The past few years have been a period of consolidation for the ad tech world. We’ve seen some of the biggest independent companies being bought up by media, tech and telco giants, alongside others who have chosen to merge in order to better compete with the likes of Google and Facebook. Fewer ad tech companies have been raising significant sums of money as VC funding has turned its attention to greenfield opportunities in areas like fintech, edtech and retail tech.
But there are still areas within ad tech where there is plenty of room for growth and innovation. Some of these stem from new problems which need to be solved, others from new opportunities which are emerging.
The connected TV land grab is far from over and looks set to continue apace for the next five to ten years. Connected TV advertising continues to see surging growth and a number of demand-side platforms (DSPs) and supply-side platforms (SSPs) list CTV as one of their fastest growing channels. The Trade Desk’s CEO Jeff Green said last year that CTV was his company’s “most important strategic focus” going into 2020. And Magnite, the new SSP formed by the merger of Telaria and Rubicon Project, says CTV is its fastest growth area.
But there are still many challenges to be solved within CTV, all of which throw up opportunities for the companies who can solve them.
Matt Prohaska, principal and CEO of Prohaska Consulting, said that measurement and attribution for addressable TV campaigns both need to be improved. In the TV attribution space in particular, Prohaska said he’s seeing smaller companies emerge which are filling holes left where other third-party measurement and attribution businesses have been bought up by publishers or tech companies.
In a similar vein, Brian Wieser, global president of business intelligence at GroupM, said he sees opportunities for companies which help marketers manage reach and frequency across platforms, and on television in particular.
Wieser added that solutions which allow cost-effective reach extension in the TV world would add significant value. “The reality is that television will not be fully addressable any time soon. That’s not just the technology, it’s the business model and the interests of the incumbents which limits the pace of change” said Wieser. “So that really complicated matters if you’re trying to solve for things like reach and frequency.”
Managing reach and frequency will also become more difficult in web and mobile environments, as browsers and device manufacturers restrict third-party cookies and mobile advertising identifiers.
“On the one hand, you want to know whether or not a consumer receives a message, and whether they’re an existing customer or not, but then you’ve got to do that at scale in a way which doesn’t offend privacy,” said Wieser. “So figuring out what those products are that balance these interests on both a short and long term basis is one of the bigger challenges.”
Prohaska said that there are several specific areas underneath the umbrella of identity where there is room for innovation. These include privacy-focussed technologies, consent management platforms, and solutions which offer value directly back to consumers in return for accepting targeted advertising.
Prohaska added that a lot of the work his company is doing at the moment is helping publishers and brands get the most out of their first-party data, and that there are opportunities for tech companies in this space too.
“I think there’s still room for new companies in the identity space, especially those that can help with cross-screen identity”, said Prohaska.
Wayne Blodwell, founder and CEO of The Programmatic Advisory, said that he believes CTV and identity are “the two biggest areas by quite some way” in terms of room for growth and innovation.
But he said that outside of these two, contextual targeting tops his list of areas with growth potential. Restrictions on identifiers used in advertising will also open opportunities in contextual targeting as marketers find it harder to target audiences.
As VAN has previously reported, even contextual targeting is not necessarily shielded from heightened privacy requirements being implemented by browsers and regulators. Some forms of contextual targeting link sensitive information about the content audiences watch with a personal identifier, posing a privacy risk.
But solutions suited for a privacy-first world, which strip out personal information while still enabling effective targeting, could be well placed for growth.
A number of established companies have bet on contextual targeting over the past few years. Oracle bought contextual specialist Grapeshot back in 2018, Comscore released a new contextual targeting solution in partnership with IRIS.TV back in March, and just yesterday Verizon Media added a contextual targeting solution to its demand-side platform.
And with the COVID-19 pandemic and Black Lives Matters protests highlighting the nuances in brand safety management and keyword blocking, solutions which use contextual intelligence to manage brand safety, while avoiding defunding important news stories, could add value to the industry.
In-game advertising is well established in the mobile world, but now we’re seeing opportunities emerge within AAA PC and console gaming too.
Some companies, like Bidstack, have begun trialling ads in in-game environments, in such a way that they fit the theme and feel of the world. Others, most notably Simulmedia, are bringing TV-style ads into AAA games. Simulmedia has begun testing opt-in video ads within premium games, which give players rewards in return for watching the ads.
Games like Fortnite and Call of Duty: Warzone have proven the value of ‘freemium’ models for AAA titles (where the base game is free, but players pay for additional content). So far these games have relied on microtransactions for monetisation, but in-game ads could provide an alternative avenue for players unwilling to pay for content (as they already do in the mobile world.
There may be opportunities emerging in AR/VR gaming too. A patent filed by Sony earlier this year suggests the company will enable ads within its PlayStation VR technology, and third-party solutions could emerge to capitalise on this opportunity.
The travel industry has been hit hard by the pandemic, but the opportunity for more addressable in-transit advertising remains. If anything, an additional revenue stream from advertising will be more attractive than ever.
Global consultancy KPMG published a report back in 2017 saying that digital ad revenues could have a “transformative effect on transport operators, by providing a significant source of additional revenue, creating tools and platforms to engage the customer, and offering a rich data source to inform and improve operations.”
But despite the opportunity, few companies have emerged to cater to the industry. Inadvia has developed tools for programmatic advertising within ‘bring your own device’ services on planes, trains and buses.
But some of the other opportunities pointed out by KMPG, around uses for static screens and consumer data within in-transit advertising, have yet to be fully realised.