7 Trends for
Ad Tech Consolidation, Consumers & CTV
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.
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.
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.
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.