The convergence of adtech and martech: why now?
A new whitepaper discusses the difference between adtech and martech, how they developed in parallel and why the lines between them are blurring.
AdRoll’s ‘The Convergence of Adtech and Martech’ discusses how adtech and martech industries and disciplines are merging.
The merger of adtech and martech is most pronounced on the data layer. This is apparent with the investment marketing cloud vendors have made in technology acquisitions, and in the new capabilities, more ad platforms are providing.
The difficulty in explaining the difference between the two further demonstrates the fact they’re converging. AdRoll explains the difference in five points:
- Adtech solutions use performance-based models, whereas martech solutions use annuity-based pricing models,
- adtech solutions use cookie-based identification, whereas martech typically deals in first-party collected personally identifiable information (PII),
- adtech platforms primarily operate in a one-to-many environment, martech platforms operate in a one-to-one environment,
- agencies and partners are a part of the adtech orbit, whereas, in the martech world, brands work directly with vendors, and
- pricing models differ, and therefore the way markets value the two disciplines is different.
New phenomena are emerging as the lines between the two begin to blur. Marketers are beginning to invest in technology more than in advertising altogether. Additional factors driving the two together include that big global software businesses – those developing marketing clouds inhouse – are now acquiring adtech companies as a way of innovation. Innovation from within is difficult for these giants, so smart acquisitions can strengthen their overall position and help them diversify into new markets.
Further to this is a wider strategic shift in the market. In the past, media companies that provided the distribution channel, environment and audience captured a disproportionate amount of value. The platforms, by comparison, captured very little. Now, platforms and publishers are merging inside services like Facebook and Youtube.
These combined entities are capturing a large part of the value associated with the advertising. With access to vast amounts of first-party data, they are well placed to help marketers figure out what ads to show and who to show them to.
Advantages of the merger include:
- Building value: a better understanding of how customers engage with a brand will enable marketers to improve the customer experience,
- higher sales and better prices: tighter integration across all marketing activities will make it easier to deliver the right offer to the right customer,
- more control: linking advertising campaigns to personally identifiable data through a proprietary database using sophisticated probabilistic matching will increase campaign efficiency,
- confidence: marketers are able to base personalisation on a deterministic knowledge of the identity of the consumer, and
- attribution: multi-touch attribution is made easier, replacing first- and last-click models.
The whitepaper also explores roadblocks which exist that still hinder the convergence, such as:
- The customer: in adtech, there are few global players with the budgets to leverage the market. In martech, every company with an email list or a website is a customer.
- Decision making: CMOs control budgets, but responsibility for software licences or cloud services is split between IT and marketing. CMOs may spend more on IT than the IT manager, but without IT’s buy-in, success can be compromised.
- Different data: In martech, accuracy is everything. In adtech, recency trumps accuracy.
- Talent: different types of professionals work in these areas,
- Pricing: marketing is subscription based, whereas tech relies on CPM or CPA.
- Uncertainty: adtech is more vulnerable to the mood swings of disloyal consumers, and there are issues of fraud and brand safety.
- Competition: the thousands of companies working in adtech brings a new competitive landscape to martech.
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