What is Ad Tech and Why Should Agencies Care?

 Emerging technologies always encourage scrutiny and critical analysis, and ad tech is no different.

This discipline has been around for a few years, but it's only recently caught the attention of savvy ad tech agencies. In the era of big data, they've recognized having ad tech company relationships makes them more powerful and attractive to clients.

The age of social media has forced agencies to investigate innovative ways to interact with relevant users, rather than relying on typical broadcast or digital media buys. And the advantages for agencies investing in ad tech are plentiful: 74% of marketers want to work with ad agencies who know how to make use of ad tech.

But there's still one issue: many young ad agencies are still trying to figure out what exactly ad tech is -- and how they can best use it to their advantage.

What is Ad Tech? And Why Should You Care?

The first step to leveraging ad tech is understanding exactly what it is. Ad tech (short for advertising technology) is the umbrella term for the software and tools that help agencies and brands target, deliver, and analyze their digital advertising efforts.

If you've ever scratched your head at the terms "programmatic" or "omnichannel," you've likely already heard a little about what ad tech does (though you may not have even realized it). Programmatic advertising, for instance, buys target audiences instead of time slots: Think about buying ad space that reaches a particular demographic wherever it is instead of buying a prime time TV spot and hoping the right people are watching.

Omnichannel marketing reaches target consumers across all channels -- mobile, video, desktop, and more -- within the context of how they've interacted with a brand (those first seeing an ad will receive a different message from those who have engaged with that brand a number of times). Omnichannel and programmatic aren’t the only two tools within ad tech, but they are two of the most revolutionary.

That said, ad tech is designed to help advertisers make better use of their budgets. Ad tech methodologies deliver the right content at the right time to the right consumers, so there's less wasteful spending.

Elephants and Ad Tech: A Story

Imagine being asked to wash an elephant’s ears while conserving water. You could always bathe the whole elephant -- you would definitely get his ears clean, but you'd use much more water than you need to, so that method doesn’t make much sense.

To save your resources, you could concentrate on the head instead, using less water but still more than you’d like. Or you could figure out a way to use just enough water to scrub those ears and make him the happiest pachyderm in the herd.

Now, take this analogy and put it in the context of online ad placements.

The traditional method of pushing advertisements to web users involves a broad-brush approach, much like showering the whole elephant just to get to its ears. Remember that publishers are not based on ad networks, they're based on content. Advertisements slipped alongside content that may or may not have relevancy for the viewer forces exposure. This method can work, but it can be inefficient, annoying, and wasteful. It's still not the best use of an agency’s resources.