Bob Dylan's oft-used “The times, they are a changing” is the timely lyric to describe today's Ad Tech market, which is being reshaped by a few large waves of innovation. And these are not just "trends" -- they represent major shifts in the way Madison Avenue does business.
The definition of ad tech has continued to shift and evolve thanks to new developments affecting the way ads are targeted and served. About a decade ago “ad tech” was synonymous with ad networks and search advertisers. Since 2007, the markets have shifted, and more ads are being purchased in real time.
IDC recently projected that real time bidding will soon become the fastest growing area of digital advertising with an expected compound annual growth rate of 59% through 2016, and 105% increase in year over year spend. RTB has already had an undeniable impact on the internet advertising industry, with more disruption to come in the next few years. Programmatic and the data involved on both the buy and sell side will inform nearly every aspect of ad tech moving forward into the New Year, and here’s how:
1. There will be a mega merger of programmatic and agency sales teams. Advertising technology providers and agencies will start to rethink the division of agency sales and programmatic buying. To keep pace with the rapidly transforming advertising technology industry, it’s not a matter of if this change needs to be made for all companies, but when. A recent CMO poll found that nearly half of brands are planning to evaluate working outside of their existing agencies and instead work directly with a demand side buying platform. This operational integration and the ability to provide value regardless of where a buy happens are vital to an advertising technology company’s success.
2. Brands will shift significant investment to programmatic. The advertising industry is slowly moving towards Tim Armstrong’s prediction of ‘everything that can go programmatic will’. As the quality and variety of programmatic inventory continues to increase, marketers can no longer hesitate to invest brand dollars here. Proof: brands can no longer hesitate to invest here and we’re seeing them move more budget here specifically into video & mobile. According to the Q4 2013 State of the Video Industry report from Digiday & Adapt.tv, programmatic video spend by brands more than doubled in the past two years and projections for ‘premium’ mobile RTB spend have been rising at an impressive rate.
3. Content marketing will scale programmatically. Content marketing -- which has grown into a 44 billion dollar industry, is still struggling with scale. Brands like Red Bull, AMEX and L’Oreal have already successfully made the leap to becoming great content publishers, as traditional publishers like NYT, AP and Hearst are starting to think more and more like marketers. Yet for the "right ad at the right time" to finally become the ‘right content at the right time’, content marketing will need to become seamlessly integrated and distributed through advanced targeting technology via ad exchanges and RTB platforms. It’s not enough for marketers to produce great content -- it needs to be seen by the right eyeballs.
4.‘Big’ data will become ‘transparent’ data. In 2014, it will be all about big insights and transparent data. Most sell-side data can’t be leveraged due to its customized nature. As clients demand more optics into their campaign data, sell side players will need to integrate technology that helps unlock the proverbial ‘black box’, making audience and environmental data attributes visible at the impression level for smarter targeting and insights. Impression level data transparency will also allow publishers to unveil valuable inventory at higher CPMs that would have gone unnoticed. Transparency will be the answer to making data truly beneficial to both the sell and the buy side.
5. Beyond the cookie targeting becomes crucial. The online world is as fragmented as ever, and audiences are becoming harder to find. This means advertisers are going to have to start looking much more aggressively for alternative ways to reach their audiences -- they can no longer rely solely on third-party cookies and a narrow white list to assign value to an impression. With channels like SmartTV on the rise, Twitters acquisition of MoPub and Google’s recent news on its potential move away from cookies altogether, there has never been a time when this has mattered more.
Overall, these are more than just trends. They are changing the way that advertising technology companies do business, the way that brands reach audiences, and most importantly, the way consumers are reached through online advertising. Bob Dylan would be proud.
Sloan Gaon is CEO of PulsePoint. Follow him on Twitter @sloaner.
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