9 Trends That Will Shape Programmatic Advertising in 2021

First a brief recap of 2020, so far...

The year 2020 has been tough for marketers. Advertising budgets were cut across industries and channels.

Traditional media like TV & Out-of-Home media were hit the most. While Display & Search advertising has also declined compared to the same period last year, they were the fastest to recover since people across demographics & geographies are spending more time online.

A report from Ofcom confirms the same. Another study conducted in the UK found that internet users in the age-group of 18 - 24 years, on average, are spending over five hours online, while internet usage of people in all age groups has increased by at least 30 minutes compared to Dec '19.

Source: IAB Media Buyers Survey

Even among the digital media, Programmatic Advertising was still growing, although at a slower rate than previous years, and is expected to grow faster in 2021.

What made Programmatic Advertising thrive during this tough year?

The rise in new ad formats and mediums is one of the major reasons. Now that more people are online for more duration, penetration of OTT platforms and ConnectedTV has accelerated. Even the traditional mediums like OOH platforms are now displaying digital ads powered by programmatic advertising.

As per eMarketer - Display & Video ads spending on ConnectedTV grew by 36.3% each. Though the growth was slower than in the previous years, it was significantly high compared to other advertising mediums. Similarly, digital OOH ad spending grew by 71.9% this year.

To summarize 2020 for Programmatic Advertising, it would be safe to say that when marketing & advertising functions across geographies & industries were seeing budget cuts, digital, and more specifically, programmatic advertising & AdTech were growing.

The growth is set to continue in the coming years, but there are some changes, challenges, and innovations that will shape programmatic advertising in the future.

Let us jump into the top 9 trends for programmatic advertising for 2021.

1. User Privacy will be of utmost importance.

Internet users worldwide are becoming more sensitive about how websites, apps, and third parties track and use their personal information. They are not necessarily against using such private information but demand to be aware of what is being tracked and how the brands use it. After CCPA, states like New York, Maryland, Massachusetts, Hawaii, and North Dakota are working on similar policies, which eventually will be transformed into Laws in the US. Similarly, GDPR in the EU is safeguarding its internet users against illegitimate use of their private information. It provides a strong tool to provide consent to advertisers on when and how much information they can use.

Apple's latest iOS updates will go down as the watershed moment in history for individual data protection. The update visually notifies users when any of the apps access the device's microphone, camera, clipboard, or other sensitive data. In addition to this, users can choose what to share with the apps instead of giving blanket access to their phones.

This is not entirely bad news for advertisers. Though this means that they would be getting less data on their audiences but simultaneously, the data generated would be of the highest quality and would significantly boost the relevancy of ads and thus improve the business metrics.

2. Third-Party Cookies will be gone

This development is another important step towards protecting user privacy. Mozilla and Safari got rid of the Third-Party cookies in 2013, and Google Chrome will follow suit soon. Google, in 2019, announced that they would be blocking the Third-Party cookies by 2022.

So 2021 will be the defining year for Advertisers (Brands and Agencies), Publishers, and Technology Providers (AdTech companies including Demand-Side Platforms, Supply-Side Platforms, Ad Exchanges, Ad Networks, among others) to formulate a long term strategy to fill in the gaps left by these cookies. The industry will go through a major shift post the Third-Party Cookies.

3. First-Party Customer Data coming into the fore

Once the Third-Party Cookies are gone, First-Party data will become crucial.

Though most brands claim to have large data pools coming directly from their customers, not everyone can use it to its full potential.

First-Party Data is indispensable when it comes to engaging with customers on platforms owned by a brand. However, until and unless it runs in sync with the Third-Party Data, the brand will be unable to close the engagement loop with customers & prospects across the web when they employ programmatic advertising.

As per a study by Merkle, only 41% of marketers use both First and Third-Party Data to drive personalization efforts. This makes a Data Management Platform a vital part of a marketer's technology suit.

4. OTT Platforms will grow further

Over the Top content platforms will be seeing massive subscriber growth in key markets. Asia-Pacific (30%), Middle-Eeast & Africa (31%), and Latin America (27.5%) will be the key drivers of its growth.

Why is OTT advertising so exciting for marketers? Here's why -

According to CTVMedia, advertising on OTT platforms (and CTV in general) have 3 fundamental benefits -

  • A Captive Audience with an average completion rate of 98%
  • Brand Safety when your ads are shown on premium content and top tier networks
  • 100% Viewability, as 100% of the pixels are in-view

With these clear benefits, programmatic is set to rule OTT and ConnectedTV Advertising in 2021.

5. OOH Media will be more digital

Digital Out Of Home is defined as any out-of-home advertising that is dynamically and digitally displayed. It includes digital billboards, digital street furniture, digital transit, and digital place-based display. Programmatic digital OOH ad spending grew by 71.9% this year and will grow at a whopping 103% in 2021. As per eMarketer, it is expected to reach $533.8 million by 2022 in the US alone.

With so much revenue potential, programmatic advertising platforms have to include DOOH in their solutions portfolio. Also, with key economies around the opening up after the lock-downs due to the pandemic, it's only fair for marketers and advertisers to start outdoor advertising, and given the control and transparency that DOOH providers, it will be their first choice in 2021

6. More Mobile Audience

Mobile already has a 68% share of digital ad spending. Now that more people are online than ever, the world moves even further towards smartphones and tablets.

As per Statista, the world will add another 300M smartphone users in 2021. So programmatic ads and campaigns suited for mobile audiences will remain the top priority for AdTech companies and advertisers.

7. AI in Programmatic

With limitations in tracking users through Third-Party Cookies and increasing user data privacy concerns, artificial intelligence in programmatic advertising will play a more active role in designing winning campaigns. AI will help advertisers make more sense of the data at hand and increase overall ad effectiveness due to its ability to recognize buyers' patterns accurately.

According to a 2018 survey by Deloitte, 82% of the early adopters of AI reported a positive investment return for their AI initiative. This shows that AI programmatic advertising will grow stronger over the next year due to the advertiser's increase in faith in it.

8. 5G to enhance programmatic capabilities

5G will revolutionize the mobile experience for the users. It is expected to be 10 times faster than the existing 4G service.

This will enable faster and more accurate data sharing and ad delivery through more varied smart, IoT, and wearable devices. This fast response can only be made possible by Programmatic advertising.

Programmatic advertisers need to be at their best to deliver more interactive and rich ads to mobile audiences.

9. Wearable Tech to boost personalization

Better data connectivity (5G) and more smart wearable devices will boost the quantity and quality of data shared by the users. Higher quality of data will ensure better and more relevant ads for the user, and with programmatic AdTech's intrinsic ability to track, target, analyze, and optimize campaigns at scale and speed, it will be driving the ad ecosystem in the wearable devices space.

For more details on other aspects of AdTech & Programmatic, do read through our Official Blog.

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