What's Driving the Ad Tech Boom?

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2021 was a record year for digital advertising. Why was that so? What were (and are) the main drivers of the digital advertising boom?

The boom is more complex than the usual explanations for it, and it's essential to keep an eye on where your business is heading long term, not just a single year. Nobody can say with 100% certainty what the future inventory will look like; but, as an industry professional, I can highlight some possibilities.

COVID-19 gave us a digital retail boom because the offline market shut down for nearly two years. The big boom came from new SMBs entering the digital ad market. Now retailers are struggling, and more and more customers going back to the offline market. That opens up the possibility of a big comeback from traditional media.

I know a lot is happening in linear TV, and I see more and more technology for marketers to use data to access inventory in traditional channels.

What was the impact of the pandemic on digital advertising?

What was expected to cause a downturn in the digital advertising market turned out to have the opposite effect: 2021 showed the strongest growth since 2006, with an increase of 35.4% in digital ad revenue.

A major driver of digital ad revenue growth has been the explosion of SMBs increasing/starting their ad spend to gain visibility online, according to IAB US and other commentators.

Some sectors of digital advertising, such as digital out-of-home (DOOH), suffered as the footfall in public spaces decreased (it has since picked up again); but other than that, the accelerated digitization during the pandemic has had a positive impact on digital advertising.

What does the boom mean for companies? How can they make the most of it?

Technology continues to advance rapidly, so some trends are focused on automation for new inventory that is now open for every marketer, large or small. I believe we will see more booms in inventory over the next 12 months from the OTT and CTV players. Buying video inventory is getting easier and causing marketers to enter the channel for the first time, driving incremental growth. If I were on the buy-side, I would explore the same opportunities.

Are there any disadvantages for companies increasing their ad spend?

Usually, one of the main goals for a business is to drive sales and, with that, increase revenue. One way to do that is to increase ad spending.

With increased spending comes additional costs, however, and not all extra costs are worth it. To avoid wasteful spending and to ensure investments are profitable in the long term, brands need to find a healthy balance between long-term, brand-building investments and short-term, lower-funnel investments, and they will have to make sure they're reaching a relevant audience with their message.

How will the digital advertising landscape will change in the next year?

Digital marketing is constantly evolving, so we can expect that some significant changes will occur over the next twelve months.

Businesses will likely buy inventory across too many channels because of the overwhelming amount of digital marketing options. Instead, companies should focus on only a few media partners they can work closely with and home in on the data those partners can open up.

Brands should also seek out and work closely with the partners offering the best technology and platforms so that they can position themselves at the forefront of trends.

Are we in an ad-tech bubble?

There is definitely an abundance of ad tech companies in the industry, a lot of which will be redundant or will have to pivot drastically after the demise of the third-party cookie. In short, the ad tech industry is evolving continually, and often with quick turns, but I wouldn't call it a bubble. More of a "you snooze, you lose" scenario.

Which sectors of digital advertising are growing the fastest?

Expect to see more walled gardens. We have some new players in the OTT/CTV space that will open up ad-supported subscriptions, driving gains in the OTT/CTV space. Expect to see fewer social media ad platforms and more retail media. There will be a few tech giants dominating the space where digital ad budgets are going; but there will also see more and more big publishers taking back control of their data and inviting marketers into their walled gardens.

How can publishers reassure advertisers that brand safety is guaranteed?

Brand safety can mean different things for different people. But, in general, advertisers want to know that their ads won't be played alongside inappropriate or sensitive content.

With regard to brand safety, traditional publishers will have the upper hand vs. traditional social media, because those traditional publishers control what content is being published.

Self-serve advertising platforms in particular give more control to advertisers since they can add or remove advertisements with a simple click of the mouse. Whereas, in a typical advertising deal, ad insertion and timing are agreed upon long before the advertisement actually goes live, so there's more left up to chance.