Adtech: Technology trends – Verdict

The advertising tech (adtech) industry is primarily a face-off between tech giants like Google, Meta, Amazon, and Alibaba and pure play vendors like The Trade Desk, MediaMath, and Amobee. The particular tech leaders dominate the market with their massive user bases plus sophisticated adtech walled gardens. Several real play suppliers will become acquisition targets for Big Tech vendors over the next three years.

Listed below are the key technology trends impacting the adtech theme, as identified by GlobalData.

First-party data

First-party data will be the information a company collects directly from its customers. It includes demographics like age and location, online purchase history, web activity, and email engagement. In Merkle’s 2021 Customer Engagement Report, 88% of the particular 600 marketing, analytics, plus technology executives surveyed said collecting and storing first-party data was a high priority on the next six to 12 months. The survey further suggested that privacy regulations and the abolition of third-party cookies are transforming the marketing sector plus forcing companies to rethink their data generation systems.

Adtech and third-party cookies

Third-party biscuits (packets associated with data generated by websites that track an user’s online activity) have been the bedrock of digital advertising for several years. Consequently, Google’s plan to remove cookies from Chrome simply by 2023 would significantly disrupt the adtech market. Apple’s Safari plus Mozilla’s Firefox web browsers have already stopped supporting third-party cookies, but adtech will feel the biggest impact when Chrome—the largest browser by market share—abandons cookies.

At the time of writing, there is usually no clear alternative to cookies. However, some key initiatives in order to prepare for a post-cookie era include Google’s alternate profiling system, dubbed the Privacy Sandbox. The product initially used the Federated Learning of Cohorts (FLoC), the technology that clustered groups of people with similar interests. In January 2022, Search engines replaced FLoC with ‘Topics’, which allocates users to categories based on passions. These categories are defined based on the last three weeks of browsing activity.

As the search with regard to a viable alternative in order to cookies continues, the future of on the internet advertising will be based on first-party data. Adtech vendors that provide third-party information will face the greatest impact as advertisers move data generation in-house.

iOS App Tracking Transparency (ATT)

In April 2021, Apple released a privacy feature on iOS called App Tracking Transparency (ATT), which mandates that will apps and games upon its Application Store seek users’ permission before tracking their exercise. According to data through Flurry Analytics, by December 2021, 76% of users worldwide had chosen to opt out, meaning they do not allow apps in order to track them. As ads are the vital source of revenue and data for app developers, Apple company offers advertisers access to SKAdNetwork, a tool that tracks iOS users’ in-app activity plus shares it with ad networks without any user- or device-level information.

Advertisers have access to data on trends such as the types of games being played, and overall period spent simply by users in a particular app. However , they cannot track customers or devices individually, which usually will significantly negatively impact their revenues.

Android advertising ID

Google’s Android is also introducing an iOS-like privacy policy, driven by growing regulatory pressure plus competition from Apple. While Android users have long been able in order to opt out of personalised ads, marketing ID is still in use. Google claims that it enables developers to track users’ online activities and target them along with ads.

Nevertheless, Android 12 lets customers opt out of advertising ID. Whilst Apple ATT is the default option for iOS users, Google’s approach is more passive, requiring the consumer to act on personal privacy and customised tracking. Nevertheless , it still represents another blow to the adtech industry, as this limits the tracking associated with Android users via both cookies and advertising IDs.

AI

AI-powered ad tools can detect patterns at scale in advertising data and predict what changes to campaigns will improve performance. This can all happen inside seconds, rather than the particular hours, days, or several weeks it might take a human in order to analyse, test, and iterate across campaigns. AI can also analyse how ads perform across specific platforms and recommend ways to improve overall performance.

In the post-cookie world, marketers will look for a return in order to first-party information based on direct interaction with the consumer and reduce their dependence on third-party data.

Adtech and Ad fraud

The growing volume of fraudulent traffic jeopardises the effectiveness of any ad campaign. The World Federation of Advertisers predicts that global ad fraud will become the biggest market for organised crime simply by 2025 and will be worth $50bn. Pixalate, a good ad scams protection firm, reported in its 2020 Connected TV (CTV) Ad Supply Trends Report that about 24% associated with CTV programmatic ads in the US involved invalid traffic.

Advertisement fraud not only limits the desired impressions of an advertiser but also increases operational expenses. A key challenge regarding publishers plus advertisers alike is accurately verifying advertisement impressions and distinguishing among real customers and bots.

However, ad verification methods are also becoming sophisticated, incorporating real-time user analysis to, intended for example, identify bots. Ad fraud protection firms will increasingly deploy AI plus cybersecurity techniques to tackle advertisement verification issues.

Internet of Things (IoT)

IoT products such while wearables and smart speakers offer opportunities for adtech to expand beyond PCs and smartphones. These devices help brands gather first-party data on users’ preferences plus needs. They are furthermore popular with young consumers, helping brands reach a valuable demographic. While these techniques are usually under-development, further penetration associated with IoT gadgets will push adtech businesses to explore new ad delivery channels.

Adtech and native advertising

Native advertising is a type of contextual advertising that will blends the paid ad into the platform on which it appears. Unlike banner advertisements, native ads appear because regular content on a webpage or even app, assisting to minimise intrusiveness and maximise click-through rate (CTR). Brands through various sectors use indigenous ads to promote their offerings, boost sales and improve user engagement.

Native advertisements are usually labeled as ‘Sponsored’, ‘Suggested’, ‘Featured’, or ‘Advertisement’, allowing publishers to be transparent with users that ads are being targeted to all of them. However, these types of labels are typically small and easy for customers to miss.

Adtech plus shoppable advertisements

Shoppable ads allow users to straight purchase the product featured in an ad. The video, image, or barcode-based ad includes embedded tags that direct the user to the particular product’s page on the brand’s website. Shoppable ads aim to make ad views and online shopping seamless and interactive. Brands are using shoppable advertisements on streaming platforms, social media, instant messaging services, ecommerce sites, and TV channels to increase sales plus establish a first-party relationship with customers.

Augmented reality (AR)

According to Zenith UK, worldwide ad spend on AR will increase by more than 30% within 2022 and 2023. AR allows advertisers to provide more inventive, eye-catching, plus interactive ads and shift beyond non-interactive media like print and TV. In September 2020, Shopify reported a 94% increase in conversion rate to get products that featured AR or 3D content.

WebAR allows users to experience AR content through internet browsers instead than the standalone application. It is already being used in marketing by big brands, including Coca-Cola, Toyota, EE, Sephora, and Universal Pictures. Instant visibility, faster targeting of prospective customers, improved online visualisation of physical products, plus reduced volumes of electronic storage spaces are some associated with the benefits of WebAR.

Advertisement blockers

Ad blockers—software that will prevents advertisements from appearing on a web page or app—are a significant challenge pertaining to advertisers because they reduce the click-through rate (CTR). Some prominent advertisement blockers include AdBlock, Poper Blocker, and AdGuard. According to search engine optimization (SEO) firm Backlinko, about 43% of global internet customers use ad blockers every month.

The particular Acceptable Ads Committee (AAC) is a self-regulated independent organisation that creates standards for ad-filtering and advocates the concept of acceptable ads, essentially native ads. Advertisers must comply with AAC standards to serve advertisements to users without being filtered by advertisement blockers.

This is an edited extract from the Advertising Tech (Adtech) – Thematic Research report produced by GlobalData Thematic Research.