The big three: Adtech's latest influences

Consumer Electronics Show, the annual tech trade show held in Las Vegas, Nevada, anticipates the future direction of the industry through its presentation of new tech initiatives. Yet inevitably, as ad tech evolves and changes, new opportunities—and obstacles—arise. The Drum’s US editor, Ginger Conlon, caught up with ad-tech company Codewise’s CEO, Dr. John Malatesta, in a video interview to discuss the three biggest influences on ad tech with suggestions as to how marketers can make the most of the opportunities available and avoid unnecessary obstructions.

Ad tech limitations

“Ad restrictions are the number one influence on the ad tech industry,” said Dr. Malatesta. Because major platforms like Facebook, Google, and other mainstream digital publishers are (for understandable reasons) tightening ad restrictions on their sites, a great number of industries have increasingly limited advertising possibilities. He gave the example of banks, which cannot advertise student loans on Facebook.

“These restrictions are preventing multibillion-dollar industries developing services and goods used by billions of consumers from utilizing the full spectrum of advertising platforms,” Dr. Malatesta said. The financial services, alcohol, gambling, nutrition products, gaming, medication, dating, and mobile app industries are just some of those affected.

However, the surge of ad exchange platforms like Zeropark suggests there is a solution for non-traditional industries to reach their customers. Dr. Malatesta thinks that these platforms can serve as “a gateway to those advertisers that cannot advertise on mainstream sites” and could help bridge the gap.

Ad formats are another cause for concern. While many social platforms do support display advertising, they don’t enable zero-click, pop, or push notifications. This is also true for ad objectives. Mainstream sites mainly support branding and awareness as opposed to sales-oriented ad objectives like leads, sign-ups, or installs.

“Ad exchange platforms like Zeropark are an ideal solution also for those industries (e.g., automotive) that are permitted to advertise on mainstream websites but that find them extremely ROI inefficient due to the continuously increasing cost driven by the ad space saturation,” said Dr. Malatesta.

Compliance and blockchain resolutions

Advertising with any platform or publisher should be straightforward, but it’s far from it. The advertising execution process is highly convoluted, requiring the involvement of many actors. Given the need to select from among dozens of publishers, cooperate with payment solutions like PayPal, deal with hosting solutions such as Amazon Web Services, and partner with ad-tech companies, the list of actors needed for a company to advertise is extremely long, and the links among them are mostly indirect and hidden.

“Plus, the actors and their interactions are digital; therefore, it’s easy to remain anonymous, and they all happen at the speed of light, below 200 milliseconds,” said Dr. Malatesta. “So all this creates the perfect conditions for lack of transparency and, therefore, ad fraud.”

Compliance, whether AI-powered or human-based, can mitigate the issue of lack of transparency, but Dr. Malatesta realizes that compliance practices are expensive options. This is why only ad-tech companies like Codewise, or major publishers like Facebook, Google, or CNN.com, can afford to invest in compliance.

According to Dr. Malatesta, “Small websites cannot afford to make compliance investments and have small revenue streams that do not allow them to cherry-pick advertisers; thus, unconsciously, due to lack of visibility, they may end up working with fraudulent ad-tech companies, advertisers, or payment solutions.”

Dr. Malatesta suggests getting all the actors in the ad-tech system to work together. “Advertisers, publishers, and media agencies all need to come together in one global organization to define ad standards and minimum ad requirements,” he said. “We need law enforcement and legislators to revisit some privacy policies and rebalance the privacy of consumers and their online safety.”

Blockchain may be the most realistic and feasible solution. Because all online interactions are pulled together into one open platform that transparently unites all actors—advertisers, publishers, media agencies, law enforcement, and payment and hosting providers—the blockchain can “deliver transparency and trust, which will help to minimize fraud,” Dr. Malatesta added.

The implications of AI

AI is undoubtedly disrupting the way in which the ad industry operates, so inevitably, it’s impacted the world of ad tech too.

“Digital marketers are tired of the abundance of data. They want to be told what to do, and ideally, they'd like the platform to do it for them.” And this is exactly what AI can do.

As AI moves from descriptive analytics toward prescriptive analytics and becomes increasingly tailored, it can help digital marketers make smarter decisions for their target audience while saving time and money.

“AI is becoming more pervasive in the ad-tech industry. Fully AI-powered ad measurement and optimization platforms like Voluum now allow digital marketers to define the optimal distribution of traffic among offers, landers, and their combinations at a speed and accuracy that no human-based A/B testing can achieve,” Dr. Malatesta said. “This results in higher ROI and saves time and budgets, which can be reinvested in campaign operations to achieve unlimited scalability,” he concluded.

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