I made a number of predictions at the start of 2018, and all of them featured in an industry marked by rapid change: agency holding groups are making fundamental changes to their business models, ad fraud scandals continue to dominate the headlines, there is pressure on sell-side programmatic margins, and those platform providers that invest in their own infrastructure, especially machine learning, are winning. In 2019, I believe there will be five major trends to keep an eye on.
The emergence of in-app mobile advertising
The diverse and fast-growing APAC markets command the top spot for almost any mobile usage/growth statistics, and, so as a region it is primed to benefit from the slew of programmatic in-app solutions that will launch in 2019.
APAC is leading the in-app industry, which is galvanising around a rapidly growing mobile-first consumer segment who spend the majority of time in the world of apps. Whilst the region benefits from the growth opportunity of in-app it is also subject to its growing pains.
Seemingly there are a lot of bad actors that operate in the in-app space because monitoring tools have been a bit slower to emerge, compared to desktop-based advertising. Expect to see more scandals as an industry-wide clean-up targets these publishers and some large players may suffer as a result. The launch of IAB’s In-App Ads.txt is a great initiative that will provide much needed oversight.
While in-app, and in-app video particularly, will see significant growth in 2019, it will most certainly be a bumpy road so watch whom you partner with.
SPO (Supply Path Optimisation) will become a widespread industry practice
SPO has quickly moved from a niche play to a mainstream strategy for buyers to derive greater efficiencies from their programmatic supply chain. The goal of SPO is to maximise revenue for the publisher, and to keep the bidding process fair. Originally driven by demand-side platforms (DSP’s) out of the North America market, agencies are now getting involved and negotiating deals market by market.
The growth and importance of APAC markets means they are no longer an after thought for these deals as recent PubMatic partnerships reflect.
Header bidding has democratised access to inventory over the past eighteen months and driven up ad tech vendors costs as a single impression is processed numerous times. Publishers will agree that their yields have increased as a result, however, as DSP’s and agencies target the most efficient and cheapest sources of inventory, could we start seeing a major shift and increasing downward pressure on publisher yields?
The power of the duopoly is amplified in APAC due to the fragmented nature of this part of the world. For agencies buying across multiple languages, cultures and timezones the path of least resistance is often sought.
The Advertising ID Consortium has perhaps lost momentum with founding partner AppNexus withdrawing but the IAB’s Digitrust is growing strongly and between them will hopefully offer a credible alternative for buyers looking for scaled audiences across multiple publishers and geographies. The walled gardens need a robust alternative and Universal ID developments in the open web will be critical to the success of independent platform providers.
Mergers and acquisitions will drive further consolidation
2018 was not a kind year for ad tech with GDPR, take rate compression, and fraud issues dealing a blow to many companies. We will see the ramifications of this spill into 2019 as undervalued and over-leveraged assets are snapped up by global corporates or ambitious regional players looking to expand. (Amobee’s purchase of Videology is one example).
In Australia, media consolidation will continue with the Nine Entertainment Co. and Fairfax merger reflecting the coming together of two traditional businesses, a broadcaster and a publisher, to consolidate and streamline their strengths again in a tough advertising environment where scale and digital prowess commands the most ad dollars.
Meanwhile in Japan, Dentsu’s CCI’s alliance with Voyage Group, whose primary businesses is an ad platform (Fluct is one of the largest SSP’s in Japan) and incubator, points to their perceived importance of agencies owning their own technology and innovating in this area.
Their release stated a primary goal being the ‘enhancement of platforms and the promotion of collaboration across the digital advertising field’. This may well spur the growth of programmatic in Japan which lags far behind its global peer set in adoption, especially for brand campaigns.
Transparency will be elevated as brands ask more questions
Fundamental change is never an easy process, and making the leap to transparency in the digital advertising ecosystem will be no exception. What’s needed to drive this pivot toward true transparency is for every participant to play its part, and for those with purchasing power to continue leveraging it to drive change. It’s time to stop making excuses and start insisting on transparency. It’s going to happen because the industry needs it. Expect to see the adtech industry provide more proof that they are taking this matter seriously.
I think we’re going to be looking at a radically changed environment over the next couple of years.