The 2020s will be a defining era for the adtech industry. While it has so far enjoyed rapid, unrestricted growth, the next decade will be defined by its ability to address its fundamental flaws and retrofit rules and regulations while continuing to grow and innovate.
Its heyday is by no means over. The latest research from Magna Global found that digital advertising (search, video, social, display) represented more than half of the total advertising market for the first time in history in 2019. While digital advertising's growth curve has been slowing over the past four years, it is still expected to experience double-digit growth in 2020 and act as the growth engine for the global ad industry over the next decade.
But it faces a much tougher competitive and regulatory climate in the next decade. Growing unregulated has allowed the industry to overlook fundamental issues such as privacy, competition, brand safety and fraud. These issues dogged the industry in recent years—according to industry veterans that this week discussed the ways in which adtech had shifted focus over the past decade—and will continue to be the biggest hinderances to its sustained growth.
As we enter a new decade, Campaign Asia-Pacific asked six adtech industry experts what three major themes they believe will heavily influence the industry in 2020. Unsurprisingly, the most common theme to emerge was addressing privacy concerns, which is expected to trigger the revival of contextual advertising as well as the growth of connected TV.
Jason Barnes, chief revenue officer APAC, PubMatic
The multiple consumer data breaches, misuse and scandals we endured in the past few years have made data privacy one of the foremost issues for our industry. One way large digital corporates have responded is by limiting the ability for third parties to drop a cookie on a user, so we can expect a reduced ability to target effectively across the internet, as access to user profiles is limited to the sites a consumer has a direct relationship with. That is obviously problematic for an industry built on accurate audience targeting and plays further into the hands of the FANG’s (Facebook, Amazon, Netflix, Google) who have troves of first-party consumer data. Expect the value of the cookie to depreciate and identity to be a major area of investment and collaboration in the early 2020s as we seek a scaled, persistent and independent solution to targeting users. It is a problem we have to solve. A related point is that governments and the general population trust these global digital platforms a lot less than they did in 2010, so expect increased regulation and scrutiny and an empowered consumer this decade, which may hinder growth if it is carried out with a sledgehammer and not a scalpel.
2. In-app advertising
One platform that has a natural persistent identifier is the mobile phone, with its Device ID or Android ID, which leads me to my second major theme: the exponential growth of in-app advertising. App advertising had a bad end to the decade with multiple global fraud scandals. But with technologies such as OM SDK and app-ads.txt rolling out, we will have a cleaner and more measurable environment, which is a prerequisite for branding dollars. A big winner will be gaming, which is now well and truly mainstream, and buyers are seeing the value of reaching this vast and diversified audience within the data-rich app environment.
Traditional linear-TV advertising has been resilient in the face of digital transformation, especially in Asia, but this will radically change in the 2020s with CTV and OTT becoming increasingly dominant. Chinese TV advertising is declining 5% to 6% per year, in Japan 1% to 2% per year (buoyed by the Tokyo Olympics this year) and Australia saw a massive 8% decline year on year (Magna Global). In India, according to a report from Boston Consulting Group and the Confederation of Indian industry, viewership of digital video has increased twofold in two years, driven by the fact that India has the second largest base of smartphones in the world. While YouTube is mopping up a lot of the migrating TV spend, it is pleasing to see many high quality CTV and OTT options steadily gaining market share, from Iflix and HOOQ in southeast Asia to Hotstar and VOOT in India and AbemaTV and TVer in Japan.
Erika Cole, Asia-Pacific media investment manager, Goodway Group
There is a significant amount of noise in the digital market at the moment, especially around new super hot and shiny technologies and tactics. However, advertisers are still struggling with fundamental challenges, whether it’s setting up their brand for digital engagement, ensuring they are getting the right data from publishers, or, crucially, making sure that their own first-party data is activated correctly and supporting their overall marketing efforts. Brands and agencies want to ensure their working media dollars are being allocated across search, social and display in the most effective way. That comes down to transparency at the campaign level, and in the manner in which brand dollars are being utilised. We expect to see transparency at the execution phase become an overarching trend in Southeast Asia in 2020 and beyond as marketers are forced to meet this challenge of consumers moving from legacy offline media consumption to digital and mobile channels and platforms. This is nowhere more relevant than in Asia, where audiences are largely using mobile devices for their daily consumption.
Every major brand will seek to become privacy-compliant in 2020 in all of the Asian markets they operate. This is a particularly stiff challenge in Asia, where you have 13 different markets to contend with. The first port of call for many brands is to make sure that they store and access data in a privacy-compliant way and that they don’t breach specific country legislation. For example, new personal data laws come into effect in Thailand at the end May, and brands in that market will need to know how to behave online. As per a recent IAB SEA + India white paper, legal teams will need to help brands understand what personal data means in each jurisdiction and what implications there are for processing it. The decline of the third-party cookie will have less impact in Asia, because the market is driven by mobile users, so the management of device IDs is more important.
Consolidation will be the umbrella driver for in-housing, because brands want to take control of their media investments, and that will have major implications for the way that brands interact with tech-stack partners. Advertisers will continue to explore the rates and fees they are paying to their partners, and they will want fewer vendor/suppliers in the mix in a bid to reduce overall costs. An EY report released this week reports that 70% of advertising and marketing executives want to internally restructure and consolidate their business, and 30% of respondents were from Asia. Consolidation will be brutal for some players as advertisers aim to reduce costs, including money spent on the so-called adtech tax.
Laura Quigley, managing director Southeast Asia, Integral Ad Science
1. Brand suitability
2020 will be the year that contextual targeting achieves scale for advertisers and will increasingly become a proxy for the audience. An increased focus on brand suitability from advertisers requires technology that does more than just protecting brands from risky content. It requires technology that enables a clear understanding of the nature of webpage content with detailed granularity and greater scale than ever before. This will be particularly prevalent in Europe and California because of the privacy regulations (GDPR and CCPA respectively) and the imminent death of cookies. Contextual and brand suitability targeting also represents an opportunity for publishers to monetise their sites in a world without cookie data. I do foresee APAC following suit on privacy regulations per California and Europe, and this situation will likely accelerate the shift towards contextual targeting as a means of reaching desired audiences. Sentiment analysis, providing the ability for brands to target based on negative or positive sentiment, will grow stronger as an offering across the industry. Sentiment is an integral part of suitability conversation and provides the opportunity for the industry to build more intelligent solutions and protect themselves against the growing environments of user-generated content. AI and ML will play a crucial role in developing sophisticated technology that is up to near-human comprehension when it comes to contextual and sentiment analysis.
CTV and OTT will continue to dominate the advertising industry in 2020. With mega-events for advertisers like the Tokyo Olympics and the 2020 elections, CTV environments will play a key role in reaching younger audiences at scale. Already, direct-to-consumer brands are heavily investing in CTV advertisements, recognizing that we’re entering an age of being able to buy the big screen without having to drop huge amounts of money on the table. However, as more ad dollars shift to this new environment, so will the attention of fraudsters. 2020 is the year CTV goes programmatic, opening the opportunity for brand-unsafe or ad-fraud scenarios. As a result, the industry will see verification companies like IAS continue to expand their CTV solutions in 2020 to ensure advertisers and publishers can effectively advertise in the new environment. In 2020 we are also likely to see subscriptions to ad-free CTV services begin to stagnate as consumers reach their limit on willingness to pay for yet another streaming service. Bundling may be more common among streaming services, essentially grouping together to provide consumers with more holistic service in one as a better or more cost-effective deal (for example, a free Iflix account with your Spotify subscription)—especially as consumers catch “subscription fatigue.”
The policies surrounding political advertising will continue to be significant as we enter an election year in the US. Facebook recently announced they will not fact-check political ads, whilst Twitter and TikTok plan to ban political advertising because of their belief that political messaging should be earned, and not bought. The vast majority of ad dollars go to Google and Facebook, which will continue to grow and consolidate no matter how many players try to take more of it. Agencies and advertisers will continue to look for alternatives, but this duopoly will continue to be the most effective option. Facebook and YouTube will continue to dominate in 2020, despite increased scrutiny. We will, however, see adspend continuing to consolidate. In 2019 we saw major social players starting to work closer with verification companies, and we see that continuing in 2020. Recently Facebook piloted publisher whitelists for its Audience Network and in-stream ads, with plans to expand the whitelists more broadly next year. Whitelists allow ad buyers to ensure ads placed on Facebook in-stream, Instant Articles, and Audience Network are next to content suitable for their brands.
Robert Woolfrey, SVP Asia, Amobee
As we enter a new decade, the ad tech industry will begin focusing on the next generation of identity. With the European Union having set the industry standard with the introduction of GDPR in 2018, and the United States following suit with the implementation of the CCPA, the industry as a whole will suffer if we don’t move swiftly to adopt new solutions for both a cookie-less and privacy-first world. In 2020, the collective industry will realise that solutions can’t only utilise device-level information in the increasingly conservative regulatory landscape. Because of this emerging trend, we’ll see more key players implement a combination of user and panel-based measurement for audience-based strategies in order to meet newfound industry standards and still reach consumers. A shift from third-party to first-party data is happening now, and we will see contextual advertising on the rise in 2020, as we see more advertisers applying their first-party and contextual targeting capabilities, to remain privacy-compliant.
2. Addressable TV
In 2020, more broadcasters will start adopting and supporting the convergence of four screens to better package audiences across devices. We’re going to see an absolute inflection point on the sell-side—leaning in on converged packaging for advertisers that are audience-based and cross-device using a common currency. The future of the media landscape will also see a significant increase in broadcasters and other publishers adopting walled gardens strategies, unlike the ‘open internet’ model the buy-side has hoped for. Agencies and their ad tech partners will need to solve for the changes in how TV is bought and sold in this converging world, and demand-side platforms will need to evolve and reset their strategies and tech stacks in order to remain viable and competitive. The industry will see a new generation of DSPs built for convergence and extending their capabilities across four screens to optimise a combination of user and panel data to remain competitive and meet broadcasters at this important crossroads.
3. Agency restructuring
Forrester recently validated in its New Wave report that cross-channel video platforms are at the forefront of the industry and ‘old tech’ is being pushed to the back burner. Today, advertisers are reaching critical mass in the convergence of TV, digital and the implementation of true converged measurement across all screens: linear TV, connected TV, digital and social video. But before marketers can execute on that strategy and reap the benefits in media efficiency and advertising effectiveness, they must clear some operational hurdles. Agencies will need to implement wide-scale organisational change to break down traditional silos and begin effectively planning for the convergence of TV and digital by integrating and bringing their agency TV investment and trading desk teams closer together. On the balance of TV trading skills versus programmatic trading skills, those with TV trading experience will benefit more.
Samantha Pearlson, GM client service, SEA, The Trade Desk
1. Programmatic everything
This might come under the heading of “they would say that,” but within this decade most advertising will be digital, and nearly all of it will be transacted programmatically. The shift to data-driven advertising is only now gathering momentum, particularly in relation to connected TV and streamed content. Our CEO Jeff Green has been quite outspoken on this, arguing that this shift is going to happen more quickly in Asia than the US and Europe.
Over the coming decade, privacy will become the default. Consumers will ask for and will gain more control over their information in a way that has not always been the case. This won’t spell the end of advertising, but it will just place greater onus on advertisers to provide transparency on where, how and why they collect data.
The next decade will bring even more data, but it will also deliver more precision. Advertisers will be able to tie business outcomes to specific activations—guesswork and click-based metrics will be retired. Creativity will be informed by unparalleled levels of insight, and campaigns will be iterated in real-time. The impact will be tangible and measurable.
Samuel Tan, senior director of market development, Xandr
1. Contextual advertising 2.0
As government regulation of consumer data becomes more prevalent (from the PDPA in Singapore to the GDPR in the EU, and what is to come in Australia off the back of the ACCC recommendations), cookie-based targeting and re-targeting will be significantly challenged. Against this backdrop, a golden age of contextual advertising will emerge as advertisers double down on reaching their audiences in premium, brand-safe environments. Rather than purely targeting a vertical (or site section) as was done in the early days of digital advertising, advances in keyword targeting will help brands make better decisions around the environments they wish to be seen in. This is a real opportunity to present more relevant advertising to consumers, as advertisers marry messaging and positioning to environment, rather than relying on cookies to follow a user around the internet.
2. Video header bidding
The meteoric rise of header bidding by publishers around the world will shift into the premium video and broadcaster space. Header bidding provides content creators with the ability to make their inventory available to all buyers simultaneously, doing away with the need for the inefficient waterfall method of allocation. As a result, advertisers now have greater access to premium inventory and their demand for greater quantities of video inventory will help drive adoption. For broadcasters, technology advancements in header bidding will help ensure that inventory can be monetised effectively while continuing to place the user experience front and centre.
3. Increasing addressability of video supply
In 2020, advertisers and agencies will seek to bring in additional addressability to the way they trade digital video. Buyers have great insights into their audiences and the right time and context to be showing someone an ad. With increasingly sophisticated methods for video buying, consumers will have more streamlined and consistent experience across formats and devices.