data on tablet

Combined capabilities could be the secret to beating ad blockers and increasing revenue.

Over the last 15 years, reliance on traditional advertising avenues like direct mail, telemarketing, and print media has rapidly decreased to make way for the rise of ad tech — the multibillion-dollar industry providing ad serving, targeting, retargeting, analytics, machine-bidding, and buying for companies focused on capturing online consumers. And with more consumption platforms available to advertisers than ever before, ad spending has consistently been on the rise. According to Variety, global advertising expenditure is on course to grow 4.6% to $579 billion this year, up from 3.9% growth in 2015.

Unfortunately for advertisers, the use of ad blockers has risen alongside ad tech’s increasing popularity, making it much more difficult for advertisers to make effective use of consumer data. According to the New York Times, one in five smartphone users (or almost 420 million people worldwide) utilize ad blocking when browsing the web on cellphones. That represents a 90% annual increase, according to a new report from PageFair.

Blurred Lines

As brands and agencies seek to combat ad blocking technology, the line between ad tech and martech has blurred. “Paid media and engagement marketing have previously been treated separately, with ad tech and martech operating in silos,” writes Sanjay Dholakia, CMO of Marketo for Exchange Wire. “This has to change to reflect increasing consumer expectations for a more cohesive and relevant brand experience.”

Modern digital consumers demand personalized excellence from advertisers, and expect ad units to provide a cohesive experience tailored to their consumption habits — rather than creating an unrelated intrusion to their web browsing. As advertisers seek to provide relevant and useful content while also circumventing ad blockers, engagement marketing has emerged as the most effective way to do so.

Investors Prefer Martech

For these reasons, investors have shown increasing interest in martech, and funding for martech has surpassed steadily decreasing investments in ad tech. Why are investors more likely to spend on martech? According to the Wall Street Journal, “Advertising technology took off on the promise to automate the buying and targeting of ads across the web.” Martech companies, on the other hand, have “focused on selling software on a subscription basis, often directly to marketers. The recurring and relatively predictable software-as-a-service revenue model is often more attractive to investors because it’s less exposed to fluctuations in ad spending and other market dynamics.” The distinction between the two may be increasingly blurring, but one thing’s clear: investors prefer martech’s predictable revenue model.

The Business of Customer Experience

“Marketing is opening up, moving from being in the business of communications to being in the business of customer experiences,” say Dholakia. “By bringing point solutions into one central platform that talks to one central database, martech and ad tech can work together in partnership, creating a single, delightful customer experience.”

Ad blocking presents a major problem for brands and agencies, and an inconsistent ad tech business model has led investors to turn to martech. As the consumer landscape demands increasingly creative, immersive ad experiences, brands would be wise to consider how advertising and marketing teams can help each other, combining forces and utilizing consumer data to create cohesive ad units.