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Digital advertising is recalibrating.
It seems like at every turn, there is something new, unpredictable and unfamiliar. Content platforms are adding commerce, and commerce platforms are adding content (and ads), all in an effort to boost revenue. Meanwhile, privacy enforcement is heating up, online platforms might lose essential legal protection, and consumer behavior continues to transform.
Amidst all that change, though, there is one reliable constant: programmatic, a medium that, at this point, touches pretty much every facet of digital marketing. Its penetration in digital display is forecast to reach a massive 91.1% in 2023 (up from 90.2% last year), and it’s growing in other maturing media formats, too—the likes of connected TV (CTV), digital out-of-home (DOOH), and digital audio.
Not that this is surprising. At a time when marketers are scrutinizing budgets and searching for operational efficiencies against economic headwinds and increased complexity, investing in programmatic makes perfect sense. And even despite the turbulence caused by the loss of the third-party identifiers upon which programmatic was built, the medium is standing its ground as advertisers embrace a raft of new, versatile, privacy-friendly targeting solutions.
By all indications, 2023 is set to be (yet another) dynamic year in programmatic advertising. Here, we’ll dive into seven programmatic trends that are set to shape the programmatic landscape and explore some of the ways advertisers can capitalize on those trends to power growth.
Our everyday lives are jampacked with technology—in 2022, the average US household was equipped with 22 connected devices—so it’s increasingly important for brands to serve up unified cross-channel experiences. Consumers today are watching TV while on their phones one minute, then listening to podcasts while working on their laptop the next—and they expect a seamless advertising experience across all of them.
Adjacent to that, brands have less and less time to win consumers’ attention. Gen Z and millennials, in particular, have grown up in the short-form video worlds of Snapchat, TikTok, and YouTube—they won’t hesitate to skip past content and ads that don’t engage them from the get-go.
All this is to say: marketers have it tough.
To combat the challenges and complexities, marketers will need to nail the fundamentals. Powering programmatic media performance entails complicated processes, so advertisers should look to evaluate whether they’re taking advantage of the resources already at their fingertips. That means stewarding budgets responsibly, investing in campaign planning, maintaining media hygiene, optimizing optimizations, and, critically, embracing technology that breaks down silos and accelerates digital media execution. Adopting a passive position in these areas will only expose marketing organizations to crisis and lead to strategies defined more by fire drills than brand values and needs.
The macro trend within the TV landscape is clear—streamers are slowly dethroning linear TV:
Consumers are increasingly tuning into the biggest screen in their homes digitally. And, in the fight for their time and wallets, streaming platforms have been busy—finalizing mergers, securing content rights, and rolling out ad-supported tiers in pursuit of subscriber growth and diversified revenue streams.
Amid these forays into the world of advertising, the streaming platforms are placing an emphasis on how they’re enabling ads via intentional partnerships (think Fox and Magnite, Netflix and Microsoft, Roku and Nielsen, and NBCUniversal + iSpot). This is creating consolidation across a complex ecosystem, unifying some of the fragmentation and opening opportunities to execute digital TV investments more cost-effectively—and programmatically. Indeed, in 2022, 74.4% of CTV ad dollars flowed through programmatic pipes, and that number is expected to rise to 78.6% by 2024.
The development of programmatic in CTV naturally depends on how the various streaming providers want to monetize their vision for ad-supported environments. But programmatic affords vastly more flexibility than upfront or scatter markets, so where there is inventory available, it should continue to gobble up market share.
There’s no question that digital audio is growing in importance, commanding an increasing share of our day and engaging audiences in ways few channels can. It’s an absorbing, emotional, and different experience—and one that drives results (75% brand recall rate, anyone?). It’s also got reams of untapped growth potential. Podcasting advertising alone is estimated to be undervalued by as much as $40 billion relative to other channels. Clearly, it’s time for advertisers to get involved in this opportunity.
The numbers around digital audio make for some compelling reading: Podcasts are projected to account for 5.1% of total time spent with digital media in 2023 (up from 4.7% in 2022). Music streaming has increased 27.5% from three years ago and averaged 1 hour 56 minutes in daily listening time in H1 2022. The penetration for digital audio is currently 78.5% of internet users. And that’s just scratching the surface.
The programmatic share of digital audio ad spending continues to deepen and is estimated to hit 23.2% this year. In times when audiences can be oversaturated with visual advertising, audio offers a great way to diversify programmatic budgets, evolve omnichannel strategies, and reach a highly targetable (and mobile) audience in a brand-safe environment. Those that embrace this medium as a soundboard for creativity and lean into expanding consumer listening habits will likely set themselves up to cut through some of the marketing noise in 2023 and beyond.
If you’re looking for innovation, you may want to get up and get out of the house.
Indeed, some 47% of US agency and ad execs think digital out-of-home (DOOH) is developing the most innovative ad opportunities, behind only social media and mobile. And with TV and radio audiences fragmenting under the force of digital, DOOH is helping advertisers fill the one-to-many void.
Traditionally, DOOH media owners have sold their inventory via time-limited packages that promise a minimum share of voice or number of playouts, essentially guaranteeing budgets per campaign. But as more and more screens pop up across cities worldwide, programmatic DOOH is prospering. Back in 2020, only 6.9% of DOOH ad spending in the US was transacted programmatically, but that share is forecast to rise to 22.6% this year, then 29.0% in 2024.
It’s quite profound growth, and it’s easy to understand the drivers behind it. By tapping into a range of real-time data such as live sports scores, weather fluctuations, traffic updates, or local in-store retail discounts, advertisers can create dynamic messaging and capture the attention of large, relevant audiences. Programmatic DOOH also opens the door to unique creative through full motion video, social media engagement, syncing and touch screen interactivity, augmented reality, QR codes, and more.
While undoubtedly a nascent medium, DOOH is gaining traction through its versatility and ability to successfully drive brand awareness—solidifying itself as a fixture in marketers’ omnichannel media mix.
Google may well have pushed back the deprecation of third-party cookies from Chrome until 2024, but advertisers should understand that between 50 and 60% of signal fidelity from third-party identifiers has already been lost through the actions of other platforms and browsers (such as Firefox, Safari, and Brave). In other words: we’re living in the cookieless future right now.
This, coupled with expanding regulations and stricter enforcement of existing data protection laws (eyes on you, Sephora and Kochava!), necessitates immediate privacy-forward action from stakeholders across the entire advertising ecosystem. Everyone has a role to play: Adtech itself needs to help activate tactics, consult on solutions, and facilitate partnerships; publishers must create a positive CX to empower quality data capture; and brands should be implementing compliance frameworks and advanced data management systems.
What does this mean for targeting and measurement in programmatic? In short: we’re still very much in the innovation and trial stage. New proposals are entering the market all the time and existing solutions that have taken a back seat for a while are garnering renewed attention (hello, contextual targeting!) Eventually, once publishers and advertisers have run their tests, the industry will likely coalesce around a small selection of agile and scalable options. But the point here is don’t sit around and wait for the problem to go away. The time to act is today!
Over the past two years, brands of all sorts have been launching retail media networks (RMNs), opening new real estate for ad placements and promising the proliferation of their privileged first-party data. The revenue success of Amazon has awoken others to the opportunity, with Walmart, Target, and Kroger getting particularly active in ramping their retail network and advertising capabilities. CVS, Walgreens, Dollar General, Ulta Beauty, Petco, eBay, Lowe’s, The Home Depot, Marriott, and Dick’s Sporting Goods (to name just a few) have also gotten into the game.
The growth of RMNs in the US could equate to $45.05 billion in ad spending in 2023, and the ripple effect of this evolution is significant. The ability to match unique customer IDs and ad impressions to SKU sales—all in a privacy-protected way—is compressing the marketing funnel and creating a paradigm shift in digital advertising not seen since...well, the rise of programmatic! All signs suggest the space is likely to scale, and with retailers inking deals with publishers, DSPs, and SSPs that want in on the action, the implications could be far-reaching across programmatic and beyond.
They’re still in their early days, but RMNs are certainly something to watch carefully and leverage accordingly.
It’s been a tumultuous time for social networks—so much so that The Atlantic recently questioned whether the age of social media is indeed ending. The growing levels of social ad spending would indicate not, but there are undoubtedly some interesting, shifting dynamics at play.
In 2022, we saw:
TikTok has been a shining light, but even this golden child of social media should watch its back with emerging competitors like BeReal gaining traction. The key to the future of social is essentially Gen Z—the changing of the social guard is founded upon this generation embracing a social experience rooted in more interaction, entertainment, and authentic communication. Sixty percent of US teens also report that feeling “welcome and safe” is more important than a space to speak freely online.
2023 will be a year for recalibration in social circles as the likes of Facebook, Instagram, and Twitter look for new ways to kick-start their businesses. Marketers should look to the younger cohorts for a glimpse into where they should be making sound social investments.
The advertising industry is poised to undergo a digital sea change in the year ahead. And the micro world of programmatic will be in the thick of it. Defining and reaching audiences, what those audiences care about, the channels and tactics employed, and how performance is measured—it’s all changing. Marketers who can stay agile and nail the basics will be in the best position to navigate all the headwinds the industry is running into, and perhaps even turn them into tailwinds!
Want more tips and tricks to navigate the year ahead? Check out all our 2023 trends content designed to help you stay ahead of the curve.