How do business and tech inputs coexist in tech industries? Adtech example.
Published: 2023-03-04 11:55:15

Adtech is a field of advertising technologies i.e. this is a tech field. Yet business plays a huge role in it. How is it made sure that business decisions are coexisting peacefully with tech initiatives? The question we propose here is vast, so let’s try and unpack it using one particular example, dealt in a programmatic environment. Even if it does not answer all the questions one might have, it will definitely help to find an angle to approach such concerns. 

Let’s start with quickly defining what ad tech really is - it is a multibillion industry focused on delivering context and targeted online advertising to internet users via non-direct campaigns. This means that the core of this industry is to make sure that either open auction is happening at the moment when the user is visiting the page on the open web or an ad is delivered via some other predefined method. The open auction situation is pretty straightforward and is based solely on technology - bid requests are sent to the advertisers, chosen by a machine learning algorithm, every advertiser uses their predict model to guess the lowest possible winning price, makes a bid and then the highest bid wins. But what about so called (by me) other predefined methods’?

In adtech, more specifically in programmatic, all sorts of deals exist. Namely, private, preferred and guaranteed. Private deals are more or less similar to open auction, only with one key difference - only selected, invited buyers can participate in bidding for the bid requests sent in such a manner. Preferred and Guaranteed deals on the other hand are sold in a one-to-one manner, so they resemble direct bidding. At this point the question neggs itself - what is the difference between those deals and direct bidding?



![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/0o2dktz3hcs4bqnj15fg.jpg)

There is no straightforward answer to this question, and in fact maybe there is no answer at all. From one point of view, the way any industry works is it starts from an idea, evolves into something, then a bunch of new, more innovative ideas come around, many of which later start resembling the initial idea. This might be partially true about direct bidding and guaranteed deals in ad tech for obvious reasons. From another point of view though, for both publishers and advertisers there is a huge difference between having to negotiate every one and single deal between each other and having Exchanges and SSPs between them that can help with this process. The more an SSP or an Exchange evolves, the stronger their Client Services and Account Manager teams become, the more they know about the publisher and advertiser and the easier it is for them to make a match. 

One might ask, but if this match is done manually, what is the point of complex machine learning algorithms that are doing essentially the same match? The point is that programmatic offers both publishers and advertisers a choice. A choice of the instruments they want to use for one volume or another for a publisher, and for one portion of the budget and another for the advertiser. So even if Guaranteed deals do essentially stand for the same thing as Direct deals, working with an Exchange or an SSP is much more convenient for an advertiser or an agency and this can hardly be denied. 

Lastly, as a bonus observation, I want to address the question some of you might have formulated during this article - but what about the time that it takes from the moment the request is sent to the moment the ad is shown? Won’t it be higher for Guaranteed Deals because of the presence of multiple entities between the publisher and the advertiser? The answer is, yes, but not really. Of course, the processing time of the request is higher for Guaranteed deals than it is for Direct deals, but not drastically, so the difference can be neglected. One should bear in mind that traffic received for Guaranteed deals usually avoids all the machine learning bid shaping and filtering tools, so there is no time lost there. 

To conclude, I want to encourage all advertisers and publishers working in the programmatic space to reach out to their AMs and TAMs and consider creating deals. Selling traffic via deals is not an answer to everything, but sure as hell a useful tool in one's toolkit. Happy selling and happy buying everyone!