AD TECH INSIGHTS
by Roman Vrublivskyi
Posted on Dec 8, 2023
Unveiling the Programmatic Advertising Ecosystem Without Third-Party Data
by Roman Vrublivskyi
by Roman Vrublivskyi
The AdTech industry is undergoing one of the most transformative processes — rejecting third-party data in the programmatic ecosystem. Companies will lose billions of dollars in revenue in the short term, but it’s about evolution and development for the long game. The programmatic advertising ecosystem is a complex environment consisting of many elements. We will discuss them all in detail below.
At this point, let’s say that the entire AdTech ecosystem is designed to provide the most relevant commercial possible to convert website visitors into customers. Programmatic infrastructure, in which ad sales are automated within a split second, has replaced direct ad sales agreements. Direct sales involve human-assisted contracts between the parties. They are still used, but only for a small percentage of the premium ad segment. Nowadays, programmatic ads infrastructure is the primary way to sell ads.
In the past, 3rd party data was a key element that ensured accurate user targeting. So-called third-party cookies were critically essential for this purpose. But cookies are slowly becoming a thing of the past. And while SmartHub still effectively synchronizes cookies for more accurate audience targeting, companies like Google, Apple, and Mozilla are on the verge of abandoning their use altogether. They are about to build a cookieless advertising ecosystem.
Why investing in a programmatic advertising ecosystem without 3rd party data is an asset to the future, what to choose – first vs third party cookies, and how SmartHub meets this challenge — read on in our extensive article.
A programmatic advertising framework is a technology stack that connects supply-side platforms (SSPs on the side of publishers) with demand-side platforms (DSPs on the side of advertisers) with each other through ad exchange. Ad exchange, in turn, utilizes mostly real-time bidding (RTB as one of the different types of programmatic advertising) technology to display relevant ads to targeted groups of users.
Infrastructure may involve DMPs (data management platforms) containing first, second, and third-party data, but this business model could be better. The reason is that DMPs are an integrated part that does not contribute to developing the AdTech ecosystem but only feeds it with different quality data.
SmartHub ad exchange focuses on direct targeting, which does not require the connection of DMPs. This way, the programmatic advertising ecosystem remains capable of growing and developing.
Let’s take an overview of the key components of the programmatic advertising ecosystem. This will help us better understand the challenge of building an AdTech ecosystem without 3rd party data for publishers and advertisers.
With the help of demand-side platforms (DSPs), solo advertisers and agencies buy audience. They buy an audience, not an ad space. It is essential to understand. If somebody sees an ad they are not interested in, no one benefits.
Advertisers use DSPs to manage the trading process in programmatic ads infrastructure comprehensively. With the help of DSPs, advertisers specify:
The programmatic advertising ecosystem is a multi-channel ecosystem; it allows advertisers to use many DSPs with different functionalities simultaneously.
Another important element of the ecosystem of programmatic is the tool of publishers — supply-side platforms (SSPs). Through them, publishers that own websites for visitors, most often thematic media, place ad slots and manage the process of their automatic sale.
Publishers use SSPs to:
Today, large publishers, such as the world’s top media, can sell even their premium ad inventory through SSPs.
SmartHub is an excellent example of an ad exchange platform vital to the programmatic advertising infrastructure. All actions of the ad exchange can be simplified to four points.
The oldest and most commonly used method of organizing bidding on ad exchanges is real-time bidding (RTB). Although it is not the only programmatic ads framework method, there are others:
The programmatic advertising framework is developing and evolving, so it is worth remembering that sometimes ad exchange is already integrated into DSP or SSP or even a part of a single combined solution. Development is unstoppable. We need to manage it for the sake of growth and profit.
You can explore SmartHub’s demand-side integrations option to gain even more insight into how to increase your ad exchange revenue. It is the same with the supply-side integrations option. An ad exchange is only helpful if connected to the proper inbound and outbound channels. Only some newcomers to the AdTech ecosystem can handle such configurations on their own, so we are always ready to assist all interested parties.
As mentioned, data management platforms are large computing and aggregation centers that receive and analyze user information. Within the ecosystem of programmatic advertising, this information is integrated with first-party data separately from DSPs and SSPs to target users while bidding through ad exchanges.
It is not required to use the DMPs at all, as the ecosystem of programmatic ads is full of other technological solutions for precise user targeting. SmartHub, for instance, has an integrated technology stack for targeting and retargeting that protects user privacy and does not rely on 3rd party data.
In short, the ecosystem of programmatic needs to abandon 3rd party data. And, of course, such market demand has its obvious advantages.
Third-party data in the AdTech ecosystem is not just undergoing a challenge; it is in a crisis with no way out. Users worldwide are increasingly concerned about the privacy of the information collected by companies and the applications they use.
According to Resmo’s summary data for 2023:
Of course, we are talking about 3rd party data, when companies receive information about users while they visit other websites and resources. In the programmatic advertising ecosystem, such information previously played a key role in targeting. But now things have changed. Let’s look at the spending of companies on using automated advertising infrastructure.
As you can see, the spending while using a programmatic advertising ecosystem for bidding in AdTech has been increasing over the years and is expected to continue rising. The only question is how to achieve this without violating updated data policies.
The introduction of data security standards such as GDPR and TCF forces companies to abandon third-party data. Sooner or later, the AdTech ecosystem will be completely cleared of bad-quality data or information gathered in a non-ecological way. Because it often violates user privacy and leads to operational and reputational losses.
The main advantages of building a programmatic advertising framework, both for supply-side with SSPs and demand-side with DSPs, that does not rely on 3rd party data include five points.
The so-called duopoly between Google and Facebook is an excellent example of how third-party data is rejected and how it benefits the advertisement business. These two companies do not buy 3rd party data because the amount of their information allows them to provide exceptionally detailed results during ad serving in the AdTech ecosystem.
Indeed, private companies, both on the demand and supply side, as well as owners of ad exchanges, can also benefit from refusing to use information obtained from third parties. A transparent data use policy will help build more open and trusting consumer relationships.
SmartHub meets the above-mentioned security requirements (GDPR and TCF), as well as the COPPA, CCPA, and others. In addition, we have implemented fraud detection mechanisms such as Scalarr into the programmatic ecosystem and introduced privacy-enhancing technologies (PETs) referred to as Ads.txt and Seller.json.
Let us give you a more comprehensive overview of how SmartHub enhances the programmatic advertising ecosystem within the scope of this article.
With SmartHub, you can easily earn money from your own AdTech ecosystem white label platform while receiving extended support from our technical consultancy team. White-label meaning is widely disclosed in one of our previous articles; it is a popular and rapidly developing business model.
Not to brag here, but our expertise is in setting up the high-tech programmatic advertising ecosystem and earning good money from it. Let’s look at some numbers.
“SmartHub became our guiding light, enabling us to grow and deliver top-notch solutions. They know how to start in the best way and what steps to take to succeed. Since partnering with SmartHub, our numbers have been going up. Their SaaS platform is truly remarkable. We appreciate the ongoing support they provide at any time.”
Moshe Sabia, CEO of Toucan Ads
More case studies are always available for you to explore. You can download a detailed programmatic ecosystem customization case description on each page or contact us immediately for advice on your business issue.
You can always reach the SmartHub team for a high-end technological ad exchange capable of almost unlimited scaling as a key element of programmatic infrastructure.
We guarantee installation of SmartHub in an average of 5–7 days! With SmartHub ad exchange, our partners have repeatedly achieved an increase in ROI by more than 500% and a return on investment in less than three months. It all depends on the project’s features, of course. But our joint work on building a modern programmatic advertising framework will be profitable and unforgettable for you and us.
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