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7 Trends for
Ad Tech Consolidation, Consumers & CTV

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Trend #1 Consolidation Is Inevitable The glue that holds together ad tech is coming apart. Integrated technology stacks are an answer.

Privacy legislation and changes imposed by the browsers have eroded the connections that hold together ad tech, the death of the third-party cookie being most prominent. Over the last five years, we have seen huge moves from the power players, buying up smaller, specialized companies to build integrated tech stacks. Oracle acquired AddThis, BlueKai, Datalogix, Grapeshot, and Moat (to name a few), creating a diversified data + DMP + validation + measurement business in only a few years. This has encouraged the growth of niche ad tech companies focused on winning in narrow categories–supply aggregators, data management platforms, multi-touch attribution providers, and sequential and dynamic creative personalization shops.

But with the ad tech glue dissolving, disparate technologies stand to lose. With the conservatism of last year in mergers and acquisitions, successful companies have built up their war chests and are starting to spend this cash to grow their businesses. Ad tech M&A activity surged in Q1, with 4 transactions of a billion-dollars-plus, after 5 years with none over a billion. These variables are providing the catalyst for the next wave of consolidation that is occurring, creating an opportunity for marketers to tap into an innovative and unified approach, such as with the Quantcast Platform.

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Trend #2 Scrutiny of the internet giants steps up a level Will they play nice? Or has the battle just begun?

The internet giants are under a microscope with respect to data collection, content moderation, consumer privacy, and increasingly antitrust. Lawmakers continue to scrutinize the big tech companies and in March asked their CEOs to testify in Congress. Antitrust complaints and investigations have become a key battleground in the fight for the free and open internet as lawmakers and regulators increasingly explore the intricate web of seemingly disparate services and more fully appreciate the potentially preferential interplay between them. The UK, in fact, recently launched its Digital Markets Unit to promote pro-competition reforms to help innovation thrive and secure better outcomes for customers.

The tech giants’ power has shaped the internet as we know it and determined how advertising has been bought, delivered, and measured. With the post-cookie world upon us (itself the focus of new scrutiny), how will they balance societal trust with their business demands? Operating large media and advertising businesses themselves, they benefit when it is harder for brands to buy advertising on the open internet as more ad budgets flow to them. And now Google has announced that they will not support a class of emerging identity solutions and will utilize FLoCs across its own ad tech products instead. This move complicates the ease with which advertising–which funds much of the free content for billions of users–can be bought and sold on the open internet.

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Trend #3 Consumers Join the Conversation, Advocating for their Data Rights Consumers want a free and open internet. Now we need to have an honest and open conversation.

The internet’s original sin was allowing everyone to believe the internet is free. We know consumers value free content and that society benefits greatly from it, but most consumers don’t fully appreciate that all the free content they enjoy is largely funded by advertising. While it might be uncomfortable, the industry needs to make clear to consumers that the content they value is paid for by ads, which only work if based on accurate data. It is essential that the relationship between consumers, brands, and publishers remains symbiotic.

As regulation ramps up and is better enforced, there will be more active scrutiny of consent in all internet interactions, and thus publishers and businesses need to embrace consent management. Consumers will put their trust in trustworthy companies.

And so consumers should be invited to join the conversation. Businesses need to explain to consumers what data they need and why, ask for consent, and allow consumers to change their mind. This dialogue will provide consumers with an understanding of the value exchange and the tools to take actionable steps towards controlling their data. It is time to confront the original sin and have an honest and transparent conversation.

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Trend #4 Consumer-First Identity Solutions are the Answer Trusted relationships at the center are key. Winning identity solutions will be consumer-first.

There is a lot of noise in the marketplace around identity solutions, with a flurry of new products purporting to address life after third-party cookies, such as FLoC, Unified ID 2.0, and LiveRamp. But in the absence of clarity on how the browsers will dispatch their self-appointed internet gatekeeping duties, there remains a gap between the ideas and proclamations of today and the meaningful and actionable solutions our future needs.

To allow the open internet to thrive while respecting consumer privacy, it is important that identity solutions adhere to the core tenets of industry standards, interoperability, and innovation. The ad tech industry, working with publishers, brands, and agencies, has the opportunity to set these standards and build a framework for a viable long-term identifier with the flexibility and potential to maximize performance.

We will see solutions tested and not gain traction. But innovation often comes on the heels of failure. Ultimately, we know that audience-based ad buying is not going away. Trusted relationships that start with the consumer at the center are key and these approaches will thrive, while many others will wither.

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Trend #5 A Year of Connected TV CTV is growing up.

Connected TV is the newest trend. The pandemic shifted consumer behavior in 2020. Usage has grown dramatically and so has ad spend, albeit from a relatively low base. But now, as the magnitude of ad budget grows and becomes increasingly material, connected TV is entering its adolescence and must embrace all the awkwardness that goes with it. To gain a seat at the adult’s table, the underlying infrastructure for planning, execution, and measurement needs to advance. CTV has struggled to find itself, especially when it comes to success metrics. It is not like linear television, which is reliant on small panels to measure audience reach–an approach that feels so 1980s. Nor is it like traditional digital: there are no clicks.

Early digital video tried to copy over traditional broadcast metrics such as gross rating points (GRPs), which calculated audience reach, but it also copied over weaknesses in its methodology. While CTV has found some success with completion rates, if other video channels provide any foresight, this metric can be seen as a huge limiting factor. Nielsen, the industry leader in TV measurement, is trying to play catch-up by adding YouTube and YouTube TV to their Digital and Total Ad Ratings mid-next year. CTV is in a critical phase of growth this year: eMarketer has increased their prediction for total ad venue to $11 billion for 2021.* As with any new platform, it is now time to experiment and innovate new metrics that will show value and define its potential as an emerging platform.

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Trend #6 Marketers Commit to Understanding and Embracing AI AI automates the automatable. Marketers can go back to thinking about marketing and not tech.

We all roll our eyes when we hear the buzzwords “big data” and “artificial intelligence.” And yet, these are the keys to driving marketing efficiency and effectiveness. We are at a crossroads, where we can either move backwards towards simpler (but inaccurate) metrics like clicks, or we can move towards the power of statistical techniques powered by AI.

Machine learning makes the impossible possible because machines provide the speed, scale, and accuracy needed to build unique predictive models for individual advertisers, continuously optimizing campaign delivery to simultaneously drive optimal outcomes and comply with constraints.

By applying AI and ML to rich data, marketers can gain significant insight from the 3Ps: patterns, preferences, and predictions. They can detect patterns in large data sets, discern consumer preferences, and make predictions to determine the next best offer, next best action, and next new customer. Artificial intelligence is no longer a buzzword; it is a requirement in any savvy marketer’s toolkit, freeing up humans to tackle the problems that they outperform machines on, such as strategy, creativity, and marketing.

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Trend #7 Measurement On the heels of the pandemic, there will be a rise in spend, but it will need to be justified. Sophisticated marketers are bringing incrementality in-house.

Another buzzword we commonly hear from marketers is “incrementality” and while almost everyone generally means the same thing when discussing it, the specifics of what is meant, how it is measured, and how that measurement is used vary wildly. Incrementality is the holy grail of advertising measurement because it calculates the causal impact a given marketing approach has on a group exposed to specific advertising, providing a compelling foundation for rational budget allocation. But the vast majority of incrementality testing conducted today does not come close to achieving this aim. Mostly, it is not used as a singular measure; rather, it is a secondary metric that backs up a CPA or ROAS measurement. And, in the vast majority of instances, implementation lacks the level of mathematical modeling and statistical rigor necessary to compensate for the challenges of publisher inventory bias, cookie churn, and the myriad of ways in which control groups are polluted, gamed, or otherwise, biased.

These challenges can certainly be daunting, but for a handful of the largest performance marketers in the world, overcoming them and embracing incrementality as the only campaign metric is fundamental to their outsize success and market share. As the economy rebounds and things begin to return to normal, agency and marketer spending will increase again. But the pandemic has changed us: needing to more carefully justify spending, savvy marketers are tackling the measurement dilemma directly, drawing a stark line between the serious mega-scale in-housers and standard performance marketers.

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