WTF is MadTech

Industry Index began using the term “MadTech” as opposed to AdTech or MarTech, as these technologies began to converge and overlap. We think of MadTech as the intersection of AdTech and MarTech. So first some definitions:

The term “AdTech, which is short for advertising technology, broadly refers to different types of analytics and digital tools used in the context of advertising. Discussions about AdTech often revolve around the extensive and complex systems used to direct advertising to individuals and specific target audiences.”  Techopedia

MarTech is the blending of marketing and technology. Virtually anyone involved with digital marketing is dealing with MarTech, since digital by its very nature is technologically-based.” MarTech Today

AdTech was borne by Google. Yes, there were other companies earlier, but Google really created the category.  They figured out how to make gobs of money by leveraging their proprietary technology to sell advertising (via paid search results).  Many others have followed in their wake, but AdTech companies  make money one of two ways:

  1. They sell media married with a proprietary technology. Their income statements have a huge top line, but the next line is an expense, their Cost of Media, and usually runs 60%~90% of total revenue.  This includes DSPs, exchanges, SSPs, ad networks, retargeters and publisher optimization tools.
  2. They sell a technology based upon the number of impressions served (the CPM model).  This started with ad serving and has continued to evolve to include DMPs, creative optimization, rich media, ad verification, measurement and analytics.  (A lot of publisher-centric technologies — which we also cover under MadTech — also follow this model, sometimes counting “pageviews” or “visitors” rather than impressions.)

MarTech meanwhile is traditionally sold under a software or service contract and recently adapted to a SaaS model. It’s offered directly to brands rather than through  agencies and other intermediaries.

Another way to differentiate AdTech from MarTech is that AdTech typically targets anonymous audiences, while MarTech targets known customers.

It’s All Melding Together

Today, the distinctions among AdTech and MarTech are no longer clear.

MarTech companies are moving into the realm of AdTech.  They are actively engaging with unknown customers  (think HubSpot and Marketo, who are actively engaging in tracking anonymous website visitors while also managing known visitors). Equally importantly, MarTech is often initiating the decision to target a known or unknown user.

Retargeting, which was traditionally AdTech and therefore anonymous, is now partnering with companies that translate cookies to users, emails, and sometimes names and addresses. AdTech companies, in which we’ll include publishers, are also rapidly trying to move their business models from “media” to “technology.”

Large vendors like Adobe and Oracle have acquired AdTech companies and integrated their technologies into their other marketing technologies and built a marketing and advertising stack, effectively consolidating these categories into a unified offering.

AdTech is beginning a massive transition and likely consolidation. Some of the change is due to the preference equity investors place on “technology” over “media,” but much is due to the frustration of buyers over the lack of transparency and the clearer opportunity to create value for their clients with a “technology” sale. Of course some players, particularly publishers, still seem to prefer the “media” model, but these preferences will also evolve as publishers experience the value and increased revenue opportunities of transparent pricing.

Also, the boundaries among silos within a company are fading as new technologies are deployed. Delineation between call centers, marketing and sales used to be clear. But with a persistent user ID that follows a customer across websites, phone calls and advertisements, companies are forced create far more overlap among these formerly disparate groups.

AdTech and MarTech are becoming interchangeable terms used to describe an assortment of technologies, data sources and tools that  fundamentally focus on reaching the right audience with the right message at the right time and place.
For this reason, Industry Index has decided to call all of this technology MadTech. Now our challenge is to appropriately categorize and organize these different companies into a structure that is understood, searchable, and provides knowledge to our community.

Author: Jonathon Shaevitz

Jonathon Shaevitz is the CEO of Industry Index.

Posted in MadTech and tagged , .