The current global pandemic has undeniably affected all sectors, and the advertising industry has been no exception. As companies continue to deal with reduced revenues and unstable growth projections, the advertising industry has remained optimistic, as the disruption caused by the pandemic has accelerated digital transformation, which should be an advantage for advertisers when the economy eventually rebounds at the end of 2020 as currently anticipated.
When it comes to advertising technology, programmatic advertising has emerged as one of the most important developments and is a designated key driver for the future growth of the industry. Programmatic sold advertising had topped $100 billion in value in 2019 and Zenith has forecast an increase to $147 billion by 2021, along with projections that the share of programmatic within total digital media spend will rise to 69% in 2020 and up to 72% by 2021. Therefore, it is important to stay in the loop regarding advancements in the programmatic advertising space.
We examine key trends and technologies to watch in the programmatic advertising space in 2020 and beyond.
Introduction of Programmatic Advertising on Wearable Devices
The global wearable technology market size is projected to expand at a compound annual growth rate of 15.9% from 2020 to 2027. The growing popularity of the Internet of Things (IoT) and connected devices and a rising tech-savvy population is expected to drive further demand.
With nearly a quarter of U.S adults (57 million) using a wearable device at least once a month in 2019, this channel has huge potential for multiple reasons.
Smartwatches are the most common wearable device type, but new devices such as fitness trackers, smart glasses, and hearables are constantly produced in order to attract new customers.
Reasons why there is huge potential for programmatic advertising include:
- The digital interface on a smartwatch such as Apple, Fitbit, or Garmin enables the delivery of content & digital ads in a variety of formats.
- Sensor technology which is integrated into the device can capture indicators of emotions, for example, heart rate, which in turn can provide a pathway for personalized advertisements based on sensual segmentation & targeting.
- For brands, who find it hard to engage with a younger audience, advertising via wearable technology helps target this elusive 25-35 year-old segment, who represent 38% of the entire market.
With these devices regularly collecting data based on location, health metrics, real-time moods & lifestyle choices, this makes for a compelling channel for forward-thinking marketers.
For example, speciality providers such as FITAD, help brands target automated promotions to health and wellness consumers on their Samsung & Sony smartwatches.
Although data and privacy concern one of the primary obstacles for the growth of this medium, we expect to see advertising on wearable devices to emerge throughout 2020 and beyond.
Accelerated Programmatic DOOH Inventory Access
During 2019, advertising technology developers laid the necessary groundwork to enable the scalable growth within the programmatic digital-out-of-home (DOOH) media channel, with Clear Channel, one of the world’s largest OOH providers, reporting that programmatic solutions for DOOH now reach more than 100 million adults per month.
With these real-world screens driving reach, immersive experiences, and impact via viewable, fraud-free and brand-sage display and video formats along with 100% SOV (share of voice), it is no wonder that many brands are intrigued by this emerging channel.
Throughout 2019, DOOH media spend increased by approximately 10% but it should be noted that programmatic executions were not fully automated yet and we can already see that we are experiencing increased automated and scalable programmatic DOOH capabilities in 2020. For example, some mainstream demand-side platforms now allow brands to access programmatic OOH inventory across airports, roadside digital billboards, elevatory, shopping malls, fitness centers, and much more.
Audience targeting and measurement capabilities are continuing to improve as ad tech providers help brands leverage location-based data in order to optimize DOOH campaigns. A great example of this is brands that implement dayparting during high-traffic intervals in order to deepen brand engagement and this can be particularly powerful when optimizing towards DOOH placement. It should be noted that high-traffic day parts may differ depending on the location, for example, high traffic at the mall may differ from the roadside or airports during peak commuting hours.
On average, prior to COVID-19, it is estimated that Americans spent approximately 70% of their time outside of their home, but right now fewer people are traveling to and from the offices or to the shops and as a result, there are fewer cars on the road. Although programmatic DOOH will continue to grow in 2020, this media channel is one that is likely to be impacted by coronavirus more so than other media channels that can safely be consumed at home.
Voice-activated Advertising Growth
It is estimated that $8 billion digital voice assistants, from Apple’s Siri to Amazon’s Alexa, will be in by 2023. This represents a substantially accelerated growth of over $2.5 billion assistant in use since 2018.
It is now the reality that voice advertising along with placements via DOOH and streaming content will grow rapidly as innovation continues such as the underlying ad tech supply chain, increased inventory & improved audience targeting and measurability.
As more and more consumers familiarise themselves with smart assistants, brands will strive to create more interactive & voice-commanded advertisement content. For example, Spotify & Pandora are currently testing voice-activated ad formats for iconic brands such as Unilever, Nestle & Doritos in order to drive greater engagement.
So how do these voice ads work? The ads will turn on between songs & ask questions to users. Therefore brands only have a few seconds to gain interest in order for them to hear more of the ad – if the listener replies “no” or does not respond to the advertisement, the music will resume.
With regards to a conversion & revenue generation point, automated technologies will enable listeners to perform a variety of voice commands in order to initiate an instant response. For example, ad delivery between podcasts or songs that listeners can engage with commands such as “I want to learn more” or “buy it” will become more prevalent. As voice-activated technologies continue to grow both inside and outside the home, this provides brands with increased opportunities to engage with listeners via automated programmatic advertising and this will be particularly difficult as consumers are now staying home more than usual for a good percentage of 2020 due the global pandemic.
Increased OTT & Digital Audio Programmatic Advertising Streaming
An increase in media investments in over-the-top (OTT) and digital audio channels may not come as a surprise to many but we believe that streaming content will be the most interesting programmatic channel to observe throughout 2020.
Viewers are currently caught in the middle of “streaming wars” as the likes of Disney, HBO and Apple have launched their own direct to consumer streaming services alongside other OTT services such as Hulu, Netflix, and Amazon Prime. It should be noted that listeners have a variety of streaming radio options to choose from nowadays with Spotify touting the largest subscription ahead of SoundCloud and Pandora.
While many brands have invested heavily, growth in OTT and digital audio advertising is continuing to increase as many local brands begin to optimize their content and targeting to increase and grow their brand engagement via both video and audio advertising formats.
According to Borrell Associates, local brands are expected to increase their investment at the highest rates for digital audio and OTT in 2020. And as consumers currently comply with the COVID-19 stay at home restrictions and guidelines, OTT content is being consumed at an all-time high.
Therefore we believe that many brands could be begging to shift a greater percentage of their advertising budgets than expected to video formats on streaming devices due to the global pandemic. But, no matter how the number fairs in 2020, it is predicted that both OTT and digital audio programmatic advertising will continue to accelerate at a healthy rate.
What Lies Ahead for Programmatic Advertising in 2021?
Beyond the trends highlighted, there are many other emerging technologies that should not be ignored in the remainder of 202 and looking ahead to 2021.
Moving forward, 5G networks that will have unprecedented data speeds will drive an increased growth of streaming content on mobile devices. This provides many brands with the opportunity to heavily invest in short-form video advertisements which would be suited for an on-the-go mobile audience.
Many advertising technology companies will also continue to improve artificial intelligence (AI) and machine learning, which in the long run will help brands achieve better performance rates and ultimately a higher return on investment.
As the programmatic advertising industry continues to face new challenges day in day out with the ever-evolving privacy regulations and guidelines, advertising fraud, and transparency along with the impact of COVID-19, we expect to see continued growth across all programmatic media channels throughout 2020 and beyond. In fact, the global pandemic may actually result in faster adoption of programmatic advertising technologies across certain channels.