because more than 60% of its revenue comes from ads and not from the products sold on the platform. Amazon’s ad business has shown a massive growth of 45% in 2019 alone, as JP Morgan reported. Ecommerce companies have an enormous advantage in this space. They can combine brand partnerships and product placements to work together “in the moment”. Through sophisticated technology, e-commerce sites can maximize revenue from their visitors, even if they don’t buy.  Brands can run programmatic ads on the website visitors, based on behavioral profiles and customer cohorts, to deliver tailored messages to the audiences. Thus all parties involved, the brands, the eCommerce website as well as the website visitors have something to gain from it.

As long as these retailers can provide brands the ability to target those customers, they would be interested in advertising to them. Given the sheer amount of information about each consumer available to the e-commerce platform, the brands can craft compelling messages that can leave a deep impression on the customer.

Another innovative approach e-commerce companies employ the user-generated reviews and product feedback that they gather. This content, provided by real people, acts as an ad too. 

The success of direct to customer companies also depends not only on the product but the story it tells. Companies like Warby Parker have carved out a niche in the market by matching quality products with a unique and shareable story. This approach demands that messages be personalized to tell a story to each individual consumer.

This means creating a full-funnel ad experience driven by analytics.

Estimates are that marketers are spending on paid display ads in volumes. Social media ad spend has also increased. Let us look at a few examples of how companies have leveraged Adtech to increase their revenue and broaden their market.

  1. O2 is an excellent example of a brand achieving creativity through data. It wanted to make its ‘tariff refresh’ TV ad engaging for mobile users. It used mobile usage data like location, device type to customize messaging to users. O2 used this data to inform its audience on the current recycling value of their phone and the best offer for an upgrade. This campaign saw its personalized ads achieve a Click-Through Rate (CTR) 128% higher than generic video ads.
  2. The Economist wanted to target ‘intellectually-curious’ readers who had previously been reluctant to try the publication. It used subscriber data to identify the most relevant and engaging content to deliver, tailoring stories to that audience. This resulted in 65000 new prospects and an astonishing ROI ratio of 10:1.
  3. When Audi was preparing to launch its new customizable vehicle, it wanted to personalize its marketing. Audi worked with Google to analyze its key touchpoints. The data they analyzed included floodlight tags on the Audi site. This enabled the creation of retargeting lists of previous website visitors, as well as in-market segments. The strategy helped Audi discover new users whose online behaviors showed their intention to make a car purchase. This led to a conversion rate four times higher than what was achieved through traditional methods.

It seems to be clear that brands that invest in Adtech generate higher revenues and experience higher growth than brands that do not have such an interest in Adtech. Is investing in Adtech on your agenda?