Thought Leadership

Eight Trends Impacting Ad Tech in 2015

PulsePoint

PulsePoint
January 9, 2015

By Sloan Gaon

When we were heading into 2014, I gave a few predictions about how we’d expect to change over the course of this year. Some of the obvious trends have come through – the industry has continued to adopt programmatic. In fact, a recent BI Intelligence study noted that RTB, a key piece of the programmatic ecosystem, will account for over $18.2 billion in U.S. digital ad revenues in 2018, up from just $3.1 billion in 2013.

In 2014, other than the increase in programmatic buying, the ad tech industry also saw a few IPOs, and lots of investment. This is an exciting time for those in the ad tech industry and 2015 will be another year of exciting change and also opportunities.

From buzzwords to buying, here are my predictions for the top trends to watch in 2015:

1. Programmatic TV Will Be The Next Buzzword

I believe that everything that can go programmatic will go programmatic, including TV advertising. The players who control the set top box have delayed the industry from the benefits of programmatic, but this trend is coming and will be a top leader in the year ahead. We have already seen firms such as Magna Global look to expand in this arena and many more will follow suit.

2. Private Marketplaces Will Remain a Pipe Dream

While I hate being a pessimist and adamantly support the evolution of the programmatic landscape, today's current Private Marketplaces (PMPs) go against everything the promise of programmatic stands for – the ability to find the right audience in a highly efficient, highly scalable manner. Remember when ESPN tried to become service providers and launch their own cell phones, Mobile ESPN? Their product didn’t take off in the marketplace because ESPN didn’t fit into the current telecom landscape. Just like consumers didn’t need a branded phone, the ad tech industry doesn’t have a need for private marketplaces. Why? Private marketplaces rely very heavily on content-based ad buys, while the future of data-driven programmatic will rely more on real-time, data-driven audience-based ad buying. Additionally, the current structure of PMPs, which involves select publishers selling to select advertisers, gives campaigns very limited scale and is extremely cumbersome to set up. While PMPs will be something everyone talks about in 2015, it will be something few actually do – and succeed – at.

3. High Impact Ad Formats Will Begin to Replace Display

As programmatic strategy continues to evolve for mid-upper funnel campaign objectives, so will the type of ad formats marketers buy programmatically in the next year. The automated stalwarts like standard display will see serious competition from more custom formats. Big winners will be digital video, sponsored content and custom rich-media display units.

4. The Ad Tech Industry Will Experience a Wave of Consolidation

The ad tech industry has experienced an increase in funding and investments in 2014. Recently, AlleyWatch took a look at the increase in investment in the industry just in New York City alone and found since 2011 $1.4B was invested in ad tech startups in NYC over the last three years and 30% of that was during the first half of 2014.

However, will this continue into 2015? I predict that some of those companies who have secured series A or B rounds recently will need to close their next round and will struggle, leading to many acquisitions and mergers in the industry.

5. The LUMAscape Model Will Be Challenged

This model, which has exploded with hundreds of companies, has experienced an increase in overlap in the last year, which will only continue in 2015, especially if there is a consolidation in the space with creative and technology merging more and more.

6. The Death of DMPs

As the industry starts to see consolidation, DMPs are amongst those getting absorbed. Other players in the industry provide the crucial data, making DMPs less and less important. Instead, exchanges like PulsePoint, will be powered by their own DMP function along with brand trading desks who utilize their own data. There will be no need for them in our changing ecosystem.

7. Ad Quality Will Drive Industry Growth in 2015

As more and more advertisers begin to have a better understanding of traffic and a better understanding of audience because of the control over both with programmatic advertising, there will be an increase in ad quality. With this, more advertisers will jump on the programmatic train to reap the benefits and also compete with each other.

8. Back to Context

Contextual targeting is a fundamental building block of advertising and if your name isn’t Google or Facebook, context will be more critical than ever in 2015. The key to great targeting on mobile will be contextual. This will move RTB well beyond the cookie.

This year, the ad tech industry has continued to quickly transform and grow, and I believe that won’t change in 2015.

Sloan Gaon is CEO of PulsePoint. Follow him on Twitter @sloaner.

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