Agents Play Nice, Ad Tech Does Not; The Cool Kids Click

Agents Play Nice, Ad Tech Does Not; The Cool Kids Click

The ad tech industry is witnessing a significant shift with the emergence of agentic systems, which are AI-powered agents designed to streamline workflows and tasks. However, despite the growing interest in these systems, the industry is struggling with interoperability, a crucial aspect that will determine the success of agentic systems in ad tech.

The Rise of Agentic Systems

The Trade Desk has recently launched its first in-platform AI agent, called Koa Agents, which aims to help with workflows and other tasks. The company has partnered with agency group Stagwell to pilot the technology. This move is part of a larger trend, with Microsoft Advertising also announcing AI-based product updates, including new campaign agent services. These developments indicate that agentic systems are becoming increasingly important in ad tech.

Other players are also entering the fray, with the IAB Tech Lab, PubMatic, Criteo, and Stagwell all developing their own agentic systems. The IAB Tech Lab’s Agentic Real Time Framework, PubMatic’s AgenticOS, and Criteo’s implementation of the Model Context Protocol are just a few examples of the competing systems emerging in the market. The Trade Desk’s Open Agentic Kit (OAK) is another contender, aiming to define the system that agents run on for online advertising.

The Interoperability Challenge

While there is broad agreement that agentic systems will need some level of interoperability to function effectively, each player wants to be the central hub for others to plug into. This creates a significant challenge for adoption, as the industry struggles to agree on a single standard. The Ad Context Protocol, an industry collaboration, is another attempt to address this issue.

The lack of interoperability will likely hinder the adoption of agentic systems by marketers, who are already overwhelmed by the complexity of ad tech. As the industry continues to develop competing systems, the risk of fragmentation grows, making it harder for marketers to adopt and use these technologies. This irony is not lost on industry observers, who note that ad tech, known for its complexity, is struggling with interoperability, while agents, which require seamless interaction, are having a harder time getting on the same page.

The Shift to CPC Model

In a related development, OpenAI has expanded its ads business by introducing a cost-per-click (CPC) model, in addition to its existing cost-per-thousand views (CPM) model. This move allows advertisers to better compare the performance of their ads on ChatGPT to other channels, such as Google Search. The CPC model provides a more familiar and comparable metric for advertisers, which is likely to drive adoption of AI-powered advertising.

The implications of this shift are significant, as it may signal a turning point in the adoption of AI-powered advertising. By providing a more straightforward and comparable metric, OpenAI is making it easier for advertisers to understand the value of AI-powered advertising. This development is closely watched by industry experts, who note that Trusted Media Brands is also leveraging AI to sell cross-platform audiences.

Conclusion and Insights

The emergence of agentic systems in ad tech is a significant development, but the industry’s struggle with interoperability is a major challenge. The focus on agentic systems may lead to a fragmentation of standards, making it harder for marketers to adopt and use these technologies. However, the shift to CPC model by OpenAI may signal a turning point in the adoption of AI-powered advertising, as it provides a more familiar and comparable metric for advertisers.

As the industry continues to evolve, it’s essential to consider the implications of these developments on marketers and the ad tech ecosystem as a whole. The California Delete Act, for example, highlights the importance of data protection and the need for advertisers to be aware of their data broker status. By staying informed about these trends and developments, marketers can navigate the complex ad tech landscape and make informed decisions about their advertising strategies.