Programmatic Advertising Trends for 2020 and Beyond | Adzerk

Programmatic Advertising Trends for 2020 and Beyond

Rashmita Behera
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There is no doubt that programmatic advertising has reached an unprecedented adoption. With constantly evolving technology, programmatic empowers publishers, advertisers, and their partner agencies in a way that everybody can create value while keeping users engaged.

But the recent economic shifts have made 2020 unlike any other year the ad tech industry has faced. Be it new privacy laws, third-party cookie blocking, or the COVID-19 pandemic, those on both sides of the supply chain are re-thinking strategies to get back on track.

Here are eight trends in programmatic that should give you an idea of the changes taking place now and what programmatic advertising might look like in the future:

1. Programmatic is still fundamentally strong

The recent status of the global economy has made businesses question their future, and programmatic is a big part of the equation. While things are a little uncertain for everyone, both the buy-side and sell-side are trying to figure out the best possible solution.

In April, the total digital ad spending was down 38% versus the prior year. But in May, the decline was between 25-28% from the previous year — still an improvement on April. In the same way, it is being estimated June decline should be 16% versus last year.

While there is a significant decline in spending as compared to last year, early signs show that our industry is moving in the right direction.

We believe once the economy recovers, the entire programmatic ecosystem should follow suit. And for the time being, both buy- and sell-side parties are advised to keep a creative mindset when it comes to engaging users. In fact, a survey by Kantar revealed that only 8% of all consumers believe that brands should stop advertising during the pandemic.

Takeaway: Programmatic advertising has become a very important part of the ad tech industry. While uncertainty exists about the economic damage caused by COVID-19, there have been early signs that indicate a short and swift recovery for the ad tech industry.

2. Better seller-buyer relationships

The relationship between key members of the programmatic supply chain starts with transparency. As sellers and buyers become more transparent about their offerings and demands, we will see better partnerships.

“The programmatic ‘black box’ prevents true visibility of where ads are served, and almost 80% of advertisers who purchase through programmatic are concerned about this lack of clarity – making it all the more vital that brands understand the supply chain and choose partners they can trust.”Andrew Buckman, Managing Director EMEA, Sublime

Lack of transparency gives rise to ad fraud and many brand-related malpractices. While that can’t be resolved in a day or two, it seems like the industry is moving in the right direction. We have technologies like ads.txt and sellers.json to make the supply chain more transparent for everyone. Google recently made the use of sellers.json mandatory for all Ad Manager users. With that, this standard is expected to witness better adoption.

Publishers are using this time to improve their offerings — better ad placements, viewability, and targeting. In return, advertisers are likely to reward publisher efforts by whitelisting inventory and relaxing their brand safety filters to reach a larger audience.

Takeaway: As both the supply-side and demand-side of the business become more transparent in their dealings, better and longer-lasting relationships will be created.

3. Increased focus on first-party data

Google announced it will phase-out third-party cookies from Chrome by 2022. Shortly after, The New York Times announced its move to first-party cookies. Starting in July 2020, NYT will segment audiences based on website analytics and subscription data collected over the years.

It is easy to see the future: first-party data will become more valuable than ever.

While some people in industry might find it challenging to get accustomed to this change, in the long run, the use of first-party cookies might actually improve the perception around digital ads.

We are expecting to see more publishers following the same path. It’s easier for large media organizations to use first-party data as they have time and resources to make it work. However, for small and medium publishers, contextual targeting will become relevant again.

Takeaway: There will be a huge surge in audience segmentation as a practice from publishers’ end and consequently, increase in demand of first-party audience data by buyers. With this, the adoption of data management and customer data platforms is likely to go up as well.

4. Privacy will become mainstream

With GDPR, then CCPA, and other emerging privacy laws, online privacy has become an important concern in programmatic. A few years ago, users didn’t know that their online data and identities were being used to show them ads, until they started noticing retargeted ads.

Users have now become more aware of their online data and privacy rights. This can be credited to large-scale data breaches, like the Cambridge Analytica data breach, where over 80 million Facebook users' data was wrongfully used without their knowledge.

Thanks to the new privacy laws, users now have the liberty to ask questions related to the use of their data and even decline sharing it.

What does this mean for programmatic? As the success of a programmatic campaign depends on targeting, users declining the use of data can be a big roadblock. But there have been several studies that suggest that don't have a problem with seeing targeted ads. In fact, 36% of consumers like to see personalized offers from their favorite brands.

Consumer reactions to brands
Consumer reactions to brands

(Source: Adweek)

Takeaway: It completely makes sense if a user doesn’t want to share his or her data for targeting or any other purpose. Publishers and advertisers should respect such decisions. But if this decision of a user hurts their revenue-generating ability, then it’s best to find more user-friendly and privacy-compliant methods of data collection and ad serving.

5. Return of native ads and contextual targeting

In light of privacy concerns and the death of third-party data, contextual targeting is the best option the industry has. Think of it like this: you are a publisher who has 60% of users agreeing to see targeted ads. However, you still need to show ads to the remaining 40%, right? This is where contextual targeting can come in. Showing users ads based on content they are seeing ensures the relevance and success of advertiser’s campaigns.

In the same way, some native ads don't use behavioral targeting, rather using web page content for a contextual match. On top of it, native ads are non-intrusive. These ads help fight banner blindness, offer high engagement, and are privacy compliant; native ads fulfill all the requirements when it comes to running user-friendly ads.

A Statista report shows that native advertising will grow up to $52 billion in the US in 2020. And according to eMarketer, in the US, native ads will claim 64.8% of the total ad spend by 2020.

Native ad spend in the US 2016-2020
Native ad spend in the US 2016-2020

(Source: Statista)

Takeaway: Native ads and contextual targeting will become important options for many publishers as privacy laws become stricter. Publishers should start focusing on updating their inventories in the same way. And advertisers should expect a rise in such inventories.

6. Programmatic video will be the new go-to for brands

There is no doubt that video content is more engaging than image or text. And brands are aware of this. Previously, there were challenges associated with placing video ads due to their heavy sizes, technological complexity, and resources needed to create engaging videos. However, now these challenges are being resolved as demand for video continues to grow.

We know that video ads work perfectly with video content — YouTube ads and programmatic OTT are thriving as a result.

However, recently, more web publishers have started experimenting with video advertising. Thanks to outstream video ads, news publishers have become the leading spenders of programmatic video ads in regions like Australia, India, New Zealand, among others.

Similarly, 58.6% of the US population is now using connected TV. This creates a sweet opportunity for brands to reach more than half of the US population. OTT services like Netflix, Hulu, Disney +, and others are expected to reach ad revenues of $5 billion in 2020.

Connected TV users by eMarketer
Connected TV users by eMarketer

(Source: eMarketer)

Takeaway: Video advertising is the future. This is the perfect time for publishers to add video ad placements on your webpages. Similarly, advertisers have a whole spectrum of platforms to show video ads — from web publishers to OTT and connected TV.

7. AI is here to stay

Google and Facebook have been using AI and machine learning for a while now to power many of their solutions and services, including programmatic advertising. If you are using these two platforms, then you know that AI has been the driving force behind your campaign performance.

In addition to these giants, we also have publishers, agencies, and advertisers using AI and machine learning to make their programmatic ad stack more efficient.

The Georgia Straight and NOW Magazine, owned by Media Central Corporation Inc., announced that their AI-driven programmatic strategy has led to a combined increase of 389% in April 2020 programmatic ad revenue.

Machine learning takes historical data and uses it to improve the future outcomes. Programmatic advertising, being a completely algorithm-driven process, benefits from machine learning the most. Thanks to AI, we have better ad targeting, dynamically adjusted CPMs based on floor price, and ROI predictions, just to name a few optimizations.

Takeaway: AI is not just limited to big tech giants anymore. Small businesses have started experimenting with them with great results. We hope to soon see its direct impact on ad revenues just like NOW and Straight.

8. In-house and outsource mix models

AB InBev, a global drink and brewing company, launched an in-house digital agency called DraftLine to reach their local consumers with the right message. While DraftLine is powered by the brand’s own consumer data, it is also assisted by external agencies for more effective results. Despite the pandemic, AB InBev continued to advertise with a unique message. They are now investing in charitable ad campaigns to engage users and maintain brand recall while maintaining sensitivity to the current crisis.

With rapid industry changes come increasingly creative campaigns. Here, an in-house team can keep the brand’s message intact while an outsourced team takes care of the required technology. With these insights, both teams can work together to figure out what is best for the business and consumers.

The sell-side can also learn from the above example. A combination of in-house and outsourced teams should provide high-quality experience, reduced ad operations cost, and real-world expertise. With this the future for publishers might look like — an in-house team taking care of the ad stack while the outsourced ad ops guide with programmatic sales, reach out to better demand, and help build lasting partnerships.

Takeaway: In the coming days, in-house management and outsourcing will become equally important. Even medium-sized publishers will start incorporating in-house teams and large media houses will be driven to external agencies for consultations, once they start noticing the benefits of such collaborations.

Summing up

Programmatic ad spend is predicted to grow from $106 billion in 2019 to $127 billion in 2020. And a recent survey indicates 66% of marketers plan to increase their programmatic ad spending in the coming months. This should provide publishers with a sigh of relief following reduced ad spending due to Coronavirus.

The future lies in making your business more consumer-centric.

In the case of publishers, they should focus more on their users and their experience with content and ads. In the same way, brands should work on winning customers rather than ad placements. Combining these ideas, user perception of ads should shift to a more positive direction and we might see a future where ads are not presumably intrusive.

Share your programmatic predictions

What programmatic trends do you see now? What do you expect to see in the coming months? Click the link below to share your insights with the Ad.Product community on LinkedIn.

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Rashmita Behera

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