All the bad press paints a rather concerning picture for the ad tech industry. But the industry overall is healthy. Ad spending is set to rise across the globe, with digital driving most of the growth. In fact, in 2019, worldwide digital ad spending will rise by 17.6% to $333.25 billion. Which means that, for the first time, digital will account for roughly half the global ad market. Like any industry, the advertising world is evolving and transforming but one thing is for sure - it isn’t going anywhere.
Advertising Isn’t What It Used To Be
Ten years ago travel marketers were facing an entirely different marketing environment. Remember, that Facebook was only launched in 2004 and the iPhone and Twitter in 2007. Marketers have had to keep up and contend with these leaps in technology, emerging digital channels and the associated changes in user behaviour ever since. The good news...the mass adoption of the internet into everyday life has been a goldmine for most of the digital advertising industry.
As users started to share more personal data online it became possible to track patterns and trends in human behaviour dramatically impacting the way marketers could personalise and engage with consumers. The world has moved online and into our pockets. Consumers are now more informed than ever, able to research nearly any topic including product pricing in seconds, easily comparing competitors and reviews. As the first truly mobile-first generation, Gen Zers, those born between 1995 and 2015, place a big emphasis on personalisation and relevance. Their habits have also evolved compared to Millennials who currently interact with three screens on average, compared to Gen Zers who use five: a smartphone, TV, laptop, desktop, and iPad. Marketers are now faced with the challenge of not only providing relevant and personalised content at the right time but also on the right channel and device. No easy feat when that includes paid search, programmatic display, video, Meta search, Facebook & Instagram, mobile etc.
Regulation Comes To Us All
This complexity has created not only challenges for marketers but also for the industry as a whole. As marketers have relied more and more on big data in order to effectively communicate with their customers, it has raised questions around data privacy and the usage of an individual’s data. We are challenged with finding a careful balance between capturing the increasing amount of data that users are generating online and using it to deliver more informed, personalized and relevant advertisements. At the highest level, in my opinion, most people would agree that unobtrusive relevant advertising is fine. It’s when you are targeted with something you have no interest in or something you’ve already bought, where it becomes annoying. Consumers are aware of the exchange between online advertising and free online content. I believe that concerns appear when users don’t understand how their data is being used. Have you ever been online and seen an ad that directly relates to a conversation you’ve just had? That’s a good example of advertising that many find “creepy”! However, what that shows is the incredible advancements of the ad tech algorithms and data science being used to provide relevant content to users. The issues surrounding data privacy are about transparency and control. Addressing these will move us closer to regaining consumer trust.
Recently, there has been a clear move towards a more transparent and consent-based approach to consumer data collection and this can only be viewed as both necessary and positive for consumers, publishers and advertisers. Reshaped by major trends such as new regulation the industry is the focus of legislation such as GDPR and ePrivacy Regulation. Which is hardly surprising with events such as Cambridge Analytica eroding public trust in big tech and companies that were previously thought of as consumer champions are now widely criticised for their data practices.
I think it’s important we remember that all industries evolve and become subject to formal regulation as they grow. Back in 1886 when Karl Benz from Germany created the first true automobile speeding fines did not exist at this time, nor road safety regulations, nor indeed even seat belts! Actually, seat belts weren’t invented until 1959, 32 years after cars were being mass-produced! It took over 8 years (1935) for the industry to implement a compulsory driving test. My point is that all industries evolve and are subject to ongoing waves of regulation. It’s a process that’s necessary in order to better serve the public good and hold everyone subject to the same expectations.
Data Privacy Doesn’t Spell Doom For Ad Tech
Increased consumer expectations for privacy - whether or not they are enshrined into law - do not have to spell doom for data-driven marketing and advertising. In fact, it could help marketers in the long run by fueling a flight to quality with cleaner data and an increased emphasis on where ads run - ultimately creating better experiences for consumers. The adoption of this new regulation is certainly prompting a clean up of the ad tech space with many ‘bottom feeders’ forced to bow out, no longer able to rely on questionable tactics.
Updates to the law are essential for the industry to stay in step with developments in privacy principles and technology, but change needs to be carefully weighed against the financial and business impact. The UK publishing industry currently generates over £10 billion in advertising revenue a year, many publishers using ad models to enable free access to content. Take away their ability to target ads effectively and you risk pulling the rug on the digital publishing industry, potentially leaving a huge hole in the economy.
Consumer data privacy has shot to the very top of our industry’s agenda for good reason. But striking the right balance between protection and freedom is a challenge that’s hard to get right and weighing all the possibilities to ensure successful outcomes for all parties could never be more important.
Written by Chris Blaine, VP EMEA at Sojern
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