Originally posted by Rob Webster
Rob Webster is Founder of Canton Marketing Solutions. He’s worked in the ad-tech industry since 2001 and is NDA’s new monthly columnist.
2019 was a year of huge change for the industry, and this year it was often driven by external pressures such as legislation as browser developments, as well as internal innovation. It was the year that the cookie began to crumble with knock-on impacts reverberating around the industry. Arguably RTB, especially for upmarket brands, became half as effective as they were twelve months earlier.
It was also the year that the industry woke up to data regulation being here to stay and a global phenomenon with California and New York joining the EU GDPR. In-housing has gone from being the preserve of small digital-savvy companies to mainstream brands. Platforms and walled garden dominance continued in 2019 to grow over traditional publishers with Amazon, Snapchat, Twitter, Pinterest and Tik Tok joining Google, Facebook and Microsoft as the main sources of digital advertising spend.
Finally, it was the year that consultancies and independent agencies challenged the dominance of the big agency holding companies. So with that background let us look at what 2020 has in store for us.
Prediction No 1. It will be a great year for the digital ad industry!
Starting off with a general prediction, but one that is very important. 2020 will mirror this year as one of change, but the outlook for the industry is hugely positive. Negative stories abound in the press about the cookie apocalypse and how regulation will destroy the industry. Yet nothing could be further from the truth. I for one encourage today’s’ school leavers and graduates to join this industry for the opportunities it will provide.
To add some meat to my prediction I am confident that online ad spends, in the UK, EU and globally will continue to grow and take overall advertising share at the same trend rates as it has the last 10 years. The industry is in need of talent and overall the opportunities to work in the industry and have great careers is going to grow in 2020.
Agencies, ad-tech providers and publishers will have successful years if they can adapt to the high level of change and build successful models for the future (more of this to come). Some businesses may sadly struggle but that is the nature of the vibrant industry with the cream rising to the top. Digital tech companies dominate lists of the world’s most valuable firms and more tech businesses will rise to the top (again more on that later).
Prediction No 2. Walled gardens will continue to grow
Brands will on average double or triple the number of walled gardens they work with. An awful lot of negative press is written about walled gardens. Some of it I agree with, there are concerns over measurement for example. However, for the most part, walled gardens are a great opportunity for advertisers.
Consider that these walls can keep out bad actors and protect the use of data far more easily than in an open ecosystem and provide advertisers with consistent advertising experience. It is far easier to utilise data and gain consent in a walled garden environment. Where will these walled gardens come from? Connected TV looks ripe for a series of walled gardens. Already in the UK Sky AdSmart and the ITV Hub (via Amobee tech) are effectively walled gardens and there is a strong emerging ecosystem coming out of the US which will grow rapidly.
Digital Out of Home will be another source of new walled gardens, as new as existing players develop their offering. Finally, traditional display and video will also be a source of new walled gardens, which brings me on to:
Prediction No 3. A logged-in, authenticated ecosystem for digital display and video will emerge
This will eventually form a new walled garden (or gardens). In recent years, publishers have earnt substantial sums from cookie-based retargeting – this has dropped substantially in recent times and will continue to do so. To replace this and allow brands to reach their opted-in audiences in quality environments publishers will move towards an authenticated web.
More and more publishers will require users to log in to access content and be able to personalise content based on these logged in users. This is copying a trick that Google and Facebook have been doing for years, combined with an easy-to-use interface which I hope will emerge also (Ozone I’m looking at you).
Companies like LiveRamp and for me one of the hottest companies in UK ad-tech right now, InfoSum, will flourish by assisting with the data layer and allowing brands and publishers to share audiences in a fashion both users and the regulators will be happy with.
Huge opportunities abound for publishers and ad-tech companies which can facilitate this world. Equally for those that can support advertisers and publishers in the new skills needed to make the most of this opportunity.
Prediction no 4. A more open, fairer and more innovative marketing services layer emerges
A more open, fair and innovative marketing services layer will emerge. The last 30 years (if not longer) of marketing have been dominated by buying power, even in digital. As such it was very hard to succeed if you were not big. Buying power is much less important now in digital marketing as so much of it is auction-based.
With many clients bringing elements of their media buying in-house and the focus of walled gardens on making buying simple (any brands can test and learn with little more than a credit card) means the need for a powerful trading director is reduced. Instead, this new ecosystem favours expertise in the use of platforms, data, attribution, optimisation and those that can respond quickly to events in this fast-paced world.
Large agency groups that cannot adapt to this dynamic will struggle. Combined with a growing market both in the UK and particularly globally this leaves a huge opportunity for independent companies to innovate and prosper. This extends beyond established digital to Connected TV and OOH where through new walled garden platforms new buyers can compete with the established players.
Prediction no 5. Ad-tech and Mar-tech become fashionable again
Valuations will start to noticeably rise again for independent ad-tech. In the programmatic era, ad-tech lost its mojo with investors, as a few unicorns failed to reach the valuations expected. This is largely because there was too much focus on sales and marketing and not enough on engineering and solving the industry’s challenges.
Also, some firms focussed too much on agencies and not on the underlying clients. Valuations had been set too high and too much-invested money wasted. These inefficiencies have been largely bled out of the market in recent years and company valuations have already gone through the needed corrections.
Furthermore, GAFA is now operating far more like publishers taking media money than tech companies taking ad or mar-tech money, this opens up the room for independent ad technology.
Consider that Facebook largely left ad-tech after its dalliance with Atlas and LiveRail. Google too, once so dominant in this space has sun-setted the DoubleClick brand name and no longer tries to be the only ad-tech platform you need. Consider that Google has no tools for managing Facebook, Amazon, Snapchat or other walled gardens. Instead of having a slice of all digital advertising Google is focussing on making its own options better, ie more like a publisher.
It should be obvious that the world’s leading publisher has some conflicts with measurement and execution. The scene is set for independent ad technology to grow and new players to emerge and flourish. I particularly look forward to seeing how innovative new UK technology companies like ID5, InfoSum and 59A continue to thrive and grow.
Welcome to 2020 then. A marketing world more in tune with the user and more open to talent and excellence. I can’t wait!
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