Ad Tech 101: Guide for Beginners

Online advertising is a huge and complex industry that involves many players, technologies, and processes. To help you navigate this world, we have created this guide to introduce you to the basics of ad tech, or advertising technology.

What is Ad Tech?

Ad tech is the term used to describe the tools and platforms that enable digital advertising. Digital advertising is the process of delivering ads to online audiences through various channels, such as websites, apps, social media, video, email, and more. Ad tech allows advertisers to create, manage, and optimize their online campaigns, as well as measure their performance and effectiveness. Ad tech also allows publishers to monetize their online content by selling their ad inventory to advertisers.

Ad tech encompasses everything from ad servers, ad networks, ad exchanges, demand-side platforms (DSPs), supply-side platforms (SSPs), data management platforms (DMPs), and more. In this guide, we will explain what each of these terms means and how they work together to deliver ads to the right audiences at the right time. We will also cover some of the key trends and challenges that ad tech faces in the current landscape, such as privacy regulations, fraud prevention, and measurement issues. By the end of this guide, you should have a better understanding of ad tech and how it can help you achieve your online marketing goals.

Key Components of Ad Tech

Ad tech consists of many components that work together to facilitate the online advertising ecosystem. Here are some of the most common and important ones:

  • Ad servers: These are the systems that store and deliver ads to the online platforms where they are displayed. Ad servers also track and report on the impressions, clicks, conversions, and other metrics of the ads.
  • Ad networks: These are the intermediaries that aggregate ad inventory from multiple publishers and sell it to advertisers. Ad networks can offer different types of inventory, such as display, video, mobile, or native ads. Ad networks can also target specific audiences or niches based on various criteria, such as demographics, interests, behaviors, or locations.
  • Ad exchanges: These are the platforms that enable the real-time buying and selling of ad inventory between publishers and advertisers. Ad exchanges use an auction mechanism to determine the price and allocation of each ad impression. Ad exchanges can offer more transparency, efficiency, and control than ad networks.
  • Demand-side platforms (DSPs): These are the software tools that allow advertisers to buy ad inventory from multiple ad exchanges and ad networks. DSPs use data and algorithms to help advertisers find the best ad opportunities for their campaigns. DSPs also provide features such as campaign management, optimization, analytics, and reporting.
  • Supply-side platforms (SSPs): These are the software tools that allow publishers to sell their ad inventory to multiple ad exchanges and ad networks. SSPs use data and algorithms to help publishers maximize their revenue and fill rate. SSPs also provide features such as inventory management, pricing control, quality assurance, and reporting.
  • Data management platforms (DMPs): These are the systems that collect, store, analyze, and activate data from various sources, such as websites, apps, social media, CRM systems, or third-party providers. DMPs help both advertisers and publishers to segment their audiences and create personalized and relevant ads.

The online advertising ecosystem is a dynamic and fast-paced environment where millions of ads are delivered every second. To understand how the different components of ad tech work together to make this happen, let’s follow an example of a typical online advertising transaction:

The online advertising process involves several steps that are facilitated by the ad tech components. Here is a simplified overview of how ad tech works:

1. An advertiser creates an online ad campaign using a DSP. The advertiser sets the campaign objectives, budget, targeting criteria, creative assets, etc.

2. The DSP sends the campaign information to multiple ad exchanges and ad networks, where it competes with other campaigns for ad impressions.

3. A publisher makes its ad inventory available through an SSP, which connects it to multiple ad exchanges and ad networks.

4. When a user visits the publisher’s website or app, the publisher’s ad server sends a request for an ad impression to the SSP.

5. The SSP sends the request to multiple ad exchanges and ad networks, where it is matched with relevant campaigns from advertisers.

6. The ad exchanges and ad networks conduct an auction for the ad impression based on various factors, such as bid price, user data, contextual data, etc.

7. The highest bidder wins the auction and gets the right to display its ad on the publisher’s website or app.

8. The ad exchange or ad network sends the winning bid information to the publisher’s ad server.

9. The publisher’s ad server requests the winning ad from the advertiser’s ad server.

10. The advertiser’s ad server delivers the ad to the publisher’s website or app.

11. The user sees the ad on the publisher’s website or app.

12. The advertiser’s and publisher’s ad servers track and measure the performance of the ad impression using various metrics, such as impressions, clicks, conversions, etc.

13. The advertiser pays the publisher for the ad impression based on a predefined agreement (e.g., cost per thousand impressions (CPM), cost per click (CPC), cost per action (CPA), etc.)

14. The advertiser also pays a fee to the DSP, the SSP, the ad exchange or ad network, and any other intermediaries involved in the transaction.

This whole process happens in a matter of milliseconds while the user is browsing the website. This is how ad tech enables online advertising transactions at scale.

Ad Tech Dynamics

The online advertising transaction involves many interactions between different parties and components of ad tech. Each interaction has its own rules, protocols, standards, and challenges. Here are some of the main aspects of ad tech dynamics:

  • Real-time bidding (RTB): This is the process of buying and selling ad impressions in real time through an auction mechanism. RTB allows advertisers to bid for each impression based on its value and relevance for their campaigns. RTB also allows publishers to sell their impressions to the highest bidder and maximize their revenue.
  • Programmatic advertising: This is the term used to describe the automated and data-driven process of buying and selling online ads. Programmatic advertising uses software tools such as DSPs and SSPs to streamline and optimize the online advertising transaction. Programmatic advertising can use different methods such as RTB or direct deals.
  • Direct deals: These are the agreements between publishers and advertisers where they negotiate the terms and conditions of their online advertising partnership. Direct deals can offer more control, transparency, and quality than RTB or programmatic advertising. Direct deals can use different formats such as private marketplaces (PMPs), preferred deals (PDs), or guaranteed deals (GDs).
  • Header bidding: This is a technique that allows publishers to offer their ad inventory to multiple buyers simultaneously before sending it to their ad server. Header bidding can increase competition among buyers and improve revenue for publishers. Header bidding can use different methods such as client-side header bidding or server-side header bidding.
  • Cookie matching: This is a process that allows different parties in the online advertising ecosystem to share user data using cookies. Cookies are small pieces of data stored in users’ browsers that can contain information such as user ID, preferences, browsing history, or behavior. Cookie matching can help advertisers and publishers to identify users across different platforms and devices and deliver more relevant ads.
  • Attribution: This is a process that allows advertisers to measure the impact of their online campaigns on users’ actions such as clicks or conversions. Attribution can help advertisers to optimize their campaigns and allocate their budgets more efficiently. Attribution can use different models such as last-click attribution, first-click attribution, or multi-touch attribution.

Future Trends in Ad Tech

The online advertising industry is constantly evolving and facing new trends and challenges that affect the ad tech ecosystem. Some of the key trends and challenges include:

Privacy and regulation: As users become more aware and concerned about their online privacy, and regulators impose stricter rules and standards for data collection and use, ad tech players have to adapt and comply with the changing privacy and regulatory landscape. For example, the General Data Protection Regulation (GDPR) in the European Union, the California Consumer Privacy Act (CCPA) in the United States, and the upcoming phase-out of third-party cookies by major browsers are some of the initiatives that impact the way ad tech collects, stores, and uses user data for online advertising.

Identity resolution: As the online advertising ecosystem becomes more fragmented and complex, and users access digital content across multiple devices and platforms, ad tech players have to find ways to identify and reach users across different touchpoints and channels. Identity resolution is the process of linking user data from various sources, such as cookies, device IDs, email addresses, etc., to create a unified and persistent view of the user. This helps advertisers and publishers to deliver more relevant and personalized ads to users, and measure the effectiveness of their campaigns across the customer journey.

Programmatic advertising: Programmatic advertising is the automated and data-driven process of buying and selling online ad inventory through ad tech platforms, such as DSPs, SSPs, and ad exchanges. Programmatic advertising allows advertisers and publishers to access a large and diverse pool of ad inventory, target and optimize ads in real time, and reduce costs and inefficiencies in the ad buying and selling process. Programmatic advertising is expected to grow and dominate the online advertising market in the coming years, as more ad formats (e.g., video, audio, native, etc.), channels (e.g., social, mobile, connected TV, etc.), and models (e.g., header bidding, private marketplaces, etc.) adopt programmatic methods.

Artificial intelligence (AI) and machine learning (ML): AI and ML are the technologies that enable ad tech platforms to analyze large and complex data sets, learn from patterns and behaviors, and make predictions and decisions based on data. AI and ML can help ad tech players to improve various aspects of online advertising, such as targeting, bidding, optimization, personalization, measurement, etc. For example, AI and ML can help advertisers to find the best audiences for their campaigns, bid for the most valuable ad impressions, optimize their ad creatives and placements, personalize their ad messages and offers, and measure their campaign performance and outcomes.

Transparency and trust: Transparency and trust are the key factors that affect the relationship between advertisers and publishers in the online advertising ecosystem. Transparency refers to the ability to access and verify information about the ad inventory, the ad transactions, the ad performance, and the fees charged by various intermediaries. Trust refers to the confidence that the ad inventory is authentic, high-quality, brand-safe, fraud-free, and compliant with industry standards and regulations. Transparency and trust are essential for advertisers and publishers to achieve their online advertising goals and maximize their return on investment (ROI). However, transparency and trust are often lacking or challenged in the ad tech ecosystem due to various issues, such as fraud, viewability, brand safety, measurement discrepancies, hidden fees, etc.


Ad tech is a complex and dynamic ecosystem that enables online advertising. Ad tech consists of various components that work together to facilitate the online advertising process. Ad tech also faces various trends and challenges that affect its evolution and performance. Advertisers and publishers need to understand how ad tech works and how it impacts their online advertising strategies and outcomes.