Ad tech is headed to the stratosphere.
Not, like, growth-wise. But ad tech and marketing software is shifting to cloud-based infrastructure, which has heightened privacy standards, thus enabling companies once again to use data to target and attribute ads.
Why is ad tech heading to the clouds?
The main rationale for why ad tech companies are moving to cloud-based business models is privacy. Within cloud solutions like a data clean room, marketers can use their own data in combination with a walled garden like Amazon or Google, or a separate partner, to target ads.
The goal for AWS Clean Rooms, Amazon’s clean room solution, is for “publishers, advertisers and other businesses to collaborate with each other and leverage their proprietary data, which lives on AWS, in a better way,” Davor Golac, AWS engineering and product GM, told AdExchanger late last year.
Companies like Snowflake and Databricks have both invested heavily in developing ad tech and media offerings that are built atop platforms like AWS, Google Cloud and Microsoft Azure. Like the walled gardens, the big platforms offer out-of-the-box solutions like data clean rooms, as well as partnerships with independent software companies.
“We’re not in the advertising business; we’re simply in the cloud business,” Snowflake’s Global Head of Media, Tech and Advertising Bill Stratton told AdExchanger. “We try and maintain an important posture in the industry where we can be supportive of companies that are trying to build their ads business without worrying about partnering with companies that compete.”
What about the rest of us?
The major cloud players compete and partner amongst themselves. For example, Snowflake is a big competitor to AWS or Google Cloud, and it’s also one of their biggest customers. The gains from advertising thus largely accrue to the walled gardens.
But what’s the opportunity for the actual third-party ad tech ecosystem?
For one thing, shifting to a cloud-based business can also resurrect third-party data marketplaces, not just first-party applications.
Experian launched its first-ever third-party data marketplace this week. The company is trying to seize the opportunity in third-party data sales, which comes with a tarnished reputation but still a great deal of inertia and real demand. Experian is indifferent to which cloud platforms its customers use, Experian Marketing Services GM Kim Gilberti told AdExchanger. But she said the new model is attainable now that there’s been a widespread shift to cloud-based infrastructure. The data suppliers like Circana, Attain, Alliant and Dun & Bradstreet have already onboarded their ID graphs and can match data anonymously.
Another notable example was an integration launched in October between the SSP Index Exchange and ad-buying platform Chalice.
“It’s potentially transformative,” Index Exchange CEO Andrew Casale told AdExchanger.
Which, ok, he has something to promote. But Casale said it’s the first instance of a third-party ad tech company “taking a leap into the realm of containerization or virtualization.”
That is hardcore 2025 agenda-setting jargon.
The words “containerization” and “virtualization” will become commonplace, akin to “data clean rooms,” as a way to convey that this integration happens in a cloud application.
Casale compared ad tech moving to the clouds to what happened in finance, where the big trading companies literally came to the stock exchange.
And this new model also means more data is available. DSPs that monitor bidstream data don’t know how many ads are on the page, for example, or if a video ad will be sound-off by default. The advertiser also only sees the domain (like “ESPN,” rather than seeing the actual URL or section of the site).
But with the ‘containerized’ integration between Index and Chalice, buyers can see those details about the website and the ad impression and factor it into the bid.
Any holdups?
The cloud computing evolution is here. Ad tech companies may still charge per CPM rather than the cloud software model of customers paying for data bandwidth. But the trend from server-to-server pings to cloud native applications is inevitable.
Still, there are obstacles and pitfalls ahead.
For one thing, cloud systems are at capacity.
During a hands-on-keyboard workshop at Amazon Advertising’s Unboxed conference in October, ad tech engineers complained of the lag times for Amazon Marketing Cloud, which is Amazon’s own ad tech solution built on AWS Clean Rooms. They said the same is true of Google’s version, called Ads Data Hub. They were surprised that the platforms’ own ad products were so slow on their cloud service.
Ad tech engineers are accustomed to practically instantaneous feeds and API updates. Cloud-based systems are different. They analyze vastly more data, often require new software languages like Google’s BigQuery, and can take minutes or hours to complete a task.
As the cloud services improve, those lag times should lessen, said the Amazon execs. But the fact is there will be a learning curve as ad tech engineers acclimate to how cloud-native ad tech will work.
Another problem is privacy. Which is counter-intuitive, because aren’t these solutions for privacy?
“Don’t judge a book by a cover,” wrote FTC staff in a blog post from last November warning companies using data clean rooms that the category is officially on the radar for data regulators.
“How a technology is named doesn’t tell you how it is used,” cautioned the FTC. These services “have complicated implications for user privacy, despite their squeaky-clean name.”
The thing about data clean rooms, and the shift to cloud-based ad systems, is that advertisers and publishers are trying to renew targeting and attribution practices that have become ineffective since third-party cookies and device IDs are now relatively scarce.
But what if new privacy regulations or policies set by Apple aren’t about advertisers doing their retargeting or deterministic attribution in anonymized cloud systems? What if the point is for those things to go away entirely?
Data clean rooms “provide a pathway for information exchange between untrusted parties,” according to the FTC. They also “increase the volume of disclosure and sale of data.”
Well, increasing the volume of disclosure and sale of data is pretty much the name of the game in ad tech.
So I guess we’ll see you in the clouds.
