By 2027, the global adtech market is expected to reach $27.42 billion with a Compound Annual Growth Rate (CAGR) of 11.2%. This is despite the geopolitical disruptions and economic tensions from the Russian-Ukrainian War that have disrupted economic recovery from COVID-19.
The demand for digital advertising remains high, with businesses across various industries and sizes turning to digital channels to reach their audiences. This compels ad tech platforms to increase their expenditures and seek better means of serving ads.
With 2024 approaching, we are optimistic about the ad tech market. There will be more disruption and innovation across the industry, but with better collaboration and a focus on driving real value, companies can continue to boost efficiency, improve sustainability, and emerge triumphant.
Here are emerging adtech trends that will shape 2024 and beyond.
Commerce-oriented advertising
2024 will continue to see the rise of commerce media. Advertisers will have better means of measuring the impact of their online ads, including how it affects in-store foot traffic. Commerce media is a new advertising format that links media impressions with commerce transactions. It can directly connect audience impressions with omnichannel transactions.
For example, Google has integrated a section for discounted coupons (called promotion extensions) in its search ads. You can attach a redeemable offer to a Google search ad, which viewers can print or save for later. Retailers can use this to close the gap between online and offline activity.
AI in Advertising
Like with any other industry, AI has a profound impact on the future of advertising. Advertisers use AI technology to identify and segment audiences, rapidly build and test multiple versions of ad creatives, and optimize existing ads – often without human interaction.
One of the common ways AI is used in advertising today is in buying and placing programmatic and digital ads. For example, Facebook uses machine learning to determine ad frequency and relevance scores. These are two important signals that dictate how often audiences see your ads and how much you pay for them.
We will see more sophisticated AI technologies in advertising as data and computing power continues to grow. However, advertisers should also be aware of the limitations of AI systems and be wary of data bias.
Better ways to tap first-party data
With third-party data out of the picture, advertisers are forced to find more creative ways to reach their target market while remaining compliant with regulations. In Europe, strict privacy laws have already banned tech companies like Meta from using personal information to deliver targeted ads. As a result, Meta implemented a subscription model so EU users can opt not to see personally tailored ads as part of their social media experience.
Advertisers must rely more on data provided by users (called first-party data), and one way to do that is by turning toward retail media networks (RMNs). These retail digital channels, like Amazon, already have a wealth of first-party data that can be tapped to deliver targeted ads.
Mobile phone manufacturers as reliable data sources
It’s no secret that device owners like Samsung and Apple actively collect user data to improve their services. These first-party data are more interesting for advertisers than the ones they’d get from advertising platforms.
Device owners are closer to user data, and their traffic is less noticeable to users. Users don’t realize they’ve been shown an ad, which means ads shown on devices are less disruptive. For example, you may see ads on your iPhone that are available from the service, and you may not even be aware that you’ve been shown an ad.
This opens the possibility for more personalization from advertisers. However, there’s very little regulation at this end, which makes it an unexplored avenue with unknown risks.
Better cross-media campaigns
In the past, it seemed like science fiction that ads would seamlessly blend into people’s conversations. But today, thanks to technological advancements, this is a reality. For example, we can now understand the exact contents of an article and allocate a budget for ads that match that content. We can analyze how target customers consume media and offer a seamless marketing experience across multiple channels.
This ability will disrupt many companies and determine winners. We can see more companies creating goals to launch new projects, strengthen already established regions, create new locations, and expand and merge further.
M&M’s proved this strategy worked when it launched a traditional TV ad during the 2021 Super Bowl which they’ve supported with a widespread social media campaign. The ad, “Come Together” kept audiences engaged before, during, and after the game, and was a huge success in driving attention to the M&M’s brand.
Changes in Google's advertising evaluation and revenue sharing
Another major change this year is Google’s shift to cost-per-click evaluation. Google will pay the same amount, but it will now evaluate clicks. This means it will be easier to compare metrics among different partners.
Google has also been recently criticized for its undisclosed revenue-sharing arrangement with Apple. This forces the company to provide more transparent disclosure of information on revenue sharing with partners, providing transparency into Google's advertising system.
Automation in Ad Purchases
Companies are increasingly automating ad purchases, simplifying the process but reducing control over ad placement. Google has consistently pushed its automated bidding and smart bidding features, automatically determining CPC. While convenient, it limits users’ ability to choose where to go through a link.
From an investment perspective, this means project costs have decreased since ad budgets are optimized. This is good for investors as they can get more value for their money. However, attracting money to projects where investment has already been made becomes more challenging as new investors are more cautious.
Final Thoughts
The advertising market has seen significant changes whose impact will continue to be felt in the future. These changes will affect all market participants, from website and platform owners to investors. Staying informed of any new developments will help you remain on top of your ad strategies and ahead of the competition.
Photo by Eleni Afiontzi on Unsplash