It’s no secret that new technologies—along with an explosion of digital data—are disrupting traditional approaches to advertising, marketing and sales. In a survey conducted by Adobe, most marketers agreed that marketing has changed more in the past two years than in the past 50. Marketers are suddenly spending much more on technology and driving more technology decisions. In fact, they now spend over $20 billion annually on marketing technology, a market that has grown by over 67 percent in just two years. In advertising, Adtech-driven programmatic and real-time bidding (RTB) approaches are taking over digital advertising. Business Insider forecasts that these approaches will represent 50 percent of digital ad sales by 2018, and many large companies are already shifting large portions of their spending this way.
With this type of rapid, technology-fueled change, innovation often occurs in silos. It is only later that broader patterns and adoption emerge. That accurately describes the situation today with Adtech and Martech: technologies and approaches that have evolved separately at a rapid rate and are only now beginning to fuse together. The connection between the two can be summarized in one word: data.
What Is Adtech? What Is Martech?
The lines of demarcation between Adtech and Martech are blurry, and widely-accepted definitions of each are hard to come by. However, here’s a shot at defining them.
- Adtech – Adtech is short for advertising technology. The term refers to the technologies and approaches used for managing, delivering, targeting and measuring digital ads. The primary users of Adtech today are publishers and advertising agencies.
- Martech – Martech is short for marketing technology. The term refers to the technologies and approaches used for managing and measuring all digital marketing activities. The primary users of Martech today are the digital marketing and e-commerce groups within organizations.
There are many similarities between Adtech and Martech. Some of the things that Adtech and Martech have in common are rapid change, new entrants, enterprise vendor acquisitions, the importance of data and, perhaps most notably, COMPLEXITY.
To get a sense of this complexity, which can feel almost overwhelming at times, one need look no further than the crowded and fragmented vendor landscape. For several years, the investment bank, LUMA Partners, has published these landscapes, now considered essential reading in Adtech and Martech circles.
Here’s the LUMAscape for Adtech (Digital Display Advertising):
And, here’s the LUMAscape for Martech (Marketing Technology):
AdTech: The Rise of Programmatic Advertising
Programmatic advertising, the use of software and data to purchase display ads that may be targeted to particular audiences, represents one of the most significant waves of innovation to ever hit advertising. Using programmatic approaches, advertisers and their agencies use Demand Side Platforms (DSPs) and Data Management Platforms (DMPs) to purchase display inventory on ad exchanges. DSPs provide centralized media buying from multiple sources, and DMPs centralize cookie data and help advertisers create segments that can be specifically targeted. For example, advertisers can target display ads for a new pet product to a segment of consumers who are believed to be pet owners. Publishers, in turn, use Supply Side Platforms (SSPs) to make their inventory available. SSPs provide outsources media selling and network management services for publishers.
Programmatic advertising has taken the world by storm in recent years. Consider these recent trends:
- According to its global chief marketing officer, Google has targeted 60 percent of its digital marketing budget for programmatic campaigns.
- The world’s biggest media spender, Proctor & Gamble aims to buy 70 to 75 percent of its U.S. digital media programmatically.
- Recent research from eMarketer indicates that U.S. programmatic digital display ad spending will grow 137.1% to over $10 billion this year. And, the forecast is for that number to double by 2016.
MarTech: The Rise of Data-Driven Marketing
For years, marketers have struggled with measurement, personalization and targeting, and e-commerce. In Adobe’s 2013 study, aptly titled Digital Distress, these ranked lowest when marketers were asked about how well their organizations were prepared to execute different types of marketing activities. Only 43 percent felt well equipped to execute e-commerce while, by contrast, 70 percent felt well equipped to execute brand building, the traditional “bread and butter” of marketing.
In many marketing organizations today, measurement is limited to whatever is available in Google Analytics, Adobe Analytics or other web analytics reporting system. And, lower value insights such as pageviews and clicks are what is most commonly reported. But what about insights into who is visiting? Or their level of engagement? Or better insight into the effectiveness of different pieces of creative content? Or the ability to create a personalized customer experience? Or the ability to offer different types of incentives to attract the best customers?
Marketers, hungry for these types of insights and capabilities, are turning to Adtech technologies to expand their enterprise marketing stacks. And, DMPs are one of the most common examples of this trend.
Data: The “Connective Tissue” of Martech and Adtech
As described earlier, DMPs allow companies to centralize data, both their own online and offline data as well as third party data, and activate that data though multiple marketing channels. While DMPs are still primarily used by advertising agencies, they are increasingly used by marketers. In fact, marketing technology vendors have been quick to acquire DMPs and bolster their capabilities.
Using a DMP, marketers can measure how campaigns perform for different customer segments and optimize their media buys and creative elements over time to improve effectiveness. Marketers are using DMPs to better understand the characteristics and behavior of their online visitors and present tailored experiences and offers. DMPs also help address the need to move closer to real-time execution in the digital and social era. They provide rapid capability to develop customer insights and push those insights to digital ad execution and marketing automation systems. In short, DMPs help marketers better understand the context of individuals as they move through their decision journeys and then act based on those insights.
Interest in DMPs has been surging in the past few years as the technology becomes a critical component of the marketing technology ecosystem. In fact, some predict that DMPs will eventually emerge as the one-stop shop for all marketing data needs.
Many marketers will determine that the data, capability and insight provided by DMPs are a valuable core competency. When an advertising agency or other third party manages a DMP on behalf of a company, data can be activated only in the channels managed by the agency. This creates execution gaps and analytical blind spots. Given the strategic importance of data and analytics, many CMOs will decide that the DMP and related capabilities belong in-house, where they become part of the broader marketing technology stack. In fact, according to those surveyed by Winterberry Group, 62 percent said their company has already implemented a DMP or plans to do so within the next 12 months.
Adtech and Martech will continue to converge in the coming years, as future marketing campaigns unfold in real-time across multiple channels. Advertisers, publishers, marketers and, most importantly, consumers all benefit as a result. As William Gibson famously remarked,
The future is already here — it’s just not very evenly distributed.