The future of the advertising industry will be shaped by a range of disruptive themes, with adtech being one of the themes that will have a significant impact on advertising companies.A detailed analysis of the theme, insights into the leading companies, and their thematic and valuation scorecards are included in GlobalData’s thematic research report,Advertising Tech (Adtech) – Thematic Research.  Buy the report here.

Advertising technology (adtech) is a blanket term covering all software and services used to deliver and target digital advertisements. It is the backbone of the internet advertising industry. Internet advertising will become a nearly $1tn industry in the next five to seven years, according to GlobalData forecasts. Adtech will play a vital role in this growth.

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Adtech’s emergence over the past 25 years has been driven by the rise in the number of internet users; the emergence of mobile, social media, ecommerce, and streaming platforms; and the growing sophistication of analytics tools. However, it is under scrutiny from data privacy regulators for its role in mishandling users’ data.

In competitive terms, the adtech industry is primarily a face-off between tech giants like Google, Meta, Amazon, and Alibaba and pure play vendors like The Trade Desk, MEdiaMAth, and Amobee. The tech giants dominate the market with their massive user bases and sophisticated adtech walled gardens. Several pure play vendors will become acquisition targets for Big Tech vendors over the next three years.

However, not all companies are equal when it comes to their capabilities and investments in the key themes that matter most to their industry. Understanding how companies are positioned and ranked in the most important themes can be a key leading indicator of their future earnings potential and relative competitive position.

According to GlobalData’s thematic research report, Advertising Tech (Adtech), leading adopters include: ADOBE, Alibaba, Alphabet, Amazon, Basis Technologies, ByteDance, Criteo, MEdiaMAth, Meta, Microsoft, Singtel and The Trade Desk.

Insights from top ranked companies

ADOBE

ADOBE’s key adtech offerings are a DSP (ADOBE Advertising Cloud), a DMP (ADOBE Audience Manager), and a CDP (ADOBE Real-time CDP). It also offers ADOBE Analytics for campaign optimisation, ADOBE Target for personalised ad content testing, and ADOBE Experience Platform for omnichannel advertising.

While ADOBE is preparing for the post-cookie era by focusing on first-party user data, it still allows clients to use third-party data to profile users. ADOBE offers advertisers access to leading OTT channels (e.g., Roku and Sky) and walled garden platforms (e.g., YouTube and Google Search). It serves a range of organisations, including Anheuser-Busch, ADP, Charles Schwab, and Lenovo, and has many adtech patents.

Amazon

Amazon is strengthening its position in the adtech market, aiming to disrupt the Google-Meta duopoly. Its walled garden comprises a DSP, ad verification solutions, publishing platforms, and access to a growing pool of user data. The vast Amazon ecosystem (that spans ecommerce, consumer electronics, entertainment, publishing, and more) generates massive volumes of first-party user data and shields it from the ‘cookiepocalypse’. Amazon uses its AI to analyse user behaviour, create contextual information on audience, and help advertisers target ads across the ecosystem. The company will aggressively pursue M&As over the next two years to expand its adtech capabilities. However, its access to sensitive user data, ability to discreetly target its ads over other advertisers, and a tendency to limit fair competition will bring it under scrutiny from data privacy and antitrust regulators worldwide.

Microsoft

Microsoft Advertising (formerly Bing Ads) helps advertisers to build campaigns and target users across Microsoft’s Search (includes Bing, Yahoo, and partner search engines like DuckDuckGo) and Audience Network (Edge, Outlook, MSN, Xbox, and LinkedIn). The company claims that Microsoft Search powers 37.4% of US desktop searches and 7.2 billion monthly searches worldwide. It has also integrated AI in Microsoft Advertising to boost targeting capabilities with features such as Dynamic Search Ads (that adapt to a user’s online search) and automated bidding strategies (that give advertisers a better chance of winning inventory auctions). However, Microsoft Advertising lags behind Google Ads due to Google’s dominance in the global search engine market.

In December 2021, Microsoft acquired AT&T’s Xandr (a DSP and SSP provider) to strengthen its position in the adtech space. Xandr’s global clientele, bidder algorithm and APIs, and agnostic interoperability solution for identifiers will enhance Microsoft Advertising’s ability to expand its share in the adtech market.

To further understand the key themes and technologies disrupting the technology industry, access GlobalData’s latest thematic research report on Advertising Tech (Adtech).

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GlobalData, the leading provider of industry intelligence, provided the underlying data, research, and analysis used to produce this article.

GlobalData’s Thematic Scorecard ranks companies within a sector based on their overall leadership in the 10 themes that matter most to their industry, generating a leading indicator of their future earnings and relative position within key strategic areas.