5 Different types of digital advertising technology in retail advertising ecosystem

In this article, we will walk you through digital advertising technologies and their role in retail advertising.

It’s not just about getting your product in front of the customer anymore; the digital era demands more. It’s about creating a deeper connection and crafting an emotional experience for your audience. This is where retail media advertising comes in. 

Retail media advertising goes beyond traditional advertising methods. It addresses the fundamental pain points for retailers and helps them stand out in a crowded online space to reach their target customers. For consumers, it provides relevant and personalized content that speaks directly to their needs and interests. 

Discover the world of digital advertising technologies and their impact on the retail advertising industry in this blog. Learn how these tools are changing the way retailers reach and engage with their customers.

How does retail media work?

A retail media adtech ecosystem is designed to deliver targeted, efficient, and effective advertising to customers while maximizing revenue for publishers and ROI for advertisers. It leverages real-time data, sophisticated algorithms, and a network of publishers and advertisers to create a dynamic market for digital ads.

In short, the retail digital advertising ecosystem involves tightly knit components working together to ensure effective targeting and delivery of ads. These include:

  • The DMP (data management platform) acts as a bridge between SSP and DSP for collecting and managing data. 
  • The CDP (customer data platform) is used by online publishers to create detailed customer profiles for better ad personalization
  • Marketing automation platform makes the use of technology to automate marketing actions like emails, social media posting, and website actions. 
  • Data onboarding providers that help match offline data with online attributes
  • Ad exchanges that facilitate real-time auctions for buying and selling ad space
  • Ad networks that act as intermediaries between publishers and advertisers. 

Here is how it works:

Retail media ecosystem explained
  • Step#1: The process of online advertising begins when a user visits an online publisher’s website. 
  • Step#2: The ad server on the website then makes a call to a Supply Side Platform (SSP), which helps manage the advertising space inventory and fill it with ads while generating revenue for the publisher.
  • Step#3: The SSP then holds a real-time bidding (RTB) process to auction off the ad space to different advertisers.
  • Step#4: When a bid request is submitted by the Demand Side Platform (DSP), advertisers have the opportunity to purchase ad space. DSPs make this process easier by allowing advertisers to manage multiple ad and data exchange accounts through one interface.
  • Step#5: After reviewing bids, the Supply Side Platform (SSP) selects the winning ad, typically the highest bidder. The ad server then fetches creative assets from a Content Delivery Network (CDN), which is a distributed network of servers that ensures quick delivery of Internet content.
  • Step#6: Finally, the CDN delivers the creative content – aka the actual ad – to be displayed on the user’s device. This streamlined process allows for efficient and effective placement of ads.

Understanding advertisers and publishers

The advertiser

In digital advertising, the advertiser is the business promoting themselves through paid advertisements. They create these ads and use them to drive traffic to their website. However, in order for these ads to be displayed, they need to work with publishers who have ad space on their websites or platforms.

The publisher

Publishers are the owners of digital or physical spaces where ads can be placed. These spaces can range from large-scale websites like news sites and ecommerce sites to niche product specific sites. Publishers offer spaces for displaying ads, with the ultimate goal of generating revenue from their digital real estate by selling ad space to advertisers, all while ensuring a positive user experience for their audience. Today, large retail brands are understanding the importance of first party data and are building their own retail platforms and offering digital space as ads to other brands.

Types of digital advertising technology explained

Now that you know the basics of how digital advertising technology works, let’s dive deep into individual components to understand it better 

Data Management Platform

The foundation of every digital advertising strategy lies in a Data Management Platform (DMP). This centralized computing system not only stores data but also effectively integrates and manages it. A DMP plays a vital role in consolidating the information, and providing a holistic understanding of the consumer journey.

A DMP’s key function is audience segmentation, which involves categorizing audiences into distinct groups based on shared characteristics. This allows advertisers to personalize their messaging and creatives for specific segments, making campaigns more relevant and effective. With targeted advertising enabled by DMPs, businesses have a higher chance of engaging and converting customers by casting a precise net instead of a wide one.

In today’s multi-channel environment, where customer interactions occur across diverse online and offline platforms, DMPs are essential for managing the diverse data sets that come with this. It consolidates data from social networks, in-store purchases, and online browsing habits to create targeted campaigns that reach customers wherever they are. 

A robust DMP also has a large cookie pool which tracks user behavior across the web and provides valuable insights into their preferences and habits. With a substantial cookie pool, marketers can refine audience targeting even further. Additionally, DMPs manage the lifecycle of these cookies by refreshing them regularly to ensure the timeliness and relevance of advertising efforts.

Data Management Platforms (DMPs) merge campaign management, audience data, and media buying into a single process. This is especially important in retail media where personalized advertising and customer experience are crucial for success. With DMPs’ advanced audience segmentation and data integration capabilities, businesses can deliver highly targeted and measurable advertisements that drive retail growth.

Demand side platform

In online advertising technology, DSP technology is the catalyst behind the transformation of the ad buying process. In the not-so-distant past, this process was labor-intensive, manual, and riddled with potential errors. Today, DSPs have emerged as the driving force behind automated ad purchasing, offering efficiency and cost-effectiveness that were once unthinkable.

How DSPs Work

Step 1: Publishers make their ad impressions available through ad exchanges, creating opportunities for ads to be displayed to users while they engage with digital content.

Step 2: Demand Side Platforms (DSPs) assess and determine which impressions align with an advertiser’s campaign objectives using factors like user behavior, demographics, and browsing history.

Step 3: Impressions are then put up for auction in real-time, and DSPs use automated keyword bidding processes to secure them on behalf of advertisers. This efficient system ensures that the highest bidder gets the impression without any manual intervention needed.

Step 4: When using a DSP, advertisers establish their budget and specify their ad preferences, including parameters such as ad frequency and target audiences. This step ensures that the campaign aligns with the advertiser’s goals and objectives.

Step 5: DSPs seamlessly interact with various entities in the ad tech ecosystem. Data Management Platforms (DMPs) provide valuable audience insights for refining targeting strategies based on user data, while Ad Exchanges ensure the availability of ad impressions from publishers. Supply Side Platforms (SSPs) manage ad space inventory for publishers.

Essentially, DSPs simplify the entire procedure, from evaluating available ad impressions to enhancing ad placements. This empowers advertisers to make informed decisions based on data and concentrate on developing captivating and effective ad campaigns. The outcome is an automated digital advertising ecosystem that efficiently delivers impactful results for marketers. Notably, DSPs free advertisers from the complexities of bidding and purchasing processes, enabling them to focus their time and energy on creating innovative advertising strategies and compelling campaigns.

Supply side platform

A Supply Side Platform, or SSP, enables automated selling of ad space and allows publishers to maximize their revenue potential. With an SSP, publishers have a gateway to efficiently manage and optimize their ad inventory in digital advertising technology.

Here’s a closer look at how they function:

  • Publishers utilize SSPs to seamlessly link their ad inventory to numerous ad exchanges, Demand Side Platforms (DSPs), and advertising networks. This connection acts as a digital bridge, extending the reach and accessibility of the ad space they provide.
  • By exposing their impressions to a diverse array of potential buyers, publishers can optimize the revenue generated from their ad inventory. SSPs guarantee that publishers receive the best possible rates for the ad space they offer. 
  • When ad impressions are presented through ad exchanges, demand-side platforms (DSPs) come into play. These DSPs evaluate and purchase impressions for advertisers based on specific targeting criteria that align with their desired audience. This happens in real-time auctions, ensuring efficient and timely allocation to the highest bidder. By utilizing DSP technology, advertisers can reach their target users more effectively and efficiently than ever before.

Publishers rely on Supply Side Platforms (SSPs) to manage their end of the ad process, similar to how advertisers use Demand Side Platforms (DSPs). With SSPs, publishers have the power to optimize their available ad space by setting price floors and choosing which types of advertisers are eligible to purchase space on their website. This allows them to maintain the value of their inventory and ensure that ads align with their content and audience.

Ad exchange

An ad exchange is a digital marketplace where ad impressions are bought and sold in real-time auctions. These auctions happen at lightning speed, with every millisecond counting. 

As publishers add their available ad impressions to the exchange, advertisers use advanced technologies like Demand Side Platforms (DSPs) to evaluate them based on various factors. These factors can include the user’s browsing history, behavior, demographics, time of day, and even the position of the ad. Essentially, an ad exchange creates a massive pool of opportunities for ads to be displayed to users as they engage with digital content.

Ad exchanges act as the intersection point where DSPs and SSPs meet. While DSPs represent advertisers and seek out the most relevant ad impressions for their target audience, SSPs work on behalf of publishers by making their ad inventory available for purchase. With programmatic ad buying, specifically real-time bidding (RTB), ad exchanges bring publishers and advertisers together to facilitate the sale of ad inventory effectively.

They play a crucial role in improving efficiency in retail advertising by providing a platform for digital advertisers to access a wide range of ad impressions from various websites simultaneously, negotiations with individual publishers are no longer necessary. This not only saves time but also allows advertisers to reach a diverse and expansive audience. 

Ad networks

An ad network plays a crucial role as the central hub of the digital advertising world, connecting marketers with online publishers

Digital advertisers rely on ad networks to distribute their ads across a diverse array of online publishers, including websites, blogs, and digital platforms. This creates a broad canvas for ad exposure as consumers browse the internet, seamlessly blending into digital content and reaching a wide and engaged audience. Not all ad networks are the same, and some have a significant impact in the digital marketing world. For example, Google’s ad network has a wider reach. By enlisting these services, advertisers can ensure their ads are seen by potential customers in various online settings.

Difference between Ad exchange and Ad network

Ad exchanges operate as automated platforms for real-time transactions, primarily handling less important inventory. In contrast, ad networks function as entities rather than platforms, concentrating on high-quality ad space and typically relying on manual agreements for transactions with prices determined by publishers. 

Ad exchanges predominantly manage low-priority inventory, automating the sale of less sought-after ad space. Conversely, ad networks specialize in premium ad inventory by bundling top-quality placements for publishers to offer to advertisers. Ad networks are associated with premium ad placements, curating and presenting top-tier ad space on behalf of publishers to ensure that advertisers can access the most sought-after digital real estate. Unlike the real-time bidding process on ad exchanges, ad networks often involve manual negotiations with prices reflecting the premium nature of the placements.

FCC for Retail Media Advertising

Flipkart Commerce Cloud (FCC) is transforming the retail industry with innovative solutions. Our comprehensive suite of products is designed to optimize success by prioritizing data and integrating existing technology systems for seamless operations across all channels. 

The suite of out-of-the-box solutions, which Flipkart tests its enterprise daily, includes: 

Marketplace Technology Stack with 40+ modular “plug and play” components, including personalization, merchandising, catalog, and recommendation engine. It also includes seller and order management tools and inventory and warehousing technology. 

Retail Media Solution, which helps retailers place relevant, personalized ads for their customers. With FCC ads manager, retailers can run display ads, offer sponsored listings with contextual ads, and help build your ad ecosystem at relatively fractional effort and investment.

Retail Pricing Manager helps retailers understand competitive pricing strategies and optimize pricing. It helps track, compare, and analyze competitor price changes in real time and uses ML models to learn the price elasticity of demand from historical sales data. Combined with game theory it help predict how customers will respond to price changes. 

Eager to learn more about how FCC’s retail media solution can help? Contact our experts today!

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