“What is ad tech?” That is a question I've been asked and have answered numerous times. I recently joined BakerHostetler's Chicago office in the Digital Assets and Data Management Practice Group after spending almost eight years at Publicis Groupe, where I led a team of attorneys supporting business units focused on media, data and advertising technology (“ad tech”). As part of this transition, I've had the opportunity to meet many new lawyers at the firm and their existing and potential new clients, and that has required honing my proverbial “elevator pitch.” That elevator speech always includes a discussion of ad tech, starting with an explanation of what it is.
If you search online, you will find slightly different definitions, depending on the source. Most will include some variation of the following: ad tech is the collection of technology and tools used to buy, manage, target, deliver and analyze digital advertising campaigns. And that's accurate, although not very helpful. Instead, I usually try to define it more succinctly; it's the technology that allows advertisers to get their ads in front of the right eyeballs. After all, the purpose of an ad is to engage consumers, particularly the right consumers. Ad tech helps advertisers do exactly that. Innovative, amazing, award-winning ad creative is great, but to move the sales needle, those ads must be seen by the right consumers. Furthermore, producing great ad creative and buying media to place those ads are significant investments for advertisers. Ad tech provides tools advertisers can use to make sure their ads are reaching the right audience and those investments are paying off. I find that initially focusing on the why of ad tech, versus the what, helps provide needed context, especially for people who may not live and breathe this stuff.
With that background, I like to provide a few examples. My favorite is the demand-side platform, or DSP. I like using the DSP for several reasons. One of my first experiences in ad tech was providing legal support to a company that owned and operated a DSP. And I was lucky enough to have internal clients (some of the best and brightest in ad tech) explain how the platform works and, in turn, how the whole ad tech ecosystem works. DSPs also plug into and engage with many other types of ad tech platforms, including sell-side platforms and exchanges, data providers, ad servers, and various measurement, brand safety and verification providers. So, by considering the DSP, you can become familiar with several different types of ad tech providers. And discussing DSPs also allows the introduction of some standard terminology frequently used in ad tech.
A DSP is a platform used by advertisers or their agencies to programmatically buy ad space and run ad campaigns. The terms “demand side” or “buy side” generally refer to those looking to buy media space to place their ads for consumers to see, i.e., advertisers. The terms “sell side” or “supply side” generally refer to those looking to sell media space to advertisers; for example, a publisher that owns and operates a website with advertising space available to sell. Just as a DSP helps advertisers buy ad space programmatically, a sell-side platform, or SSP, helps publishers sell their available ad space. DSPs and SSPs allow advertising space to be bought and sold on an impression-by-impression basis through a real-time auction known as real-time bidding, or RTB. To illustrate how this works, imagine a consumer using their web browser to check out their favorite news site. They type the address into their browser and hit enter. A second or so later, they're looking at the homepage of the site. But a lot is happening behind the scenes in the few seconds it takes that page to load. In that short time, the ad spaces on the page (each called an “impression”) are put up for auction, the winning bids for the impressions are selected, and the ad creative for the winning advertiser is provided and loaded into the ad space, along with the other content on the page, and it all appears on the page the user views. The auction is facilitated by communication between the SSP and the DSP. The SSP sends out a bid request to DSPs, announcing it has an impression to sell and is accepting bids from advertisers for that ad space. The bid request also includes information about the impression to help advertisers decide whether and how much they are willing to bid – this may include things like the name of the website the impression will appear on, a description of the content on the page, the type of device and operating system the consumer is using, the location of the consumer, and other information about the opportunity. DSPs receive the bid request and use the information provided to decide whether to place a bid on behalf of their advertiser customers. The DSPs compare the information in the bid request to parameters advertisers have set when they initially set up their campaigns in the DSP. If there is a match between the opportunity and the targeting parameters the advertiser has configured, the DSP will place a bid (send a bid response), and the DSP will determine the amount of the bid based on how closely the opportunity matches the advertiser's parameters, among other factors. All the bids are compared, the winning bid is selected, and the winning advertiser gets to show its ad to the user on the page.
DSPs and SSPs are not the only ad tech providers involved in these transactions. Ad servers play a big role and are used by both publishers and advertisers. They are responsible for storing the creative assets, delivering the content to the page, and collecting/tracking various information and metrics about the campaign (e.g., the number of impressions and clicks). Data providers license additional proprietary data about consumers to advertisers for use in determining whether a consumer is part of a particular consumer segment they wish to target and, in turn, whether and how much to bid on the opportunity. There are various other tools used to measure, analyze and optimize the performance of the ad campaigns that plug into this process; for example, brand safety and ad verification providers can analyze the campaign to ensure the ad is not shown alongside inappropriate content that can be damaging to the brand, the ads are being delivered to real people and not bots, and the ads are actually viewable by the user on the page.
The foregoing description is by no means a complete or comprehensive discussion of the entire ad tech ecosystem and its many components. It's a simplified description, focusing on one small part of that ecosystem. But my hope is it provides some helpful information in forming a basic understanding of the space. And again, I think it's always helpful to return to the why of ad tech: getting ads in front of the right eyeballs.
The use of data and technology in this way can trigger several complicated legal and regulatory compliance requirements. In addition, the contractual agreements governing the sale, licensing and use of this data and technology can be quite complicated as well. I help brands, agencies, publishers, data providers and ad tech platforms deal with these complicated agreements and legal requirements. The ecosystem runs on data. This includes transactional data, such as the time of day an impression fired and the bid price for the impression. And it also includes data related to the consumer viewing the ad, such as the consumer's location and type of device and whether the consumer belongs to a particular demographic or behavioral segment (e.g., age, gender, travel enthusiast, sports enthusiast). The agreements governing transactions in this space must address the collection, ownership and use of this data. Furthermore, because some of this data meets the definition of “personal information” or “personal data” as defined under various U.S. state privacy laws and international privacy frameworks, it is important to understand and address any compliance obligations under those laws. Similarly, if you are developing new products and services in this space, you should map and understand the data flows early on to assess any data privacy compliance obligations as well as necessary contractual terms.
In addition to these data-related issues, many other issues you would normally encounter with advertising, media buying and technology platforms in general come into play as well. These include editorial guidelines and brand safety requirements; fees and payment terms; cancellation and termination terms; issues related to intellectual property ownership, usage and licensing; compliance with Federal Trade Commission guidelines concerning native advertising, endorsements and testimonials, and social media marketing; platform service-level requirements (e.g., platform availability, uptime and issue response times); and issues related to standard contractual representations, warranties, indemnification and liability caps, all of which may come into play.
It can get complicated. But I guess this is where the “pitch” part of that elevator pitch usually comes in. I have years of experience partnering with brands, agencies and ad tech companies to help them navigate these complicated issues. I am a technology nerd at heart and find this space super interesting. Things in this space are changing rapidly – I learn new things every day, and I think that's great. I hope this post has provided a better understanding of ad tech for some of you. I look forward to continuing to work in this space and seeing how it changes over time, and I'm excited about helping clients navigate this complicated landscape.
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