The largest TV networks and media companies are busy presenting their upcoming programming and ad inventory for the year ahead. A large portion of advertising budgets are typically allocated to TV advertising, so advertising shifts among top brands will impact the whole marketplace. In this article, we’ll explore some of the latest advertising trends and insights to keep in mind during the Upfronts, NewFronts, and beyond.
1. Digital takes the top spot
In 2022, nearly $144 billion was invested in digital, print and TV advertising. While TV still makes up 41% of total ad spend, digital was the top ranking format making up 47% of all buys. Over $68 billion was allocated to digital formats. These formats include display, online video, native, and paid social among other formats. This marks an opportunity for continued growth in digital media sales.
2. Top categories investing in TV are also top buyers of digital
Four out of the top five categories buying TV ads are top digital buyers as well. Not surprisingly big spenders from finance, media & entertainment, retail, and tech brands drive digital ad sales. TV investment for these, with the exception of media and entertainment, is down YoY.
However, each of these categories are up YoY in digital ad sales. Their combined digital investment still exceeds $36.6 billion and made up 53% of all digital spend. This represents a shift in the market towards digital advertising among top segments.
3. Few advertisers entering the market bought national TV spots
Only 1% of advertisers entering the market bought national TV spots. Despite looming recession concerns, MediaRadar observed 52k new advertisers (nearly 80k brands) entered the market in the second half of 2022. Not all of these advertisers purchased TV spots (530), but over 36k invested in digital display, video advertising and other digital formats.
4. Online video advertising is up
Online video advertising is increasingly more important to advertisers as it rose 86% YoY. A study by Hubspot says, “91% of marketers surveyed say they find video important to their advertising mix and 92% of them say online video produces a high ROI.” These feelings are likely contributing to the continued growth of video ad sales across media formats.
MediaRadar observed 31.1k advertisers spend an estimated $28.2b in video advertising during 2022. Top three categories advertised via online video during 2022: software ($1.9 billion), pharma ($1.4 billion), and film promotion ($1.4 billion). Combined spend nearly reached $4.8 billion, this is only 17% of total online video spend.
5. OTT investments increased despite concerns
Just a few years ago, new OTT streaming platforms were being launched regularly and consumers were anxious to embrace them. Now, platforms struggle to match growth of 2021 and prior. To overcome challenges groups, like Disney+ and Netflix, have introduced ad supported versions at a reduced cost to mixed reviews. Despite the challenges, 5.7k brands increased their investment in streaming platforms YoY. Together their buys were nearly $1.3 billion. Most notably LinkedIn, eHarmony, Kohl’s, and Febreeze contributed to this YoY increase.
While the Upfronts and Newfronts are an increasingly important time for large networks and media conglomerates, it is also an important time for all media sellers to understand the shifting marketplace and carve their niche into the new year. There is much opportunity to capitalize on the changing advertising landscape and continued digital growth.
Today’s advertising experience can feel like a daily exercise in pain and frustration as users navigate bizarre offers and deceptive ads promoted by shady advertisers.
The digital media industry faces mounting obstacles in building audience trust, largely stemming from deceptive and intrusive ad experiences. For media professionals, trust isn’t just another buzzword – it holds tangible monetary value. To regain trust and prevent any further damage, publishers must weed out deceptive ad experiences that threaten their readership.
Dangers of false advertising in the digital age
According to GeoEdge research, misleading product offers and financial scams have become the primary tools for fraud. Publishers’ sites have been saturated with clickbait ads in recent months.
In 2023, one in every 170 ad impressions in the U.S. contains a malicious ad. Due to daily run-ins with these ads, audiences approach digital ads – and content – with a healthy dose of skepticism. Frustrated readers who become annoyed with bad ads leave the site and seek out alternatives, which can spell disaster for publisher monetization. The fallout includes reduced engagement rates, fewer click-throughs on ads, and ultimately, diminished ad revenue. Additionally, the reputational damage may lead to declines in traffic over time.
What digital media gets wrong
The media industry started building a house by installing the latest and greatest programmatic technology, only to realize they forgot to lay a sturdy foundation of audience experience. Since then, advertising has become increasingly bizarre and dangerous as programmatic pipelines are susceptible to nonexistent products, counterfeit goods, and unrecognizable gadgets.
Navigating ad experiences is a hurdle for many publishers. What does digital media get wrong?
Passing the responsibility of ad quality to upstream partners.
Treating the ad experience as separate from the user experience.
Failing to utilize technology to identify and remove misleading or clickbait ads.
So, the big question is: Who bears the blame for lousy ads and shoulders the responsibility for eliminating them?
How digital media can course correct
Publishers must acknowledge that ad experience and user experience are intertwined, with one influencing the other. A negative ad experience can detract from the value of content, or prevent audiences from ever reaching publishers actual product: their content.
Despite the high stakes involved, digital media professionals tend to shift the responsibility of ad quality onto Ad Tech partners up the chain, leading to a false sense of security. Relying solely on upstream partners to weed out harmful ads is wishful thinking. Publishers cannot depend on tech giants as gatekeepers for ad quality since they are often the same culprits responsible for delivering them.
GeoEdge analyzed ad quality ranking and malicious ad trends over the last 90 days by tracking impressions from the top nine global SSPs. The results revealed that 87% of all scam ads originated from just two SSPs. Yes, Google was one of them.
Luckily, publishers aren’t in an unwinnable programmatic trench war. Implementing publisher-centric ad quality control allows them to prevent misleading ads from appearing on their sites. By filtering out clickbait ads, publishers can protect their audience from ad scams involving fake products or questionable cryptocurrency schemes.
The Journey of Responsibility
The junk ad epidemic undermines the entire digital media industry, posing a significant threat to its sustainability. If digital media professionals continue to ignore the impact of clickbait ads, they risk driving away audiences and losing their credibility in the process. By implementing technology that prioritizes user protection and experience, publishers can regain control over the audience relationships.
Failure to take action can trigger a chain reaction, starting with a decrease in ad clicks, followed by reduced engagement, eroded trust in content, and ultimately, far-reaching negative consequences for the wider ad supported media industry.
The ads appearing on trusted sites must offer a guaranteed, risk-free experience. Publishers’ ad quality values must demonstrate that the customer’s content experience, which includes advertising, is their highest priority.
In recent years, various fraudulent advertising schemes have resulted in significant financial losses for publishers and advertisers. The digital advertising sector alone suffered a staggering loss of $65 billion in 2021 due to ad fraud. According to Statista, this figure is expected to increase to $100 billion by 2023.
This situation is already concerning, but what makes it worse is that the reports fail to consider the percentage of violations that occur due to ad setup policies. These violations include ads that overlap with other content or ads (in part or whole), ads that are completely hidden due to display or CSS errors, or ads that fail to behave as intended. For instance, an ad may render off the page or obscure other elements when viewed at certain browser widths.
Even considering invalid traffic alone, a leading industry report estimated that around $35bn of ad spend annually is wasted showing ads to bots or crawlers. In recent years, publishers have become much more aware of this problem. However, it is important to remain vigilant and defend against this problem and potential loss of revenue.
How to identify and prevent IVT
When looking to limit invalid traffic. A good place to start is to identify your site’s audience and traffic sources. Use analytics to analyze traffic patterns, looking out for anomalies or spikes in the data that don’t seem organic. A page or domain might have been targeted if a lot of the traffic increase comes from a particular area or the time on site drops dramatically.
Google recommends segmenting your traffic using analytics (or other similar alternatives) to help track and review traffic across your sites. This allows monitoring of visitors who view the pages and their behavior there. Segmenting your traffic by source will enable you to see how they perform relative to one another. This can again alert you to anomalies, allowing you to identify potential invalid traffic quickly.
Publishers should also be very diligent when it comes to checking ad implementation. Every ad should follow Google and IAB guidelines regarding the space around ads, visibility, intrusiveness, display properties, etc.
Exploring the automation alternative
However, many publishers are moving towards a more automated method of filtering. That’s because bot attacks are getting more and more sophisticated, and ad setup policy violations are becoming harder to eradicate (or easier to miss).
Ideally, when choosing an automated IVT solution, you want to fully understand what the product is doing and how sophisticated it is. Many vendors break down invalid bot traffic into “general” (spiders, crawlers, and robots that can be identified based on their non-human behavior) and “sophisticated” invalid traffic.
Sophisticated invalid traffic is a lot more technical and harder to catch. It usually requires advanced analytics and significant human intervention to identify, analyze, and prevent threats. These include bots and spiders that look like human visitors, hijacked devices, hijacked sessions with hijacked devices, invalid proxy traffic, adware, malware, fraudulent incentivized promotion, falsely represented sites that present themselves for legal purposes, cookie stuffing, manipulation/falsification of location data, and more. An automated solution should be able to deal with both types and be continuously updated as new threats arrive.
You also want the product to alert you to ad setup page violations or ad placements outside of IAB guidelines. These can seriously impact the reputation of your site and the bids you might attract from advertisers.
Some solutions only provide an ad fraud report post-auction, but that could be too late. Ideally, your solution should restrict ads from serving where it appears either an ad placement violation exists or invalid traffic is detected to prevent network ad bans and ad revenue deductions (clawbacks). An optimal IVT solution can help you better understand the traffic your website receives to help you minimize revenue loss.
Final thoughts
While the threat of invalid traffic and ad setup policy violations may seem overwhelming, automated solutions can offer a more efficient and practical approach to addressing these challenges. As the landscape of invalid traffic and ad fraud evolves, it is critical to stay vigilant and proactive to avoid and address these challenges in order to optimize advertising revenue.
About the author
Kean Graham is the CEO and Founder of MonetizeMore, a leading ad monetization partner for web publishers and app developers. Under his leadership and guidance, the company has scaled to 15B+ monthly impressions for over 1000+ publishers worldwide.
Cookie deprecation is approaching and over the past few years the industry has been considering how to fill the gap. Publishers and advertisers are testing alternatives that will allow an ad-supported internet to continue to thrive. For the second time, we surveyed publishers and advertisers around the globe for an upcoming report examining the evolution of cookie deprecation on both sides of the industry. Here are a few of the key findings ahead of the full release later this month.
Attention holds promise as an advertising currency
Attention stands to benefit from the looming deprecation shifts, according to both sides of the industry. These solutions do not depend on third-party cookies, instead measuring exposure and engagement in a privacy-friendly way. Attention ranked 3rd for advertisers and 4th for publishers on a post-cookie solution ranking.
Among advertisers, 96% stated that they will rely on attention in either most or some of their ad buys in 2023. Publishers agree: 94% described attention-based capabilities as either “moderately important” or “very important” in 2023. Those same publishers stated that their offering was either “very good” (29%) or “good” (48%).
Despite the focus on experimentation, potential solutions may have a way to go before they gain trust in the marketplace. Three out of four professionals we heard from were still in some phase of the testing process. With only one year to go until Google’s latest deprecation deadline, there is clearly more problem-solving to be done.
One of the more telling year-over-year changes showed that this uncertainty is impacting how publishers are thinking about post-cookie revenue. Though publishers who thought their overall revenue would decrease were in the minority, the number of respondents who predicted an increase saw a steep drop. In 2022’s survey, 63.8% of respondents anticipated greater revenue, while only 48% thought the same this year.
Conclusion
With DV’s unique position as a partner for both publishers and advertisers, it’s one of our highest priorities to stay in tune with the trends and drivers of the digital advertising industry as a whole (as you’ll see from our ongoing research). With uncertainty and opportunity abound, few topics have been as prevalent to the entire community as the imminent deprecation of third-party cookies.
This is the moment to push for collaboration with advertisers while there is still time for both sides to adapt and compromise. Third-party metrics like attention are just one way that both sides can build trust and alignment by speaking a common language. The ad-supported ecosystem will be in a much better position to thrive in privacy-friendly ways as these solutions take hold and become more actionable by both sides.
Technology is an essential tool for enabling efficiency in today’s fast-paced media landscape. This is especially true of new media platforms—including retail media networks, connected TV (CTV), and streaming services—whose rapid growth has left publishers with little time to reevaluate and optimize their ad monetization processes. Most of these platforms are utilizing legacy ad ops processes as a result, the majority of which are highly manual and not suited for the pace of digital media.
The consequences of this trend have led to mounting challenges for publishers, including delivery delays, higher error rates, increased makegoods, and slower revenue recognition processes. To eliminate these inefficiencies and enable growth at scale, publishers must leverage automation. If your business struggles to keep pace with the rapid evolution of new media and ad revenue models, here’s how automation can help you streamline your manual workflows and future-proof your ad ops processes.
Out with the old, in with the new
The ad ops processes that have worked for long-standing, traditional publishers cannot meet the needs of today’s modern digital media players. They need to be run continuously to keep up with rapidly evolving ad revenue models, which is challenging because they employ time-consuming manual processes such as audience targeting and data analysis.
Unfortunately, many media players continue to adopt these legacy workflows because they have been the norm for so long and are the path of least resistance. But this is simply not sustainable. The demand for targeted audience reach, coupled with the speed at which these platforms are growing, means that workflow inefficiencies will only increase. At the same time, ad ops teams are put at a major disadvantage because they typically work on parallel campaigns across multiple platforms and ad servers. This creates siloed and fragmented data and makes tracking and analyzing campaign metrics extremely difficult.
Automating manual processes is the key to eliminating workflow inefficiencies and increasing productivity. It’s also essential for enabling career growth and professional development. When ad ops teams use automation to relieve members of repetitive and menial tasks such as data entry and reporting, they can turn their attention to the higher-value jobs that require strategic thought and therefore can only be carried out by human beings. Rather than seeing automation as a threat to job security, it can be viewed as a tool for skill expansion and professional growth.
Using automation to support the foundational needs of media companies
The benefits that both new media and traditional publishers can gain from automation are plentiful and help support three foundational needs:
Unity. Automation can integrate internal platforms, improve communication between teams, eliminate data silos, and enhance data visibility.
Performance. Automation can streamline manual tasks to reduce errors, makegoods, and delivery delays. It can also boost campaign performance and improve client satisfaction by allowing campaigns to be optimized in flight.
Guidance. Automation can be used to develop user-friendly systems that improve internal knowledgeability, as well as create platforms that notify teams of potential errors so they can troubleshoot before mistakes occur.
Automation also helps increase profits by allowing teams to focus on revenue-boosting activities like business growth strategy and client management. It frees them up to run more campaigns, which is a win-win for everyone: Advertisers appreciate the maximized brand exposure, and publishers benefit from the incremental revenue. Finally, automating order-to-cash processes allows for quicker invoicing, which means faster revenue recognition and more cash to reinvest into new business initiatives.
The time to automate is now
While the current economy has forced all industries to do more with less, efficiency has always been a necessity for publishers. Now that advertising has become a key revenue model for new media players, it’s essential for them to leverage technology to enable productivity and scale. The time to automate is now, as artificial intelligence, machine learning, and automation tech become more accessible and affordable. Publishers — especially new media players like retail media networks and CTV companies — must take advantage of this time to implement automation or risk getting left in the dust.
Online video offers tremendous reach and growth potential for advertisers and publishers alike. But disparate technologies and fragmented metrics have been longtime pain points. There’s a clear need for a solution that can bring standardization, interoperability and improved efficiency to the industry.
That solution might finally be on its way with the Interactive Advertising Bureau’s unveiling of their ambitious Advanced TV initiative. Built alongside standards that have already been approved by the Advanced Television Systems Committee (ATSC), the IAB’s work could prove to be a significant step toward universal addressability, both for the myriad of devices and online services that make up the ATV ecosystem, and for the elusive bridge to linear TV measurement as well.
Standardizing and unifying all these different outlets of buying and selling ads in a way that allows everyone to compete means that everyone can win, including consumers. We have seen in the past that these types of issues are resolvable when the industry comes together and comes up with a solution that works for everyone. This could be the start of something truly transformational.
Advanced TV explained
Before diving into the IAB’s plan, it’s important to understand what Advanced TV is.Namely,Advanced TV is an umbrella term that refers to any TV device or service that isn’t part of traditional broadcast channels (or Linear TV, with some exceptions). Those products and services are often distinct from one another in subcategory, but they’re all considered a part of Advanced TV as a whole.
From an advertising perspective, the key divide between Advanced TV and traditional broadcast is addressability, which isthe ability to serve targeted ads to viewers based on their individual data, and track the success of whole campaigns based on various observable metrics. Standardizing and streamlining that process across Linear and Advanced TV is the crux of IAB’s initiative.
The grand plan for Advanced TV
The IAB released a three-year roadmap that outlines the implementation of their vision. In it, they listed five key objectives that they will use to chart its success:
Interoperability for frame accurate ad delivery and ad break management
Universal addressability and reconciliation for audience measurement
Full auditability for advertising campaigns delivery
Ad measurement for delivery and viewability verification
Omnichannel sales management for programmatic buying and selling of upfronts as well as spot buys
To accomplish these objectives, the IAB outlined the technologies that they will be deploying over the next three years to modernize the medium.
Standardized Video Watermark Signal Utilizing OM SDK
Working within digital standards like OM SDK, the IAB’s open watermark signal will collect vital measurements like viewability verification across the breadth of ATV’s services and devices. It will also allow for universal ad break management and frame-accurate ad insertion or replacement for video publishers. This is all in hopes of achieving a better ad experience for consumers who are otherwise forced to view the same ad many times over due to poor targeting capabilities.
Universal Asset Identification (Ad-ID)
In conjunction with IAB’s watermark, a universal ad identification system will be key to auditing campaigns and creatives. This will provide the much-needed ability to track both throughout the supply chain, so any ad can be identified and attached to its respective campaign. Ad-ID will also be a crucial component of bridging the tracking gap to linear channels.
2+ Impression Currency
This technology and methodology will reconcile audience measurement based on data from multiple delivery channels, including linear ones. In the future, this will standardize tokenization and reconciliation, improving universal addressability.
Programmatic Upgrades via OpenRTB
To ensure scalability on a programmatic level, IAB’s watermark will integrate with OpenRTB signaling over the next three years. This will also include developing live streaming ad break management and publisher safety guidance.
Conclusion
If IAB’s initiative can deliver on its objectives, the Advanced TV landscape could be on the verge of a sweeping evolution. One that will turn the current disparate jumble of technologies and metrics into an interconnected, holistic, and truly universal measurement system across both linear and non-linear channels. The task is great and the days are early. But it’s hard not to be excited about the possibilities, and we’ll be among those watching the IAB’s progress – and the evolution of Advanced TV – with keen interest over the next few years.
As we look toward the rest of 2023 and beyond, it’s clear that respect for consumer privacy will continue to greatly impact digital advertising as a whole. But this shift does not need to negatively impact publisher revenue.
Platforms blocking third-party tracking and new data privacy regulations give users the tools, awareness and the choice to protect their information by opting out of data sharing. With this, when we look at the open web as a whole, addressability has collapsed to 30%. But while big tech solutions continue to threaten to commoditize publishers, consumer privacy actually gives publishers an opportunity to reclaim data ownership.
Traditional adtech and legacy platforms aren’t equipped to solve this addressability crisis. And without addressability, publishers aren’t able to effectively monetize their audience. The good news is that media companies have the power to identify and solve addressability issues. Here’s how publishers can check their own addressability, step-by-step.
Step one: cookie-blocked platforms
The first step in assessing overall addressability is to determine where your users are. In the U.S. alone, nearly half of all of users are browsing in Safari, Edge, Firefox, or other cookie-blocked browsers. Further, about half of all iOS users have opted into Apple’s App Tracking Transparency framework, which also impacts audience monetization in fast-growing environments such as streaming apps. When consumers use these platforms, publishers lose the ability to target these audiences with traditional programmatic advertising.
Ad impressions that don’t have a cookie or identifier attached can signal a problem for marketers. It might even cause them to pay less for these impressions or spend elsewhere. Publishers who don’t have the ability to retain audience addressability and become a data source that advertisers need will run the risk of losing budgets.
By starting with determining how much traffic originates from one of these environments, publishers can begin to understand what percentage of addressability is lost. If we take the U.S. national average and apply it here, a publisher would be left with approximately 55% audience addressability after step one.
Step two: user-disabled cookies in Chrome
Despite Google delaying third-party cookie deprecation in Chrome until 2024, 40% of Chrome users are already browsing in incognito windows or disabling tracking cookies on their own. In the U.S., more than half of users are browsing in Chrome.
Continuing with our example, the combination of audiences choosing cookie blocking-platforms and users opting out of tracking on Chrome means that only 30% of publisher audiences are addressable. Today, 70% of the internet is effectively invisible to adtech.
As user choice increasingly becomes the default, this number will continue to grow. Google’s prominent “reject all” cookies button in the Chrome consent banner is scheduled to be implemented in more countries, as directed by GDPR. In the U.S., lawmakers are mulling over the American Data Privacy and Protection Act (ADPPA), which would have all users opted-out by default. The result is a future where users will have to take minimal action, if any, to opt out of sharing their data for advertising purposes.
Step three: first-page-view targeting
The next step in determining total addressability is evaluating publishers’ ability to target users on the first page view. Passer-by traffic varies greatly by publisher, but it stands that publishers who can’t serve an ad on the first page view then lose the ability to monetize that bounced audience.
Adtech solutions that rely on cloud-based data processing are handicapped in their ability to target an ad on first page view. However, by processing data at or near the source, media companies are equipped to capture this crucial audience. To continue our example, if a bounce rate is 30%, a publisher’s total addressability is now only 21%.
Step four: data longevity
Finally, publishers need to assess their ability to store data against particular cohorts via unlimited lookback windows. The average cloud-based platform (e.g. traditional DMPs, CDPs) relies on cookie-based lookback windows. This means that publishers can only lookback 30 days on a particular cohort, inherently capping the scale of the audience.
A longer lookback window enables publishers to build cohorts for users over an extended period of time. By building user profiles over a longer period of time, publishers can create cohorts that are reflective of seasonality, for example back-to-school shopping. This allows publishers to provide advertisers with highly relevant audience segments that rely on specific time pegs.
Maximizing addressability
Media companies that build a direct-sold business built on the unique relationships and trust they have with their users will command advertiser media spend and be well-positioned to succeed in this new era of digital advertising.
As evidence of this, Penske Media Corporation was able to realize a 46% increase in revenue from first-party data in 2022. Further, their rich audience data insights were able to deliver advertisers a 5x increase in performance (CTR) in campaigns that only used only first-party data.
As we look toward a future of digital advertising where publishers have control and users have a choice, adtech built for marketers and based on third-party data will no longer be sufficient. Publishers who take action to maximize their addressability with first-party data are able to differentiate their data offerings, prove value to buyers via insights, win RFPs, and ultimately grow revenue.
Google’s deadline for deprecating third-party cookies has been looming on the horizon for the digital industry for a while now. But at this point in 2023, even with the continued delays by Google, it’s staring us in the face. According to the IAB, digital media has lost up to 60% of the signals that were accessible for targeting and measurement just a few years ago. And while publishers have always been more restricted in resources and spending than advertisers in general, publishers are feeling the heat. And we can see that in how they’re investing in their tech stacks.
The publisher community has long feared third-party cookie deprecation would lead to a bifurcation in the digital ad marketplace. On one side would be the walled gardens, with their large volumes of verified first-party data – not to mention advanced tech stacks. On the other would be the entirety of the open web, which would require collaboration and a scalable identity solution to hold its own.
Top priority in the publisher ad stack: making data work
In the latest installment of Lotame’s Beyond the Cookie report, our survey of publishers and marketers indicates that there really is a sense of urgency for open web media outlets to up their game. In the near future, 37% of marketers plan to increase spending in walled gardens, and 54% expect to reduce programmatic spend. Publishers know they need to onboard the right tools to compete – that is, to build audiences, and to analyze, enrich, and activate their data.
Fortunately, publishers are taking action. While strategizing about how to invest in their tech stacks, tools for managing and processing data top the list of priorities. In the next six to 12 months, our research finds that 35% of publishers will be looking to adopt a data management platform (DMP), 35% will be considering a customer data platform (CDP), and 32% will be exploring identity resolution tools. Not only that, but publishers cite DMPs and CDPs as the tools they would be least likely to retire from their tech stacks.
In the drive to process first-party data from as many sources as possible, CDPs have progressed through their hype stage and have demonstrated real value. Today, 44% of publishers and marketers alike use a CDP, and similarly, 45% say that they plan to build or buy technology to perform CDP functions in the coming year.
Don’t believe the hype. Believe the results
Unfortunately, the hype we heard around CDPs in 2022 admittedly created some confusion about their best use cases. A CDP shouldn’t necessarily be treated as a simple replacement for multiple other tools in the tech stack. For marketers, CDPs deliver value by helping improve customer experience. However, for publishers, it’s about experience and data consolidation.
To maximize their investment, publishers need to put CDPs to use collecting data from all possible online and offline sources. (As opposed to relying too heavily on, for example, data from logged-in known users, at the exclusion of other sources such as unknown users that can provide scale.) These use cases explain why publishers are investing in both CDP and DMP technology.
The rush to gain meaningful data insights that will attract advertiser spend has also driven a great amount of interest in clean rooms – despite reports that there’s still some lingering confusion about how they’re best implemented. At this point, 48% of publishers are using clean rooms. That means they’re more likely to use them than marketers (37% of whom are doing so).
A focus on balancing privacy and identity
Publishers remain concerned about the level of privacy provided by clean rooms. They’re also concerned about the reliability or actionability of the data – which they fear may be compromised by outdated emails or limited scale of authenticated IDs. Publishers do need to keep in mind that clean rooms are helpful in gaining more value from their data, by allowing participants to compare their data sets. But they’re not intended to effectively replace third-party cookies.
Publishers are also increasing their exploration of and investment in identity solutions. For a while, it may have seemed to some publishers that Google’s delays in deprecating third-party cookies put the task on a lower priority level. But interest in probabilistic solutions grew 50% YOY in 2022, while interest in contextual targeting and authenticated or email-based solutions both held steady over that same time period.
In 2023, digital ad spend is projected to continue rising, though not as rapidly as in 2021, when consumers’ digital behavior was also changing rapidly. Publishers are compelled to make wise, well-considered investments, to keep up with the industry’s evolution while keeping the business’s bottom line strong. Those who have been lagging need to step on the gas. It’s time to start testing and implementing the tech that suits their goals and advertiser partners, empowering the open web and putting their data to work to compete with the walled gardens.
According to GroupM, global advertising revenues directed to retail companies already accounts for 18% of total digital advertising and 11% of total advertising spend. “We expect retail media advertising to increase roughly 60% by 2027,” GroupM’s 2022 E-Commerce & Retail Media Forecast noted back in September. Globally, that will make it a $168 billion market.
These are big numbers. So, given media companies continued reliance on advertising revenue, any emerging player in this space is one to watch. Retail media is no exception.
Here’s what you need to know about its growth, potential impact on digital ad revenues, and what publishers stand to learn from this booming market.
What is retail media?
As Zenith explains, retail media refers to display and search advertising that appears on e-commerce websites and/or the online platforms of brick-and-mortar retailers.
Retail media networks (RMNs), such as those operated by Amazon, Walmart and Shopify, offer multiple opportunities to deliver targeted advertising. They also provide the means to deliver other forms of sponsored content to consumers, both on their own sites and increasingly off-site, too.
Why is it growing?
Retail media isn’t new. But it is in its ascendancy. GroupM estimates that global advertising revenue for retail-based companies was worth $88 billion in 2021, growing to $101 billion in 2022.
This uptake, eMarketer says, can be attributed to “the death of the third-party cookie–as well as retailers’ ability to leverage their first-party data on customers.”
Alongside this, we also must consider the continued impact of the pandemic in shifting consumer behaviors and driving more people to shop online. As e-commerce has grown, so has the desire of brands to be in spaces where we are increasingly spending more time. And money.
Not surprisingly, brands and manufacturers are using retail media to reach customers at the point of purchase, or when they are most likely to make a purchase decision. That’s often on e-commerce sites and on online shopping channels.
Threats
There are several clear challenges here for media companies. The first lies in the worry that retail media will further contribute to the cannibalization of publisher’s advertising revenues. As advertising markets continue to grow, there’s a very real concern that publishers will not get a bigger slice of this pie, as monies flow to other platforms and providers.
For agencies and brands, the volume of first-party data that retail media platforms have access to makes them highly appealing. It also makes them potentially difficult to compete with.
Alongside this, these platforms also offer the opportunity for both highly targeted ads and advertisements that may trigger trackable purchase decisions there and then.
Of course, publishers offer this functionality too, often packaged through – and around – compelling content. This can also inspire purchases, but the journey to transaction might be more complicated, or less immediate. For example, online shopping through an affiliate partnership might take you offsite to complete a purchase. In contrast, seamless, frictionless, transactions are the bread and butter of traditional e-commerce sites. Unlike on many publisher sites, transactions can be completed within their walled garden, without the need to visit a partner’s site.
New data from the Reuters Institute notes that nearly a quarter of media leaders in 53 countries around the world described e-commerce as an “important,” or “very important,” revenue stream for their company in the year ahead. As these media companies seek to grow their e-commerce revenues, the UX and targeting that retail media networks can potentially provide, may offer some stiff competition to these ambitions.
Lastly, we should also note that retailer’s media activity is not just about advertising. Some retailers are also investing in traditional content too. This includes time-honored staples such as in-store magazines through to live shopping experiences, developing relationships with influencers, and running their own in-house media companies, like Target’s Roundel.
Image: Screengrab from a presentation by New York performance marketing firm Tinuiti
Opportunities
As eMarketer explains, “the most important benefit that retail media offers brands is a closer relationship with retailers, followed by creative services, access to owned and operated media/properties, first-party sales data, and personalization opportunities through creative.”
That makes for a compelling case for many brands and advertisers. But, of course, some of those characteristics are applicable to media companies too. Moreover, retail media isn’t a sector that publishers are locked out of. Far from it. There are multiple possibilities for media companies to tap into this market.
For example, Grocery Dive notes that retailers are increasingly looking to add shoppable video, live streams, and other multimedia content on their sites. Some do this in-house and have large creative teams. However, this increasing demand for content presents opportunities for creative and publishing partners. They might range from start-ups like Firework – a video commerce solutions provider – through to the content studios at large publishers such as The New York Times’ T Brand Studios and Bloomberg Media Studios.
Yahoo! meanwhile has created a tech stack to support RMN’s run by Lowe’s and Marriott, which includes enabling ad buyers to use anonymized data to target customers using Marriott’s app and websites. In the future, that will come to TVs in their hotel rooms too. It will be interesting to see if additional content layers – such as local news, weather and sports – will be added to these spaces in the future, so that consumers are served content related to where they are staying from trusted publishing partners.
There are also opportunities to double-down on some of the partnerships between retailers and media brands. Walmart has already partnered with BuzzFeed to offer Tasty branded kitchenware and shoppable recipes. Inspired by a recipe idea, users could have the items needed to create it added to an online basket, picking up the items later in the store or having them delivered to their homes.
But given that retailers are also offering food inspiration on their own sites, that model could be flipped on its head in which case, RMNs would send traffic to publishers’ sites (e.g. NYT Cooking) to continue their journey.
Thanksgiving-themed shoppable videos on Safeway’s website, via Grocery Dive
Lastly, it’s worth noting that some retail media providers offer offsite, often co-branded ads. This means that some of RMN’s ad dollars may still flow towards media companies. In fact, they already are, according to Gavin Dunaway from The Media Trust.
As he explained to DCN readers last summer, “When retailers buy off property, they need high-quality inventory in well-lit spaces.” That might mean marquee publishers with large audiences, or more targeted niche outlets. Within that, the ability to offer contextual ads, and to do so in a less crowded space than a typical online shopping space, is potentially very appealing.
Moreover, given concerns about brand safety, quality publishers can also be a safer bet for retailers and their advertisers, than some of the vagaries of the programmatic marketplace. That too makes them attractive for RMNs and their advertisers.
Looking ahead
The rise of retail media represents a significant shift in the advertising landscape and one that publishers cannot afford to ignore.
Retail media is expected to exceed $50 billion in the United States in 2023 alone. That represents 20% of total U.S. digital ad spend, AdWeek reports. It is daunting to face another major competitor in the digital ad marketplace. However, it’s an area that publishers should consider exploring and learning from. With companies like Amazon and Walmart already generating substantial advertising revenue, media companies should be paying close attention to the strategies of these companies, if they are not already.
As part of this, trends such as shoppable videos and the intersection of retail media and connected TV (another advertising channel that is also growing rapidly) are worth watching.
And, if nothing else, the emergence of retail media highlights the importance of a strong first-party data strategy, and the potential power it holds with advertisers and consumers alike. This once again reinforces the need for publishers to ensure that they do not get left behind when we move to a cookie-less world.
Areas that retail media are already majoring in – first-party data, shoppable video, sponsored content, and contextual ads designed to spark purchases – should be reviewed with this new competition in mind. There is also much to learn from their efforts in these arenas, as well as opportunities to partner with RMNs on everything from e-commerce strategies to ad inventory.
As the retail media market continues to expand and evolve, it looks set to play a growing role in the advertising industry and in shaping consumer habits. Subsequently, it’s a space that publishers must pay attention to by continuing to revisit and check out. After all, just because you’ve seen one retail media network, it doesn’t mean seen the mall.
Two years ago, the Incorporated Society of British Advertisers (ISBA) examined buy-side data to map the programmatic advertising supply chain from advertiser to publisher. Unfortunately, there were significant data quality and transparency issues, specifically the inability to identify 15% of ad spend to delivered impressions. Given these results and marketplace concerns, industry organizations created a task force and toolkit to help improve transparency in the programmatic process. Results from the second report, ISBA Programmatic supply chain transparency study 2022, show supply chain improvements.
The 2022 study examined industry progress using the toolkit developed to improve data access in the programmatic supply chain. The toolkit defines five important questions to lead the impression match rate audit process:
Does the Audit Permission Letter (APL) accelerate data access?
Does the Data Fields List (DFL) improve the data quality?
Does improved data quality lead to improved impression match rates?
Is the unknown delta reduced?
Are there clear, actionable next steps?
The research is based on 1.3 billion impressions from September 1, 2022, to October 31, 2022, with the complete analysis taking place over nine months. Participants included 11 advertisers, 10 publishers, seven agencies, and six DSPs and SSPs, each.
Findings
The research identified a total of 104 million impressions served from ad tech vendors to publishers. Of the 104 million impressions, they matched 61 million impressions (58%) from the buy-side (DSP) to the sell-side (SSP). The match rate is nearly five times greater than the 12% in 2020. The latest report also track 65% of advertiser spending reaches publishers compared to 51% in 2020.
The higher-quality log-level data and data fields allow for a deterministic rule-based approach to matching the data sets with predetermined algorithms and calculations. Also contributing to higher match rates were private marketplaces, with an above 70% match rate (approximately 20% of matchable impressions). Notably, the 2022 study finds a distinct difference in the delta between open marketplaces (3%) and private marketplaces (<1%), showcasing the benefit of advertising with select auditable private marketplaces. Like 2020, the 2022 study focused on premium advertisers, agencies, tech vendors, and publishers which do not necessarily represent the broader programmatic ecosystem.
Improvements
The toolkit was a prime contributor to data access improvements in 2022. The Audit Permission Letter (APL) allowed for more efficiency, cutting the study time from 18 months to 9 months. However, the full adoption of the APL letter varied among the participants.
Participants who provided log-level data for each impression showed significant improvement in data quality in the audit process. The Data Fields List (DFL) also improved the data quality. However, while ad tech suppliers offered approximately 80% of the data fields, there was a remaining 20% of data fields that needed to be shared. In addition, inconsistencies in some data formats, like names, currency, device type, etc., still prevail and need to be addressed.
Recommendations
Overall, the study recommends for advertisers, ad tech vendors and publishers to work with well-curated private marketplaces (PMPs), given their higher impression match rates.
Advertisers and agencies:
agree to separate display side platform seats for each advertiser,
appoint centralized contact for Audit Permission Letter approvals and extraction and reporting of buy-side log-level data, and
consider private supply chain audits chain every one to three years.
Ad tech vendors:
invest in the ability to filter, retain, and share log-level data, covering all of the Data Fields List,
agree on consistent taxonomies and naming conventions for ads.txt, and
drive adoption and use of ads.txt and sellers.json.
Publishers:
agree on consistent taxonomies and naming conventions for ads.txt, and
drive adoption and use of ads.txt and sellers.json,
consider working with fewer SSPs, and
consider private audits of them every 1 to 3 years.
The 2022 study demonstrates the improvement of data quality with the Toolkit usage. Developing data standards and protocols offers insight into supply path optimization. Further enhancements in data access and retention with the additional collaboration of data practices will make financial audits more common and successful.
Recent history has been filled with challenges within our marketplace and we can expect 2023 to bring its own set of hurdles. At MediaRadar, we are constantly monitoring the marketplace to provide key insights and advice to our clients to help them navigate this ever-changing media landscape. We see numerous new advertising opportunities emerging within the market. However, it is critical for media companies to be ready to capitalize on them at the right time.
Here are six of our predictions for 2023:
1. Rising interest rates will cause accelerated asset sales
Normally in a recession, we can expect to see consolidation of media companies, typically weaker firms looking for scale by pairing. And we will see this. But with rising interest rates and the cost of borrowing up significantly, some well-known companies are going to be pressured to spin-off assets to raise cash and pay down their debt. This may create unexpected industry fragmentation and what may seem like new competition in the marketplace since currently many buys are bundled.
Disney may sell Hulu, or possibly ESPN. Just this week there are rumors Disney might dispatch ABC. Discovery is rumored to be renaming HBO MAX to only MAX. This may signal a desire to spin-off all or some of HBO.
The Dolan family might sell AMC. The economics for small channels has changed. The family paid debt down in the past, when they sold Cablevision (now Altice).
Over the last few years, we have seen SPACs created to acquire well-known media companies like Vice or Buzzfeed. However, some of these investments have registered lower-than-expected valuations and so investors are looking to get out.
2. Retail Media hype is cooling, but it’s also maturing
Last year the IAB Leadership Summit included a presentation with an executive from The GAP. This presentation outlined their plans for a bright ad supported business. The idea was right, but that business is already shut down. We’ve observed dozens of retailers who’ve made big announcements, but have not been able to scale their commerce media businesses.
However, retail advertising isn’t on the decline for everyone. Some retailers continue to make major investments, which are growing. Supermarkets perhaps have the most to gain. They have many ingredients for a successful business model – a captive audience, a strong presence in the local community, their consumers make frequent visits to their websites, and their core business performs at a much higher margin.
Grocery Companies have much to gain by adding a high-margin ad-supported retail advertising to their business model. This is why companies ranging from Walmart to Kroger’s are seeing success through retail media. Traditional media companies can capitalize on the return of ad dollars from failed retail media excursions. However, it is important to note that in certain areas, like CPG and grocery, that retail media is easily here to stay.
3. The Metaverse is not dead
The sense of schadenfreude for Meta (formerly just Facebook) is palpable, but this does not make the idea wrong. I read Neil Stephenson’s revolutionary thriller Snowcrash in university (the book was published 30 years ago), which foretells the metaverse, and more recently Ready Player One. I’m a believer. When the technology is in place, and affordable, it will be the next big thing. There will be an enormous ad business when the metaverse is realized. While I don’t think this will come to complete fruition in 2023, I do think media companies should be keeping an eye on this technology. It will open numerous advertising opportunities as it matures. We can’t let it sneak up on us.
4. ChatGPT will change the business of selling ads
At MediaRadar we observe more than 4.8m brands advertising in the United States. But to prepare thoughtful outreach for so many brands is far too time consuming for any individual ad sales team – at almost any ad-supported media company today. Sales teams don’t have the resources to canvas more than a small segment of the total market. However, ChatGPT will allow mass customization of outreach. We feel this will improve (that is, dramatically multiply) the number of advertisers a sales team could contact. It will collapse the time required by ad sellers to do their prep for marketers and agencies. You can expect more on this topic coming soon from our innovation lab.
5. Government spending is good for advertising
The war in Ukraine is driving advertising spend in key areas like, energy, agriculture, and defense. These will continue to flourish in 2023.
The U.S. government passed two key bills that will significantly impact the media industry. Both are going to drive unprecedented ad spending in the industries and local communities supporting these initiatives. The CHIPS and Science Act is a $250 billion bill that is dedicated to ensuring we no longer face computer chip shortages again. The Infrastructure Investment and Jobs Act. There will be $1 trillion dollars invested to update roads, bridges and tunnels across the U.S. These updates will create employment, travel and business opportunities for Americans – all which will require advertising to spread the word.
6. Sponsorship and exhibitor revenue from live events will be big, despite a looming recession
Our early analysis in Q1 suggests an especially robust market for live events. Pricing of sponsorship is up – often 20-30% above YR 2019 levels. Smart media companies will be creating and selling unique experiences, like NBCU’s BravoCon. Brands are eager to interact with customers in-person and these fun events will bring new advertising opportunities for media companies.
In 2023, we will face numerous challenges. However, there will also be meaningful opportunities for media companies to do well through the recession. When the competition hesitates, there’s room for some to move ahead even faster,
As publishers strive to reach revenue targets, the open programmatic market has cast a shadow over publishers’ ability to nurture their audiences. With the continued rise of mobile-first and in-app advertising, revenue growth in 2023 requires that media companies take a new approach that views advertising as a means to enhance consumer experience, rather than distract – or detract – from it.
Sticky audiences
In an age where audiences are inundated with content, publishers and app developers struggle to create “stickiness”. Here, stickiness refers to when users choose to stay with your product in a competitive environment because of the value it offers.
Mobile app stickiness is a metric that measures user engagement with an app. “Stickier” users mean lower churn rates, greater opportunities for upselling and cross-selling, higher customer lifetime value, and more customer referrals. Your audience will stick with you as long as there’s no compelling reason for them to stray. Irrelevant, offensive, or off-brand ad experiences are all reasons that users lose interest.
The key is demand optimization. It ensures brand suitability, ad relevance, and builds effective feedback loops that put audiences’ needs first.
Getting to the heart of churn
The lines that define a safe and engaging ad experience have never been clearer. One poor ad experience is all it takes to result in quick app abandonment. However, publishers rarely hear from 96% of their users. For every complaint logged, there are countless users who quietly slip away to explore competitors’ offerings.
Malicious ads, unwanted ad content, and disruptive formats cause a drop in engagement and a disconnect with brand identity. These issues manifest differently from app to app, even the offerings of a single publisher.
Most app publishers (93%) report that bad ads lead to negative reviews of their apps in the app store, and 71% of publishers say low-quality ads have driven users to uninstall their apps altogether. The impact is especially felt by gaming app publishers, with 57% sharing that bad ads have caused players to stop playing for good.
The need for flexible controls
The question remains: What can publishers serve to ensure long-term audience engagement?
Engaging, brand-suitable ads look different from app to app. Sites and apps that cater to teens have vastly different brand suitability standards than those for adults. Even among adult audiences, ad content standards vary greatly. What’s acceptable on a dating app may be damaging on a finance or gaming app.
When it comes to ad quality, it is crucial to have the autonomy to craft and fine-tune one’s guidelines. The ability to exclude certain content is a must-have for any publisher who wishes to maintain control over their ad experience.
Not only are many ad experiences offensive and disruptive, they are increasingly less relevant, as they are based on assumptions about audience preferences. Publishers must implement a sustainable feedback loop with audiences to efficiently tailor ad policies to user feedback. Publishers can turn to AI powered technologies to keep up with user preferences and constantly shifting expectations for in-app experiences.
Preserving publishers’ power position
Silent churn echoes louder than a scream. After enduring too many poor ad experiences, users simply opt for an alternative app. Publishers require visibility into the ads that appear in their apps, along with controls to ensure ads are relevant and engaging.Ultimately, the stickiness of your app is a powerful engagement metric that indicates long-term mobile app health. Appropriate, engaging ad experiences are the key to attracting stickier users who are more likely to become brand loyal. The result is a sustainable monetization strategy that will empower and benefit publishers and their audiences alike.
