Advertising in the online space can be a difficult endeavor. It is too easy for advertisements you invested in to be buried amongst competitors and never reach your intended audience. One potential solution could be an investment in Adtech. ‘Adtech’, or ‘advertising technology’, is a collective term for tools allowing both management and analysis of online advertising campaigns. These services seek to target your advertisements to those deemed most relevant to your product. On top of this, online analytics tools are employed to provide detailed information about the results of each campaign. Below is an introduction to Adtech systems, the laws of Adtech, and the potential benefits Adtech investment could bring to your business as against untargeted online campaigns.
An introduction to Adtech
First, it is important to understand how advertisements are targeted and how the purchase of ad space is carried out. Adtech is built upon analyses of customers and potential future customers. To ensure the ads reach the most relevant audience and have the greatest impact on the business, Adtech services will use Data Management Platforms. DMPs analyze consumer information and generate profiles based on information gathered on each individual. These profiles are then grouped using shared characteristics such as gender, age, location, internet search history, and many others. Advertisements will only be shown to the groups deemed most likely to be interested in the product or service advertised. This is intended to maximize the likelihood of a successful campaign.
Real time bidding
Available ad space is commonly allocated via real-time bidding. This is the automated sale of advertising space carried out during the loading time of any particular web page. Two further platforms are employed here. Supply Side Platforms (SSPs) allow site administrators to offer advertising space for sale. Demand Side Platforms (DSPs) facilitate advertisers in bidding for this advertising space. Through SSPs, administrators can publicize their available ad space and establish prices. DSPs are used by advertisers to determine which profiles to target and the prices they are willing to pay. When an internet user matching a certain profile clicks onto a website, the SSP will take this profile information and send a request for a relevant advertisement from the DSP. Once a match is found, the transaction takes place automatically and the advertisement will be shown to a relevant consumer.
Lastly, Adtech platforms allow advertisers to analyze the results of their campaigns to ascertain where their ads are being placed and how they are performing. Advertisers get access to real-time data on on-site traffic, as well as numbers of new visitors and trends over time. This can inform future advertising decisions.
Potential benefits of Adtech
Some of the benefits Adtech can bring to a business may have already become clear by this point. That said, there may be some not yet considered. Benefits may include:
Greater results for a lower cost due to adverts only being showed to consumers adjudged most likely to be interested.
The ability to optimize bids for advertising space through analysis of the performance of previous campaigns.
The sustained benefit of this analysis over time, gaining more information about which profiles are most likely to purchase after each campaign.
Higher conversion rates of customer interest into sales through easily accessing your target population.
The expansion into the continental or global markets without the cost of physical development.
The combination of all the aforementioned tools into a single platform.
Adtech laws and regulations
The laws applying to Adtech are confusing in that it is not specifically regulated in the UK. Instead, Adtech currently engages several legislative schemes based on, but not limited to, privacy, competition, consumer protection, and fraud. In effect, this creates a market primed for rapid legislative development in the coming years. It is thus vital for any small business seeking to benefit from Adtech that they have an understanding of the legal overhaul the industry may face.
To take privacy, the complications introduced through the General Data Protection Regulation (GDPR) make online profiling a potentially risky practice. Adtech firms must now obtain positive consent from the user whose data they seek to harvest rather than the implied consent required under the previous Privacy and Electronic Communications Regulations. Non-compliance can result in a fine of up to £17.5 million or 4% of annual global turnover, whichever is higher. After a pause due to the Covid-19 pandemic, the UK data watchdog has resumed its inquiry into Adtech practices for inconsistencies with the GDPR. This indicates the possibility for further limitations to be placed on Adtech and continued alteration of the laws relevant to the industry.
There is also the possibility of impending competitive legislation being implemented. Following a Competition and Markets Authority study into the digital advertising market, the Authority recommended that the government pass pro-competition legislation. In response, the government created the Digital Markets Taskforce to help formulate a more competitive environment in digital advertising. This is perhaps not surprising when Google constitutes over 90% of the UK’s search advertising market and Facebook occupies over 50% of the display advertising market. The result could empower new players in the marketing space. Updates to Adtech laws may create new opportunities for businesses to advertise through different digital agencies.
Lastly, some providers have made use of ‘dark patterns’, seeking to gain consumer consent through deceptive means and manipulative design. This has been the subject of scrutiny from many global authorities, including the UK’s Digital Regulation Cooperation Forum (DRCF). For the 2021-22 period, the DRCF has included design frameworks in their priority areas, and the CMA has expressly noted the manipulative design influencing the consumer’s choices when it comes to consent to use of their data. Again, then, this could be an area ripe for legislative action in the near future.
Difficulties for smaller business in implementing Adtech unassisted
Evidently, whilst Adtech offers many potential benefits for a business, the combination of various regularly altered legislative regimes leaves the industry fraught with potential legal difficulties. This is worsened for small businesses through the practical demands of Adtech. Managing the interplay of several complex tools is particularly time-intensive for a smaller business amongst the many other business activities that have to be conducted daily. Similarly, the operation of these tools is incredibly demanding. They require massive computing power and volumes of data a smaller business would unlikely have access to.
Lastly, a smaller business risks infringing the GDPR by not gaining the appropriate consent from users they harvest data from. However, some Adtech platforms incorporate frameworks such as the IAB’s Transparency and Consent Framework. Google, for instance, has declared itself TCF complaint as well as other Adtech firms like Adverty AB and MobilityWare. Further, given the potentially harsh penalties for breach of GDPR regulations, a small business may be better served operating through an Adtech platform than operating independently.
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