After ten years of untamed development in programmatic advertising, 2020 was the beginning of a new decade in the industry. We entered a new phase of growth – one driven by calls for control and transparency, which will continue to grow louder. With the start of a new year upon us, we look at where the industry stands and what we anticipate in the year ahead.
Investments in Transparency and Supply Path Optimization to Continue
As publishers expanded monetization partnerships to maintain advertising revenue, we saw the emergence of ad transaction duplication and more complicated paths to each individual opportunity. The impact it had on SSP and DSP infrastructure and market efficiency led to significant changes. On the SSP side, investment was made in machine learning technology to better manage growing ad inventories and help surface the most relevant inventory for each demand partner.
Last year also brought about the adoption of new standards around supply chain transparency at scale. Seller.json and SCO were adopted by all leading platforms to easily identify the most efficient supply path. As a result, platform consolidation is inevitable moving forward – both horizontally to avoid multiplying the paths to each individual publisher and vertically as only intermediaries adding significant value will remain. At Smart we’ve achieved results using seller.json internally to feed our analytics and decisioning, and we are starting to see some demand partners do the same.
Reach is no longer a blocker for buyers thanks to the RTB ecosystem, but it remains challenging for buyers to funnel spend towards high value-added inventory. Curation is becoming the only way for advertisers to guarantee working media is maximized and investment is aligned with marketing objectives. Last year we accelerated investment in our Smart Buyer Connect (SBC) tool and now offer all stakeholders on our SSP the ability to monitor, control, curate, and activate on specific opportunities.
What’s to come:
- Platform consolidation is inevitable – both horizontally and vertically – and will accelerate.
- Supply curation will remain a major topic as buyers and demand platforms look to consolidate their supply relationships and their inventory quality.
- More advertisers will become involved in the supply sources their agencies work with and will request access to granular programmatic spend reports and logs.
Even Greater Adoption of Programmatic Direct
With private marketplace spending surpassing open exchange in 2020, it should come as no surprise the desire for increased inventory transparency is driving a rise in programmatic direct. Deal IDs remain a great way for buyers to secure preferred access to scarce pockets of inventory and audience.
In 2020, Deal IDs became a critical signal for both DSPs and buyers to curate inventory and gain visibility and accountability in the supply chain. We saw impressive growth in Auction Packages at Smart last year with buyers seeking ways to transparently navigate available SSP inventory in order to specifically target desired inventory and key audiences.
What’s to come:
- We will see even greater adoption of programmatic direct, especially with increased ability to build custom packages.
Larger Shifts in Spending Toward Video
Video advertising played a large role in programmatic advertising market growth last year. With expanded content offerings and CTV emerging as the next horizon, more players are launching ad supported offerings. For advertisers, it’s both critical and challenging to enter the market. While the landscape offers lots of potential, many tech and efficiency challenges have yet to be addressed – including around measurement.
As with any emerging technology, the market runs the risk of bad actors taking advantage of growth opportunities while the industry strives to develop standards, as can be seen in the CTV bot attack uncovered by Oracle, for example. The launch of ads.txt and app.ads.txt offers a start towards ensuring transparency and fraud prevention in the CTV and OTT landscape.
What’s to come:
- We expect this market to continue rapidly accelerating, especially as more consumers turn away from traditional linear TV.
- Budgets will shift to prioritize the category, especially as inventory increases.
- When it comes to fraud, it’s likely we haven’t seen the last of this cycle of outrage, reaction and correction – but we’re moving towards better industry standards.
Post-Cookie Preparations to Take Center Stage
The end of third-party cookies and IDFA challenges the measuring and modeling ecosystem marketers have built over the last decade. Parts of advertising will still benefit from some sort of user ID, but it will be fragmented. With GDPR and advertisers looking for more transparency into privacy regulation compliance, potential breaches are becoming the next brand safety risk. Smart’s roots and years of investment in European privacy compliance leaves us well-positioned to address local compliance as more regulations are introduced.
Additionally, the approach of the largest digital platform towards consent and personally identifiable information (PII) is coming into question. As cookies begin to disappear, the business approach remains centered around the control of user identity at scale, but has yet to offer an alternative to using their services without providing consent to PII exchange.
But, previous investments in data science and machine learning to handle the large amounts of data generated by advertising transactions allows for performance optimization without requiring identity. Data sparsity modeling can help solve the issue of missing data due to an absence of a tracking ID or non-consent. At Smart, we have the ability to guarantee certain KPIs without harvesting any PII.
What’s to come:
- The future of targeted ads will leverage a combination of solutions to replace third-party tracking and targeting.
- We anticipate increased investment in technology that extracts more value from the content in real-time (semantic targeting).
Increased Antitrust Scrutiny and Regulation
In 2020, the industry dominance of major players who have reshaped the entire advertising ecosystem came under the microscope and reinforced the need for a non-GAFA dominated ad tech world. With their influence and the large amounts of data they’ve amassed, they easily dominate the market.
As frustration grows around the antitrust practices of the big players and the need for transparency and neutrality becomes more urgent than ever, many advertisers and publishers are keen to shift towards a more independent business model. With the possibility of GAFA having to review their behaviors, we might be moving towards a fairer ecosystem where independent players will have more opportunity and control.
What’s to come:
- Increased scrutiny and regulation will aim to limit the power of large players and partners will be looking for alternatives to working within walled gardens.
- The winners will be companies that can maximize market rationalization to bring value to both supply and demand efficiently, transparently, and independently.
Looking to the Future
2020 posed unexpected challenges to everyone across the ad tech ecosystem. The resilience demonstrated by the industry in the face of these challenges only reinforces the fact that ad tech is well-positioned to adapt and thrive, both in the year to come and decade ahead.