Adtech is a blanket term that covers all software and services used to deliver and target digital advertisements.
It is the primary pillar of internet advertising, which GlobalData estimates will become a $1 trillion industry by 2030. Adtech is undergoing a process of reformation and the key trends impacting the process include the following areas.
Adtech cookiepocalypse
Third-party cookies have been the bedrock of digital advertising for years. Consequently, Google’s plan to remove cookies from Chrome (referred to as the “cookiepocalypse”) by 2024 would significantly disrupt the adtech market. Adtech heavily relies on third-party cookies to identify and profile users. Apple’s Safari and 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.
Companies such as The Trade Desk, LiveRamp, ID5, and BritePool and groups like the Interactive Advertising Bureau (IAB), Prebid, and Advertising ID Consortium are also testing alternate identifiers. As the search for a viable alternative to cookies continues, the future of online advertising will be based on first-party data. Adtech vendors that provide third-party data will face the biggest impact as advertisers move data generation in-house.
First-party data is the information a company collects directly from its customers. It includes demographics, online purchase history, web activity, and email engagement. Reportedly, many marketing, analytics, and technology experts see regulations are the key driver of demand for first-party data. A vast majority of them also believe that the shrinking access to third-party data is a reason for the move towards first-party data. This suggests that privacy regulations and the abolition of third-party cookies are transforming the advertising sector and forcing companies to rethink their data generation systems.
First-party data
The growing need for first-party data is triggering new developments. For instance, AppLovin acquired MoPub in January 2022 and Adjust in February 2021, while Vungle acquired GameRefinery in March 2021. Interestingly, companies like Uber and Best Buy, which have not been ad sellers, traditionally, are also launching in-house advertising divisions.
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By GlobalDataThese activities will continue as advertisers explore ways to monetize in-app ads by using first-party contextual data. Advertisers that can orchestrate and analyze vast troves of first-party data using artificial intelligence will be well-positioned in 2023 and beyond.
Customer data platforms
Data management platforms (DMPs) were the go-to entities for user data in adtech for years, but they face an uncertain future, as demand-side platforms (DSPs) and supply-side platforms (SSPs) are integrating DMPs into their product mix to expand their capabilities. In addition, data privacy regulations and the cookiepocalypse are threatening DMPs’ existence. The dilution of DMPs is driving the emergence of a new set of vendors called customer data platforms (CDPs). These platforms support brands and publishers to collect first-party data and gain a complete view of individual users. DSPs and SSPs can also establish CDPs to gather user data for ad campaigns on behalf of their clients.
CDPs allow brands to understand their audience better and create personalized ad campaigns. Demand for CDPs will grow over the next two years as companies prepare for the post-cookie era.
The big adtech picture
Brands have traditionally used user views and click to measure the relative success of ad campaigns, but they are increasingly looking for deeper insights to evaluate ROI from ads. They are demanding insights into attribution (i.e., cross-screen engagement, user interaction rates), attention (i.e., viewability and audibility), environment (i.e., contextual positioning of ads), and sales (i.e., purchases driven by ads). This forces ad verification vendors to expand their traditional impression-oriented measurement to include outcomes-based measurement models.
Ad verification vendors must rethink how to measure attribution and sales since these metrics heavily rely on third-party data. They will, therefore, require new, privacy-first solutions that measure these metrics and meet their clients’ needs.
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