There are three key players in digital advertising — advertisers who spend the money, publishers who earn it and the ad tech firms that sit in between. Many firms either over index on one side or fail to evolve the value they add, which can lead to a breakdown in trust or long-term viability.

Ad tech innovations are transforming this space — there are three key areas where innovations are creating impact. First is AI-driven ad content (static, dynamic or video). It is governed by generative AI. It used to take a long time to develop the creative — it is now being done in real time. The creatives could be personalized, and high impact creatives could be generated at scale.

Another level where innovations work is automated targeting. It was based on key words. This has become obsolete. AI agents parse the web content, understand the context and identify autonomously brand-safe high relevance placements. Targeting is more precise and scalable now.

Third area of innovation is measurement and attribution. Advertisers are intreseted in outcomes. Previously these were probabilistic. These days they have become deterministic. These models are AI-powered. And there are LLMs. Both these facilitate attribution. Ad tech firms today are expected to take ownership of outcomes.

There should be a balance between the three key players. To begin with, ad tech firms just aggregated the supply. Later, they added targeting and optimization layers. These days they are expected to take the ownership of outcomes. Ad tech firms have to evolve as the industry shifts its position, and the bar is constantly rising. Instead of being middlemen, the ad tech firms must become enablers of efficiency and impact.