The past year has been transformative in many ways. One outcome has been an increase in the number of people spending time online. Obviously, this is a positive for advertisers.
Data from Crunchbase shows that adtech had dipped at a 10% compounded rate over the last five years. But positive signs are emerging. Pandemic-driven consumer behavior changes have led to predictions of an increase in interest in advertising technology in 2021. Digital advertising on digital channels such as Amazon, Google, and Facebook are expected to form 61% of all advertising in 2021.
What are the factors that will drive this growth?
- An increase in online consumers
Due to the impositions brought upon us by the pandemic, there is a higher number of online customers than before. This is the single biggest factor likely to drive a digital 2021. There will be more opportunities for e-commerce platforms, streaming websites, online service providers, and mobile applications.
At the same time, while this indicates that more people are browsing online – it doesn’t automatically mean that people will purchase more than before. The onus of driving that action will still lie squarely on the shoulders of the brands and marketers.
Let’s examine the technological trends that could help you make the most of all these new eyes viewing digital spaces.
- Programmatic advertising
By 2021, nearly 88% of all US digital display ad dollars, or $81 billion, will flow via automation.
This is a huge number. Programmatic advertising, led by artificial intelligence, will automate and simplify processes that can otherwise be costly and labor-intensive. How does it do this?
Demand-side platforms
With so many digital marketing platforms out there, it can be tedious to go onto every individual platform. DSPs use AI to manage your multiple ad exchanges through a single user interface. Helpful, right? That’s not all – DSPs also automate the process of purchasing virtual ad space.
In just a few seconds, AI-driven DSPs set the prices, and when an ad space becomes available, they purchase it. They process the request for it, choose the most valuable option, and bid on it. If their bid wins, your ad is then served in an app.
Additionally, they can use demographics, geography, and other factors to precisely target your audience. They also have more detailed and comprehensive performance tracking abilities.
Real-time-bidding
This is another artificial-intelligence driven process that automates buying virtual advertising real-estate. RTB works by powering the ability to bid for a particular ad-space against other bidders. If you calculate the bid right and win, you get to display your advert on that space. Using RTB, DSPs bid on advertising spaces online.
Used together, they drastically reduce the amount of time and human resources marketers and agencies would require for a similar task. Performing complex calculations at scale are the key – it takes a millisecond for a DSP to analyze which impression is valuable for you. These are particularly useful in automating the mobile ad-buying process.
- First-party data
Internet users across the world are demanding more virtual privacy. There are even government policies in place to protect privacy, such as Europe’s General Data Protection Regulation (GDPR).
What does this mean for marketers?
It means that in 2021 – the focus is set to shift to first-party data.
Firefox, Google, and many other tech giants have decided to eliminate third-party cookies. This means advertisers will have to depend on first-hand information given by consumers to craft their ad campaigns. Here’s how that’s likely to pan out.
Contextual Targeting
Cookies drove the early growth of behavior-based advertising targeting. 2021 will see the rise of contextual targeting instead. Contextual targeting is more respectful of the user’s privacy and more upfront while collecting data.
It can actually increase conversion rates since the advertisements will be shown to the user according to their actual interest. The relevance of each ad will become higher. This means that there will be an opportunity to build a more people-based advertisement model.
- Artificial Intelligence
The biggest driver of change in 2021 may well be Artificial Intelligence. Since the ad-tech industry, specifically programmatic advertising, heavily relies on making sense of vast amounts of data at an extreme pace – AI can add value in every process. For instance, AI could use machine learning to take first-party data and draw out correlations in your user’s behavior. AI could track this data, present easy-to-understand insights, and suggest actions like the optimal ad format and where you should place it.
Aside from analyzing data, AI can also automate several time-consuming procedures and helps optimize each step. AI helps with identifying consumer purchasing patterns and increasing campaign efficiency. Artificial intelligence also helps reduce the cost of acquiring each new customer. A survey illustrated how 82% of early adopters of AI experienced a positive ROI from their AI-driven initiatives. Watson, IBM’s AI platform, was documented to have reduced CPC by 71% when it was used to purchase ad spaces.
- Constantly changing media environments.
AI-driven advertising processes are expected to become even more popular in 2021. This is because these processes allow for a data-first approach to learning more about your audience, habits, and spending behavior. These numbers make it easy to measure different aspects of your campaigns.
2021 will see a sharp rise in video content. YouTube and other video sharing platforms are increasingly starting to dominate consumer consumption patterns. Many companies will take advantage of this in their marketing strategies. Additionally – even video advertisements will benefit from AI.
With technology leading the way for advertisers, 2021 promises to be a good year for ad tech – especially in the digital space. In the past year, we saw the rise of the virtual population. 2021 will be the year of transparent and people-oriented digital interactions between this population and brands – powered by tech.
