10 Trends Redefining Programmatic Ad Buying
The advertising industry is going through a turbulent period, and everyone is uncertain if the business will adapt to the situation. Nevertheless, progress is unstoppable. Programmatic is the next technological stage of ad buying, and even the health crisis can’t delay its global adoption. A recent report by eMarketer predicts that in 2020, more than 82% of display ads in the US will be purchased using programmatic.
Programmatic ad buying capitalizes its positions in the new sectors ‒ Connected TV (CTV), voice-activated advertising, and in-game advertising. New technologies in AI and machine learning are enhancing the programmatic ecosystem and opening new horizons for targeting. However, adtech is yet to resolve problems with data collection, privacy, and fraud.
Here is a list of trends that will change the face of the ad tech industry in 2020 regardless (or because) of the coronavirus pandemic.
1. Combating Ad Fraud
Adtech is struggling to make the market secure and transparent. Domain spoofing and other fraudulent actions resulted in more than $23 billion in losses for advertisers in 2019. A report by CHEQ estimates that damage due to ad fraud will reach $26 billion in 2020, $29 billion in 2021, and $32 billion in 2022.
The industry has implemented new standards of verification to safeguard advertisers placing ads. The IAB Tech Lab developed ads.txt and app-ads.txt, the files for a publisher's website and mobile app with a list of verified sellers of inventory. Ads.txt file is already used by over 1.2 million domains, while app-ads.txt has been implemented in more than 182,000 mobile apps.
In addition, the IAB Tech Lab introduced sellers.json, a mechanism for buyers to discover direct sellers or intermediaries in the selling of digital advertising spots.
All these measures will make it easier for advertisers to avoid fraudulent actions with ad inventory.
2. Cookie-less Optimization
The programmatic industry experienced a major throwback after the elimination of third-party cookies. Google's decision to phase out cookies sent shockwaves across the industry.
Last autumn when Firefox decided to eliminate third-party cookies, publishers and advertisers felt it immediately. In Germany, where this browser accumulates substantial traffic, buyers' bid rates were down by as much as 40%, while publishers’ earnings plummeted.
In light of the COVID-19 crisis and subsequent supply-chain shutdown, a business group within the World Wide Web Consortium (W3C) is planning to petition Google to delay the termination of the third-party cookies. Rushed transition to the post-cookie model can damage the advertising market, which has a hard time adjusting to the coronavirus outbreak. We’ll see if the tech giant shows some sympathy.
AI is a survival prerequisite for any company that works in the adtech business. Ad exchanges have to provide unique tech solutions to compete in the oversaturated market. Only those who have their own platform and a strong development team will withstand the battle, complicated by the pandemic.
In this scenario, AI-based solutions are one of the differentiators that will, eventually, leave old-fashioned traffic traders behind.
Even now, machine learning (ML) algorithms can derive more insights from big data and notice even subtle patterns in the user's behavior. By pairing viewing metrics with rich user data, AI and ML can better define buyer personas.
Surveys confirm that 82% of early adopters of programmatic AI are satisfied with the return on investments. For instance, Watson, IBM's natural language AI system, has already reduced cost per click by 71% for media buying companies.
4. Open Web vs. Walled Garden
In 2020, we will witness the resurgence of the open web. The public is growing distant from walled gardens, closed-loop platforms where huge tech corporations control all the functions. OpenX points out that people started to spend more time on the open web than on Instagram, Facebook, Youtube, and Amazon. Consumers are more likely to find useful information and relevant ads on the open web.
Although there’s been a spike in social media use, the quality of information becomes more important. Brands should be aware that social networks may once again become the main distributor of fake news and harmful content. So, I’d recommend allocating their marketing budgets to more trustworthy ad inventory.
5. Voice-Activated Advertising
Voice-activated virtual assistants are cementing their position in consumer electronics and expanding their market share in advertising. Last year, Amazon sold over 100 million Alexa-based devices, while Yandex reported $20 million in revenues from voice assistant Alisa. The bulk of voice-activated purchases consists of household items, attires, and games.
Gartner estimates that by the end of 2020, 30% of web searches will come from voice-activated devices. Programmatic will sync voice-activated ads with omnichannel retargeting for maximum impact.
The outbreak may give a significant boost for this growing market since consumers on the lockdown spend more time at home and interact frequently with their virtual assistants. Plus, voice search is another way to avoid touching devices.
6. Connected TV (CTV) and Over the Top (OTT)
Currently, there are 190 million CTV users and this number is projected to grow to 204.1 million by 2022. Direct TV services, such as Hulu and Amazon Prime, are building up their audiences and monetizing through OTT advertisements.
COVID-19 brings its own adjustment to the industry. People’s consumption of streaming services has increased by over 20% worldwide, and more than 40% in Spain and Austria.
Potentially, CTV services are well-positioned to benefit from consumers spending more time indoors. However, it puts too much pressure on internet service providers. Netflix has even announced that it would turn off the highest video resolution in Europe.
Advertisers could benefit from OTT ads on CTV platforms. Experts agree that marketers would reallocate their budgets for mobile advertising and streaming services if the situation continues.
7. In-Game Ads
In-game ads will make headway in 2020. While they have demonstrated significant potential in reach and engagement, retargeting is relatively rare in this field. Yet, the game industry is slowly warming up to the idea of programmatic. In the coming year, I expect to see new partnerships and a surge in the in-game inventory.
Esports and the gaming industry demonstrate resilience to the global crisis and thrive during the outbreak. Tournaments in Counter-Strike and Dota are setting viewership records, with millions of people indulging in games while on the lockdown.
The launch of 5G will facilitate the adoption of in-game advertising, removing bandwidth issues. The programmatic industry will have to lay down the roadmap and develop frameworks to assess viewability, brand recognition, and engagement in games.
8. Wearable Ads
Smartwatches are here to stay. In 2019, 305.2 million wearable devices were shipped globally. This figure is expected to grow to 490 million by 2023.
Wearables track location and various health and lifestyle metrics. The abundance of this data enables advertisers to build predictive models and target the strongest prospect in the right location, time, and state of mind.
Coronavirus may slow down programmatic adoption in this industry since lockdown prevents wearables from accumulating significant data points.
9. Moving In-House
According to the IAB Europe survey, 86% of brands that advertise in programmatic have industry professionals on their teams.
Some brands moved all of their media-buying in-house (39%), while others have only a few experts (47%). Brands keep strategic activities in-house while hiring third-party providers for more technical tasks such as data management and campaign optimization.
The pandemic may not only bring negative effects. Some agencies noted that they have replaced time-consuming in-person meetings by videoconferences, while all operations are streamlined in the cloud. However, the reduced marketing budgets might both affect the agencies and keep brands from hiring in-house specialists.
10. Digital Audio Advertising
The podcast market is also showing signs of strength. Podcast Revenue Reports state that in 2019 advertisers spent $479 million on podcasts in the US, a 53% increase from 2017.
During the lockdown, podcasts are gaining popularity. Spotify noticed that more people started to stream music from home devices, including game consoles, desktops, TVs, and voice assistants. Besides, it seems that more people have tuned in to cooking- and housework-themed playlists, as well as podcasts related to self-improvement and children. This is an opportunity for marketers to redefine targeting and bring their ads to the growing audience.
In addition, although advertisers seem to avoid ad placements near coronavirus-related news, they don’t feel the same about podcasts. In fact, there’s been a rise in health-related audio ads recently.
Wrapping Up: Maturing Industry
Coronavirus outbreak won’t stop the spread of programmatic, quite the contrary. The spike in internet use amid the quarantine, created a situation where traffic is abundant, while the demand for ad spaces is scarce. Publishers need to level up their inventory and provide located and contextualized impressions. At the same time, advertisers have to move their budgets from traditional out-of-home channels to digital ones, as well as set up the most cost-effective on point targeting to remain afloat.
Advances in AI will propel the industry, enhancing personalization and behavioral targeting. Programmatic will venture out into new media formats such as CTV, and Digital Audio. It will have to adapt to the new legislate landscape, and gradually transition to the post-cookie model.
Yaroslav Kholod is the Director of the Programmatic Division at Admixer with over 10 years of experience in online advertising. Yaroslav and his team develop the internal project of Admixer.SSP, the programmatic core of all company products. The Admixer.SSP provides the company’s partners with quality demand and supply for advertising online.