The technology and business factors that will change the face of advertising in 2019.
The trends that move digital advertising and ad technology are constantly in flux. But some factors are more impactful than others. As things stand, companies that both make and use adtech today are in for some major changes on a number of dimensions—some better than others. Companies that can keep their fingers on the pulse of the following disruptive forces will be better positioned for success in managing audiences and extending the reach of their brands, while keeping regulators at bay and proving ROI along the way.
Voice assistant and smart speaker technologies are on a meteoric growth trajectory. According to Global Market Insights, the smart speaker market will increase by more than 566 percent by 2024. At the end of this year, the makers of smart speakers will have shipped 56 million smart speakers around the world.
“Smart speaker uptake has grown faster than any other consumer technology we’ve recently encountered, such as AR, VR, or even wearables,” says Luchio Chen, an analyst with Boston Consulting Group. The possibilities for monetizing the growing install base are “endless,” hesays.
Consumers are increasingly turning to voice assistants like Alexa, Siri, and Google Assistant to direct their purchasing decisions.
56% of consumers have used voice search to find local businesses in 2018
Around 56 percent of consumers have used voice search to find local business information in the past year, and at least 22 percent of U.S. smart speaker owners have purchased something using these devices.
The exploration of new adtech opportunities will ramp up as organizations recognize the medium’s potential. Voice-activated technology is interactive in a way that radio never was, and enterprises will increasingly seek ways to blend programmatic advertising and rich user data with the unique capabilities of voice assistants. In fact, it’s already happening. Current analysis shows that the number of Alexa “skills,” or apps, are growing by 5,000 every 100 days.
Personalization serves as the brass ring for many digital transformation initiatives in the enterprise, as technology and business executives recognize that customers today demand a highly tailored experience from first contact onward. On the adtech front, that’s translated into mounting reliance on artificial intelligence (AI) and machine learning. Ultimately, AI will be a personalization force multiplier for adtech to more accurately target ads, manage audiences and budgets, and even personalize creative content.
Currently, the top three uses for AI in adtech are for audience expansion, audience targeting, and product recommendations. Only a scant 6 percent of organizations can currently personalize campaigns by using technology like collaborative filtering or predictive models. But the use cases are likely to change, and advanced personalization is set to grow as investments pour in. According to a recent study, 77 percent of marketing executives plan on increasing the use of AI in their advertising campaigns in the coming year.
Many industry experts believe the increased funding will shift focus in adtech toward what some call hyper-personalization.
Use of the Facebook Dynamics Ads feature is growing by 37%
“The idea of using data to personalize marketing messages is nothing new, but hyper-personalization allows brands to harness the power of data in a more advanced and effective way,” says Claudia Collu, chief commercial officer at MainAd.
One of those advanced techniques is dynamic creative optimization (DCO), which harnesses data about user behavior and context to create personalized ads in real time.
“The ad copy, graphical elements, colors, or click-through actions can be tailored to the user observed or even to the conditions around him or her, like location, time of day, or weather,” explains Francis Turner, chief revenue officer at ADYOULIKE.
DCO is already starting to gain some serious traction from major players like Facebook. The social network has seen great success with its new Dynamic Ads feature, which personalizes ads based on user browsing behavior. Use of the tool is increasing by 37 percent year-over-year, according to a report released by Marin Software earlier this year.
This year’s rollout of the EU General Data Protection Regulation (GDPR) offers powerful testament to the fact that disruption doesn’t always come by way of technical innovation. Indeed, consumer sentiment and action from European lawmakers has culminated in a piece of privacy regulation that will impact the complexion of adtech and digital marketing for many years to come.
“GDPR has disrupted digital advertising from the perspectives of risk, laws, and technology,” says Matt O’Neil, general manager for EMEA at The Media Trust. “It therefore comes as no surprise that we’re seeing all players throughout the digital ad supply chain feeling the pains of change.”
Among the high-level requirements of GDPR most likely to impact digital advertising is that publishers must obtain consent before tracking users or personalizing ads. Industry experts expect strong enforcement and stiff fines for failing to comply. However, it will take time for many publishers to adjust to GDPR, and chaos will likely reign while the industry comes to grips with the regulation’s true impact.
One study shows that even over a month after GDPR went live, a third of the major websites online still didn’t present any notice about personalized ads. Some experts have gone as far as saying programmatic advertising is inherently “a vast and ongoing breach,” according to GDPR language. Clearly, it’s still too early to pinpoint all the ways that GDPR will disrupt adtech, but, rest assured, it will be a major disruptive force.
“GDPR has disrupted digital advertising from the perspectives of risk, laws, and technology.”
On the immediate horizon, the first knee-jerk reactions have jump-started a new, burgeoning field of technology in the form of consent management platforms (CMP). As O’Neil points out, there are now more than 100 CMPs on the market, along with home-grown solutions, and it’s a field likely to broaden and specialize because not using some form of CMP “is simply not an option.”
“The technologies and the processes they facilitate are all new and are layered atop an already complex, dynamic ecosystem supported by thousands of technology vendors,” he says. “Moreover, CMPs gather complex information, which they then must communicate upstream. At the end of the day, no matter what CMP is used, all players along the digital ad supply chain must embrace transparency.”
As the complexity of the programmatic digital advertising marketplace continues to mushroom, marketing executives struggle to gain visibility into where their spend is going. This opacity has enabled skyrocketing rates of advertising fraud and has also diminished marketers’ capability to cleanly prove return on advertising spend (ROAS). In short, the lack of visibility has generally neutralized many benefits of digital advertising’s data-rich environments.
Many in the adtech industry believe that blockchain technology holds the power to deliver a healthy dose of transparency. When executed in adtech ecosystems, the immutable nature of blockchain ledgers should give organizations the power to more reliably track and reconcile exactly where their digital ad campaign spending goes as it travels through the hands of agencies, demand-side platforms, exchanges, and eventually the publishers themselves.
“The blockchain movement is going to turn advertising on its head,” predicts Jon Nolz, a business development executive for one of many burgeoning blockchain startups hoping to jump into the adtech world.
As he sees it, the three biggest ways blockchain will transform to digital advertising will be in reducing fraud, increasing supply chain transparency, and regaining user trust through improved data privacy.