The Future of Adtech: Turning Challenges into Golden Opportunities
Ad ops was quite straightforward in the pre-digital days, with media companies selling ad spots that ran during TV programming. The landscape has changed.
With digital content, ad ops has expanded its portfolio. It includes targeted audience-based advertising that are featured via online display ads and social media platforms.
The pandemic meant further changes to people’s digital consumption. Remote work set-ups and lengthy lockdowns have led to an increase in time spent online.
A survey by eMarketer shows that US adults spent an hour more per day on digital devices in 2020. Total digital time is expected to surpass 8 hours by the end of 2022.
These numbers signify the bright future of digital advertising.
A market leader in business data, Statista, estimates that digital ad spending will reach approximately $560 million by 2023!
Adtech, then, becomes a critical part of running a digital advertising campaign. Its central role can be gauged from the degree of personalization it offers.
With adtech, modern advertisements are delivered to your target audience with the perfect timing and within the most suitable context.
Marketers get to save a substantial portion of resources and effort while users receive the most helpful and relevant offers.
But growth rarely comes without its own set of challenges.
With innovations in adtech, advertisers are overwhelmed by the sheer number of options to choose from, making digital ad campaigns more complicated than traditional campaigns.
Before we jump into the many areas that can prove to be challenging for any business, let’s quickly look at what adtech actually is.
What is Adtech?
Adtech, or advertising technologies, are tools and software used by advertisers to reach their audience as well as deliver and measure their ads.
The goal is to get better ad placements, provide the most relevant content to the targeted viewers, and reduce the amount of wasteful spending. Ad tech also provides you with behavioral data which can be utilized to target potential customers.
Thanks to insights collected from billions of consumers’ device interactions, ad tech has become more popular than ever with companies discovering how cost-effective these solutions are.
Ad tech is often confused with marketing technologies or MarTech. While the concepts intersect, they are not the same.
MarTech includes a range of software, all targeted at achieving marketing goals. Adtech are different types of analytics and digital tools that are used in the context of advertising.
The 6 Challenges & Opportunities in the Adtech Space
Let’s look at the major challenges that adtech players will have to overcome in 2022 for better profits and revenue growth.
1. Privacy is Prime
Countless changes are imminent in the near future for the adtech industry, with third-party cookies taking the top spot in this list.
Research shows that almost 73% of Apple users will choose to opt-out of having their personal data traced and stored following Apple’s decision to give its consumers a choice to opt-in or out.
Similarly, Google has decided against building alternate tracking identifiers with cross-site tracking capabilities post the phasing out of third-party cookies from 2023.
These changes are meant to give the end-user better control over their online interactions and the right to digital privacy.
The adtech industry should now refocus its strategies.
Many are relying on probabilistic data to target the audience and get accustomed to a world of unidentified users.
But there are also opportunities that should be leveraged, such as contextual targeting. Contextual targeting will allow advertisers to display products on the most relevant web pages based on searched keywords.
Some browsers have already begun to test their own solutions.
Google’s Privacy Sandbox project is one such example. The project is researching alternatives to third-party cookies and the company is confident that marketers will achieve 95% more conversions per dollar, compared to cookie-based ads.
2. Transparency Takes the Center-Stage
The issue of transparency in digital advertising is complex.
On one hand, various charges are applied since various players are involved along the supply chain that helps a business run.
On the other hand, brands and advertisers have the right to know how much of their ad spend is being absorbed by intermediaries.
Companies have started to work on several solutions to make programmatic advertising more transparent.
Interactive Advertising Bureau has the Fee Transparency Calculator that provides advertisers and publishers with a granular evaluation of their programmatic technology.
Advertisers can also assess their inventory costs, including CPM-based fees, percent of Media Fees, and Flat Fees.
3. Tapping on the Potential of CTV
Connected TV (CTV) is simply a television that is connected to the Internet.
CTVs include Smart TVs, Apple TVs, devices such as Tivo and Roku, and even gaming consoles like Xbox and PlayStations.
A prime reason why CTVs are so appealing to advertisers is that they already have an impressive market permeation.
Data by Nielsen highlights an uptick in time spent watching CTV, which has increased by 81%. That translates to nearly 4 billion hours of CTV per week.
Despite the staggering figure, many advertisers face significant challenges with CTV, namely measurement, ad fraud, and campaign planning in fragmented markets.
But many companies are capitalizing on the surge by pioneering post-production solutions for brand integration in contextual advertising.
Adtech challenges in CTV can be further addressed with advanced targeting. This involves better timing of running ads for your target audience.
4. Surge in Ad Frauds
The bloom in CTV also creates difficulties in other areas, mainly measurement, ad fraud, and campaign planning.
In fact, Pixalate’s 2020 CTV Ad Supply trends Report shows that almost 24% of CTV programmatic ads in the USA were invalid traffic.
Market experts opine that this situation must be brought under control through the adoption of new industry standards.
In this regard, the Interactive Advertising Bureau (IAB) Tech Lab has come up with a text file called “ads.txt”. Publishers can use this file by placing it on their websites to give ad buyers a list of authorized vendors. Its adoption is seeing a phenomenal uptick.
5. Low CTR
September 2021 data shows that the average Click-Through Rate (CTR) for ads on Google Search stood at just 3.17%.
Low CTR continues to be a problem for any type of ad. For advertisers, this means a consistent focus on coming up with new and more engaging formats for ads.
Possible solutions involve the use of more innovative design, additional animations, the use of interactive videos, and native formats.
Native formats can prove to be immensely beneficial. It essentially entails embedding information about a product in the website content. This can prevent your ads from falling into “yellow areas”, which are seen as noise by your audience.
With more and more customers preferring to learn about products through content, native advertising can be a stepping stone for better results in advertising campaigns.
6. Rise of Gaming
Virtual reality provides new and never-seen-before opportunities for the Adtech industry to strike better connections with the consumer.
But, as Tom Simpson, SPV of AdColony puts it, advertisers must tread carefully in the new space.
Why? Because brands need to go beyond just incorporating an existing piece of innovation into a game.
The emphasis must be on providing gamified digital experiences. Adtech players should offer their customers new ways to engage, live, and play.
Online-to-offline-to-online (O2O2O) and omnichannel shopper strategies can be utilized by advertisers to monetize the play economy.
Reinventing to Stay on Top
The potential of the advertising market is tremendous.
But success in advertising will no longer be possible without technology.
Going forward, when selling adtech solutions, 5G networks with unprecedented data speed, Artificial Intelligence (AI), and Machine Learning (ML) will help brands to achieve better performance and ROI in the long run.