Marketing Bootcamp

What Startups Need to Know About Ad Tech

As a longtime entrepreneur, I know the pressure new business leaders feel to become an expert in everything their business entails -- even though it’s seldom possible. In a startup environment, where business leaders and innovators are juggling literally dozens of roles, it can be difficult to evaluate or understand the work of partners or vendors, whether they're involved with payroll, billing or advertising duties.

The broader business world has also become more complicated: Consider advertising technology, or ad tech, the industry I've devoted more than a decade to. This field is exploding, in terms of resources, investment and products. It can seem confusing because of the range of players and the noise and complexity of the ecosystem.

Yet leveraging ad tech efficiently can help startups and smaller companies punch above their weight. When done properly, advertising technology results in significant upside for advertisers seeking to drive more sales -- and for consumers, who benefit from a better browsing experience.

Nevertheless, there are important considerations for entrepreneurs and business leaders trying to make the most of digital advertising. By understanding how ad tech has changed and is still changing, businesses can ensure a better return on investment.

Related: Is Your Company Marketing Like a Taxicab Business in the Age of Uber?

Branding generates awareness, but performance ads drive sales.

Advertising is essentially divided into two worlds: branding and performance. Branding’s purpose is to raise awareness about a product or a brand (think of billboards for luxury retailers or glossy magazine ads for perfume lines). Performance or direct-response advertising is about generating immediate results in terms of sales.

Everyone in the market to buy something is connected to the digital world via a computer or a mobile device, making digital performance advertising an incredible opportunity for smart advertisers.

Advertising technology is mainly concerned with performance advertising. It’s a very hard task to interrupt the browsing of consumers who are inundated by information and orchestrate things so they'll react to an ad and eventually take a specific action. Usually, the end goal is to prompt the consumer to click on an ad and visit an ecommerce site to make a purchase. But it could also to encourage a person to sign a petition or take part in a consumer survey. To be effective, performance advertising requires sophisticated technology and this is what ad tech is all about.  

The focus is on shopping intent.

The beauty of ad tech is that it focuses ad dollars on the people who actually want to buy something a company is selling. Capturing this shopping intent is a critical aspect of performance.

Here's a typical scenario: A customer visits a retail website and checks out some cool shoes but doesn’t buy anything. Later on, she will see targeted ads for a similar type of shoes. This will allow her to return to that retail site with just one click or a tap on a tablet. Performance advertising might also try to serve up ads for complementary products, perhaps apparel related to the shoe style.

These programmatic ads are created and delivered in a fraction of a second, based on algorithms that take into account hundreds of dimensions, including purchase history, context and additional shopping patterns. It creates a very smooth and enjoyable browsing experience, as consumers are served ads for products that truly match what they're in the market for.

Marketers can measure the return on investment.

Ad tech is revolutionary because it lets advertisers understand which ad campaigns are most effective. Not only is it possible to measure how many people click on an ad, advertisers can determine in real time precisely how many people bought something, when and even whether the sale occurred online or in a store.

But all that data can sometimes be overwhelming and can lead to executives spending hours reviewing analytics reports. Busy entrepreneurs and business leaders should spend more time on the up-front strategy and attribution model.

The attribution model, which is the foundation of a marketing strategy, determines how to measure value and credit the right channel for the sales that have taken place. Ad tech, with its breadth of data and ability to update in real time, offers robust attribution models. But business leaders must follow a disciplined program.

To start, leaders must decide what success looks like. A retailer might want to increase the average amount of each online sale, while a travel provider might want to sell out more flights. Once a business goal is in place, it's possible to tailor campaigns, keep tabs in real time and figure out what's working and what's not. From that information, it's possible to ramp up outreach on one platform to increase the chances for success.

Related: The Video Revolution Will Not Be Televised

Advertisers must cover all screens.

A few years ago, things were less complicated, as digital interactions mainly involved desktop computers. Today most people are using multiple devices, often mobile ones. This results in fast fragmentation of consumers across multiple marketing channels. The new complexity can be confusing at first, but it’s here to stay. And to be successful, businesses need to deal with it.

This is where ad tech can help advertisers ensure that the digital habits of targeted consumers are properly factored into the overall strategy. If a retailer knows that members of a targeted audience tend to make purchases late in the evening when they're likely on smartphones or tablets, then be sure that the campaign focuses on those devices toward the end of the day.

In other cases, a retailer may be targeting consumers who are using multiple touch points to interact with the company. Then be sure to have the right mix of marketing across all screens and the appropriate cross-device tracking capabilities. 

The world of performance advertising will continue to evolve. Advertisers will increasingly benefit from sophisticated machine-learning performance models and other technological advances that are serving up ads faster and that are more relevant. Ultimately, this will drive a better return on investment.

Ad tech definitely gives business leaders and entrepreneurs more insight and direction into their overall marketing plans. But business leaders must do their part and keep control of the strategy -- to ensure that they leverage ad technology to its full potential.

Related: Why the Future of Retail Will Blow Your Mind