The digital advertising industry has had to adapt to consumer demand for stricter privacy controls around the world. GDPR and CCPA regulations, changes to IDFA by Apple, and Google’s upcoming phase-out of third-party cookies are forcing advertisers to find new ways to reach consumers.
These changes will have the greatest impact on brands that rely on programmatic advertising and do not have strong first-party data sets to target effectively. Developing new strategies is especially important for industries such as CPG, manufacturing, wholesale, and others.
Of course, programmatic ads aren’t going away anytime soon; in 2021, they’re expected to account for 89% of all digital display ad spending.
But in the future, it will look a little different. Here are some of the changes that the industry has begun to make.
But first, let’s define the term.
What Is Programmatic Advertising and Why Is It Necessary?
The fully automated data-driven method of media buying and selling ad space on publisher websites is known as programmatic advertising. Brands can show the right ad to the right customer in real-time thanks to complex algorithms and machine learning.
The way brands buy and sell ad space has been transformed by programmatic advertising. It was designed to replace the traditional, manual process of RFPs, negotiations, contracts, time, and financial resources. It also enabled real-time ROI measurement of ad campaigns.
Programmatic Advertising: 6 Shifts to Accommodate the Private Web:
Google’s recent announcement that third-party cookies will be deprecated until the end of 2023 gives advertisers more time to test new strategies.
However, in a post-regulation world, brands are already utilizing effective alternatives for tracking and targeting consumers.
Here’s what we can expect to see in the programmatic advertising space in the coming months.
1. Renewed Focus on Contextual Targeting-
We can expect a resurgence of contextual targeting — matching ads to the content of a website — as the primary targeting method for advertisers.
Artificial intelligence (AI) advancements have allowed for a better understanding of the meaning of content on a website, while sophisticated algorithms display ads when users are engaged with the topic or keyword. They work together to ensure brand safety by placing ads in appropriate locations without using personal or third-party data.
2. Private Marketplace Leverage–
More brands will shift their resources away from open ad exchanges and toward private marketplaces (PMPs) run by individual publishers.
PMPs make use of first-party data collected by publishers through their extensive web portfolios. Advertisers can drill down into consumer demographics and interests to place ads with the greatest relevance and impact. Along with access to first-party data, PMPs offer greater transparency and control, giving advertisers confidence that their ads are being displayed alongside brand-safe content.
3. Advertising Creative Investment-
Creativity that is both impactful and engaging is a critical component of effective advertising. However, it has arguably taken a back seat to technological advancements in digital marketing. It made sense — using platforms that use third-party data for ad targeting was more resource efficient.
This quantity-over-quality mentality explains why the vast majority of digital ads are irritating — and not even remotely engaging. With a renewed emphasis on creativity in advertising, we’ll see more brands invest in cross-channel storytelling that drives engagement rather than product-focused display ads that follow consumers around the web. Companies will be forced to build genuine, long-term relationships with their customers based on value and content. To be understood, traditional measurement KPIs such as CPA, ROAS, CPC, and CPM will now require true enrichment and context. Some of these metrics will be completely phased out in favour of more qualitative, engagement-based metrics.
4. Better Ad Experimentation and Testing–
Most businesses that have a website or an app test different layouts, colours, landing pages, and checkout processes to ensure optimal brand representation and the best possible user experience.
However, even though optimizing ad spend is always a top priority, they have been less willing to experiment with advertising campaigns. However, pretesting can increase the effectiveness of an ad by at least 20%. With the absence of the third-party cookie, which makes walled gardens even more walled, tracking and testing across channels become a significant challenge.
Right now, brands can experiment with different campaigns and content to see which strategies work best. Brands will no longer have that luxury soon (or now, if you’re reading this shortly).
Smart brands are adopting an experimentation model in which they isolate a specific known audience within a walled garden or platform, test content, and tactics, and then replicate the successful ones at scale across other walled gardens. Informed inferences, associations, models, and assumptions will be more important than ever for brand marketing success. To reap the benefits of programmatic advertising, we can expect brands to conduct more testing to improve targeting.
5. In-House Programmatic–
Some brands will bring programmatic advertising in-house, giving them more control over cost, data, and intellectual property. Of course, they’ll require massive amounts of first-party data or information gleaned from direct interactions with customers.
Bringing it in-house, however, is no easy task. A centralized data management platform (DMP), change management, in-house expertise, and a connected AdTech platform are all required for a complete solution. For some brands, the effort and cost of retaining control of consumer data, improving transparency, and reducing ad fraud are worthwhile.
A hybrid programmatic advertising model that relies on partners or agency expertise can provide similar benefits.
6. Further Development of Other Programmatic Formats-
Of course, programmatic advertising is not limited to the internet. As advertisers shift away from tactics that rely on third-party data, we can expect them to devote more resources to other formats.
- Geotargeting on mobile devices-
Mobile geotargeting uses GPS data from mobile devices to pinpoint specific consumers while they’re on the move — as long as location tracking is enabled — with the right ad at precisely the right time. Ad impressions for drink specials at a nearby coffee chain during the morning commute and a BOGO entree at a local restaurant just before lunchtime are two examples of potential applications.
Advertisers can target consumers when they aren’t looking at their screens and instead listening to digital audio — 1 hour and 29 minutes per day for the average adult. Because consumers log in to listen to digital radio, music-streaming services, podcasts, and so on, advertisers can effectively target based on data points such as age, gender, device, and listening habits. Given that these customers are also particularly captive (many listen via headphones), audio appears to be a wise investment.
- Out-of-Home (OOH) advertising-
Billboard and signage advertising is not new, but with dynamic digital display and targeting capabilities, they have become a compelling way to advertise. Electronic billboards on buses and buildings, inside airport terminals and stadiums — out-of-home (OOH) advertising is difficult to ignore unless you close your eyes.
- OTT (Over-the-Top)-
OTT advertising bypasses TV providers in favour of delivering advertisements via streaming video services and connected TVs (CTV). Advertisers can deliver relevant ads in real-time to their ideal consumers based on demographics, context, time of day, location, and the content being consumed. And, as you’ve probably noticed, they’re non-skippable on the majority of devices and platforms, which is an appealing feature for advertisers.
Programmatic Advertising’s Future Is Bright:
Brands will continue to rely on programmatic advertising to reach their target customers, and they will devote a significant portion of their ad spend to this purpose. However, they will investigate various formats that encourage creativity and new ways to reach consumers while respecting privacy.
It’s worth noting that advertisements are only as good — or as bad — as the data behind them.
Evaluating your programmatic buying and advertising strategy also necessitates revisiting your company’s overall data strategy. Claravine can assist in the establishment of relationships and patterns across existing first-party data, thereby creating data integrity and context, which are critical in the new experimentation programmatic world.