What is the Digital Advertising Ecosystem?

Reading time: 5 minutes

The term ad stack gets thrown around frequently enough for it to be considered recognizable ad tech[12] jargon. However, it’s recognizable enough for most people even in the digital marketing environment to be able to clearly define. This is probably because it’s a buzzword term that has several definitions — and complicated ones at that.

Simply put, an ad stack is a series of companies and technology in the digital sphere (aka, the internet) that gets an advertiser[5]’s message right smack in front of the right consumers at the right time. It goes without saying that the goal is to get those consumers to see the ads and take action, i.e., making a purchase, subscribing to a newsletter, calling a sales rep, etc. 

Of course, in practice, the act of ad stacking varies. In this article, we’re going to break down ad stacking and the full-stack ad tech platforms for both publishers and advertisers in programmatic advertising.

Keep reading to learn more.

Ad Stacks in the Advertising Ecosystem

As we all know, the programmatic advertising[1] ecosystem is complicated. It involves a whole list of “players” who make this ecosystem go round. You’ve probably heard all the jargon and terminology already — exchanges, networks, DSPs, SSPs, and so on. However, these are things or, components that play important parts in the active media-exchange process and ad stacking.

Here’s the breakdown:

  • Demand-side platforms (DSPs). A DSP[2] is a platform for advertisers, marketers, agencies, and other media buyers looking to purchase ad inventory[13][6]. DSPs essentially automate the ad inventory-buying process using a certain algorithm that targets specific users when their data corresponds with the buyer’s target criteria.
  • Supply-side platforms (SSPs). SSPs work just like DSPs — except for publishers, app developers, and other media sellers looking to monetize their inventories using targeted ads. SSPs also automate real-time auctions using an algorithm so that a seller’s inventory can be sold off quickly and automatically without having to worry about remnant[14] inventories getting left behind.
  • Ad networks. Ad networks collect inventory from publishers and other sellers and bundle it onto a single platform for the purpose of reselling said bundles to advertisers for a commission. 
  • Ad exchanges. An ad exchange[7] works much like an ad network[8] but as an open marketplace. By design, ad exchanges allow publishers and advertisers to trade with one another directly using real-time bidding[3] (RTB) protocols. Ad exchanges also offer each part access to higher quality inventories as they provide more connections. In addition to all of this, some ad exchanges also bundle inventory for specific traffic types, qualities, and categories.
  • Data management platforms (DMPs). DMPs work to collect and segment[15] customer information. They can be used for several different marketing purposes, however, they’re most often used in conjunction with DSPS for more precision and sophisticated audience targeting[16].

In essence, an ad stack is a selection of ad tech solutions that serve different purposes to provide a better media trading experience on both ends. It covers everything from buying and selling ad inventory to managing ad campaigns, audience targeting, and more — only all of these solutions are rolled into one. Therefore, an ad stack would include specific solutions and the tools to match a particular party’s buying or selling goals.

How Do Ad Stacks Measure Up Against Fragmentation?

The ad tech world is currently in an era referred to as the great fragmentation. As the markets become increasingly flooded with complex tools and ad networks — not to mention third-party cookies and privacy laws — the industry continues to fracture in different directions.

For the most part, ad stacks are designed to be interconnected. This allows for a better chance of successful media buying and selling. Essentially, the more supply and demand sources a platform is connected to, the more opportunities publishers and advertisers alike will be able to find what they’re looking for regarding partnerships and ad inventories. 

Adversely, there are solo DSPs and SSPs which limit the number of possible connected partners. These singular platforms belonging to different ad tech providers are also limited in functionality and diverse features. 

Therefore, when you work with a full ad stack (as opposed to singular platforms) you won’t have to worry about getting cut off at the knees, so to speak. The interconnectivity of a full ad stack offers a complete view of inventory, partnerships, and more. Ultimately, this enables publishers and advertisers to run more transparent and comprehensive campaigns and avoid fragmentation altogether. 

How Is Full Stack Ad Tech Differentiated?

Full-stack ad tech platforms provide an essential infrastructure to support ad operations[9] at each stage of the ad campaign[17] process. At the same time, however, ad tech stack advertising doesn’t come standard. This means that each ad tech provider must create an infrastructure based on their own capabilities and limitations. 

Essentially, all ad stacks can be defined by two sub-segments:

For starters, there are ad stacks that build each component from the ground up and integrate those components — usually with the help of third-party technologies. It should be noted that while these types of ad stacks have some unique offerings, third-party based solutions tend to be associated with higher risks, specifically data leakage, the overall quality of data processing, and possible violations regarding the General Data Privacy Regulations (GDPR[4])

Then there are proprietary ad stacks, which are most notable for their capability to virtually eliminate reporting discrepancies[10]. They also have the advantage of higher quality data processing. 

For example, when it comes to cookie[18] matching, most DMPs tend to lose a significant amount of data during the cookie transmitting process via third-party systems. This usually happens because there are two systems at play, but they’re recognizing the data cookies in different ways. This directly impacts the cookie matching process as well as the effectiveness of audience targeting. 

Our Takeaway

Programmatic ad buying is continuously improving to create a more efficient, secure, and transparent media trading ecosystem. As advertising continues to evolve, new challenges will undoubtedly arrive, which will call for new ways to manage multiple solutions and services to maintain efficiency, transparency[11], and security for all the players involved.

At this point in time, full-stack ad tech platforms are the primary improvement — and they’re not going anywhere anytime soon.

Terms
1. programmatic advertising. Programmatic advertising entails using machine learning and technology suites to buy and sell ad inventory with a data-driven process.
2. Demand-Side Platform [DSP] ( DSP ) A Demand Side Platform or DSP is a platform where advertisers can buy digital inventory to easily and more directly connect with sellers in a programmatic and real-time ecosystem.
3. real-time bidding. Real-time bidding is a technology-driven auction process where ad impressions are bought and sold almost instantaneously. Once an advertiser wins a bid for an ad impression, their ad is shown on a website. Real-time bidding plays a crucial part in the digital advertising ecosystem together with other players such as ad exchanges and supply side platforms.
4. General Data Protection Regulation [GDPR] ( GDPR ) GDPR which is also known as the General Data Protection Regulation is a set of personal data regulations created for EU citizens. It changes the way businesses stores and collects data from its users from the EU.
5. advertiser. The company paying for the advertisement.

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