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Observations on a disrupted digital advertising industry market

Observations on a disrupted digital advertising industry market

We are entering a period of rapid market evolution, where disruptive innovation, increasing government regulation, and moves by leading players to protect their positions (Apple, Facebook, Google, etc.) can radically disrupt the market.

First-party data is the new gold standard

Chrome is retiring its advertising ID, the key to user tracking, retargeting, and attribution. This marks a tectonic shift for digital advertising as it will become increasingly difficult to identify audiences across publishers. Advertising networks, exchanges, retargeting companies, and tools for tracking will struggle to preserve their business model in this new environment.

Over-the-top delivery challenges traditional broadcast mediums

OTT and CTV have experienced a significant increase in advertising spend over the last 12-18 months. The global number of streaming devices has surpassed 1.1 billion.

Video attains primetime

While other ad formats have experienced a CPM decline, video is one of the few formats that is experiencing growth. This ad format is highly engaging and memorable. User recall from video messaging is far higher than display messaging. Effectively, we are seeing a convergence of serial broadcast advertising with on-demand video advertising.

Audio makes it moves

According to eMarketer, podcast listenership increased by 16% in the US, while ad spends in podcasts climbed to $US782 million and is projected to reach $US1 billion this year. A Nielsen study showed that podcast ads are 4.4 times more effective than display ads and generate better brand recall than any other digital format.

The growing use of mobile devices and apps

The average time users spent on their mobile devices has increased to nearly four hours per day. A good deal of this time being spent interacting with mobile apps. Research conducted by eMarketer found that users spend most of their time on mobile apps and only 12% on the mobile web. This trend is even more profound in some Asian economies. We do expect that the mobile web will grow in import in the coming years as app fatigue sets in. Mobile offers far broader and more engaging ad formats than web along with improved attribution and click-through rates.

Increasingly, leading mobile publishers are questioning the value of programmatic for monetization, and as with their web assets, are considering more transparent and direct methods to better monetise their digital assets.

Maturing supply-side & demand-side ecosystems

High profile branded publishers are realising that by allowing media buyers to access their audiences directly and cutting out the plethora of programmatic intermediaries. Accordingly, new DSP’s are emerging to directly target specific content categories. An example of this trend is Samsung’s platform for targeting users of their smart TV devices and Infomo’s R3 platform for directly targeting users of their branded publishers.

Telcos staking their claim

Evolving personal data regulations and deprecation of advertising IDs make identity a critical issue for advertisers. All emerging ID solutions need to actively incorporate data from mobile operators, which can help to cross identify in-web and in-app users. This data can be key in linking fragmented digital environments and is in high demand from advertisers. For this reason, Infomo is working closely with both telcos and publishers to match first-party data and AT&T and Verizon are investing in their own ad tech capabilities to leverage their first-party data.

Conclusion

For the next 12-18 months targeting data will become scarce while audiences will get even more dispersed across different platforms. Data is the oxygen of digital advertising. In the face of the looming phase-out of advertising IDs and the absence of viable alternatives, marketers will have to focus on first-party data. Capabilities to collect, segment, and activate owned data are must-haves to remain competitive in this new market.

  • Establishing multi-platform attribution, and user identity, in general, will be especially acute.
  • Video inventory will further consolidate its import and deliver good conversion rates.
  • Likewise, podcasts will draw an increasing spend though, by nature of the medium, conversion rates may prove problematic.
  • New DSP/SSP ecosystems will encourage publishers to create their own walled gardens.
  • In-app will cement its position as the primary entertainment and services source.
  • IDFA consent will reshape the iOS advertising market.

With thanks to eMarketer & Nielsen. 


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