AD TECH INSIGHTS
Posted on Dec 8, 2023

Unveiling the Programmatic Advertising Ecosystem Without Third-Party Data

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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.

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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 and how SmartHub meets this challenge — read on in our extensive article.

Programmatic Advertising Ecosystem: What is It?

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) technology to display relevant ads to targeted groups of users. 

Programmatic Advertising Ecosystem

The ecosystem of programmatic

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.

Components of the Programmatic Ads Ecosystem

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.

Demand-Side Platform (DSP): how advertisers automatically bid on ad inventory

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 type of ad inventory they need;
  • ad format (video, audio, banner, etc.);
  • define the target audience;
  • set a purchase budget;
  • view campaign statistics, and much more.

The programmatic advertising ecosystem is a multi-channel ecosystem; it allows advertisers to use many DSPs with different functionalities simultaneously. 

Supply-Side Platform (SSP): how publishers manage and sell their ad inventory

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:

  • optimize their profits by selling ad inventory;
  • share data about their audience;
  • provide contextual page signals to ad exchanges;
  • value specific ad slots and determine their formats;
  • view sales and impression statistics, and much more.

Today, large publishers, such as the world’s top media, can sell even their premium ad inventory through SSPs. 

Ad Exchanges: a key element for buying traffic and selling advertising inventory

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.

  1. Receive slots and first-party data from the SSPs.
  2. Receive requests from the DSPs for the type and format of the required ad inventory.
  3. Organize bidding using the chosen technology (often real-time bidding) or their stack.
  4. Collect available feedback data and analyze it for better ad serving.

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:

  • mobile advertising;
  • native advertising;
  • video advertising;
  • pre-bidding;
  • direct automated advertising;
  • and combined technological methods.

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. 

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Data Management Platforms (DMP): more data for better targeting

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. 

Challenges in the Era of Third-Party Data in Advertising

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:

  • most users (63%) believe that companies that request their data use it in a non-transparent way, which is worrying;
  • almost every second user (48%) has already refused to purchase products or services because of privacy concerns from the companies providing them; 
  • and three out of four (76%) will not enter into a relationship with a company they cannot trust to provide their data. 

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. 

Global Programmatic Advertising Spending

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. 

Advantages of Programmatic Advertising Without Third-Party Data

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.

  1. Improving the quality of information collected and analyzed to target audiences. Relying on first- and second-party data is a strategy that leads to developing the betting mechanism itself. Especially when combined with machine learning (ML) and artificial intelligence (AI) technologies that can successfully create and update models in the programmatic advertising ecosystem. Thanks to high-accuracy data, real-time metrics, and other technologies, publishers and advertisers get precise targeting without violating privacy rules.
  2. Reducing data usage which improves computation speed and increases process fault tolerance. It also enhances the results of the campaigns’ analysis. The better the analysis, the more successful the programmatic infrastructure business model for the parties is.
  3. Improving the security of user data by implementing privacy-enhancing technologies (PETs). There are a lot of PETs, but most often, companies and platforms use combined solutions for data protection, research, and exchange. 
  4. Developing in-house data gathering and computing channels on the supply and demand side. All the collected data can be reused for better targeting and building thematic user bases. The AdTech ecosystem will only benefit from such a solution.
  5. Improving yield management by eliminating vendor commissions. The less the chain of buying and selling traffic in programmatic advertising infrastructure relies on 3rd party data, the easier and more profitable it is for the parties to build direct relationships and reduce transaction costs.

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. 

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How SmartHub Enhances the Programmatic Experience

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. 

  • Developing and improving targeting types. We use such attributes as traffic type, ad format and size, geo, sources and publisher IDs, connection type, device OS, and other non-public targeting types that do not violate user privacy being deployed in the multi-channel ecosystem. 
  • Deploying fraud detection technologies. We are talking about a number of technologies that modernize the process and increase the security of both users and exchange parties. Our traffic scanners include Pixalate, Protected Media, and ClearTrust (formerly Botman). The ones that can be integrated additionally are Forensiq, GeoEdge, HUMAN Security (formerly WhiteOps), and Fraudlogix.
  • Filtering support during targeting. We primarily filter content by the following indicators: GEO, blocked content, adult traffic, IFA and IPv4 filters, mismatched IPs and bundles, and much more. 

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. 

Success Stories With SmartHub

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. 

  • 207% increase in revenue in 6 months for Mobupps. The company has chosen a SmartHub White Label solution with powerful real-time bidding (RTB) technology. 
  • 585% increase in revenue in 4 months for Take1ads. It was a highly profitable partnership that began the development and execution of strategic goals for the company, building a modern AdTech ecosystem.
  • 4494% increase in revenue in 7 months for Toucan Ads. In addition to the white label real-time bidding (RTB) platform, Toucan Ads received an AdOps outstaffing specialist from SmartHub to improve the deployed solutions within its own ecosystem of programmatic advertising. 

“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. 

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FAQ block

How does SmartHub address the challenges of third-party data in ad exchange?
When running the programmatic advertising ecosystem, SmartHub ad exchange algorithms use targeting by traffic type and ad size, format, languages, source of origin, unique publisher ID, connection type, OS, and other data. This ensures that the ecosystem of programmatic receives precise ad targeting without user privacy violations.
What measures does SmartHub take to address potential ad fraud within its programmatic advertising ecosystem, especially without third-party data reliance?
The ecosystem of programmatic advertising that operates through SmartHub has many ad fraud detection integration options. SmartHub technologies fight fraudulent ads on many levels. We help your business build a programmatic ads ecosystem that meets all industry protocols and is fully protected. So you can scale your ad activity with peace of mind.
Do advertisers using SmartHub have access to detailed analytics?
Yes! We allow our customers to analyze the ecosystem of programmatic ads during and after the advertising campaign’s completion. When we say that we offer real-time monitoring and analytics, it means that information about the status of the programmatic advertising framework is updated every 1.5 seconds without correlation to traffic volumes. Plus, traffic scanners also generate stats about prevented ad fraud (during a given period).
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