If 2015 was the year viewability, ad fraud and ad blocking took center stage, 2016 will be the year the industry addresses these concerns while introducing new technologies that improve marketers’ ability to connect with consumers.
Following are six of top trends we see for the coming year:
Better creative, fewer ads
Despite our collective creative prowess, the ad industry produces a lot of bad ads. Ad blocker-armed consumers provided a forceful reminder of this in 2015, erasing $22 billion in publisher revenues according to a heavily cited report created by PageFair in partnership with Adobe.
In 2016, progressive advertisers, agencies and publishers will take this feedback to heart with a focus on producing more relevant and less-intrusive ads.
From a creative standpoint, agencies will begin to adopt a more fluid notion of what exactly they’re creating. Rather than developing static pieces, agencies will leverage new technologies to build creative frameworks that let ads self-assemble based on a multitude of intrinsic and real-time data inputs. These can be location, demographics, psychographics, behavior or numerous other factors. By automating much of the grunt work involved in creating millions of different ads to match millions of different targeting scenarios, creatives will gain more time to leverage their expertise.
After all, there’s no shortage of formats and executions that could benefit from new thinking, since a lot of what we have isn’t working. This should be the year creative agencies rise to the challenge of using technology in the service of better, more engaging brand storytelling.
On the media side of the equation, progressive publishers will focus on user experience with less-intrusive formats. Fewer, more relevant, high-quality ads will drive engagement with the increased value flowing back to publishers. This will create not just a better experience for viewers but for advertisers as well.
Finally, programmatic native will continue to gain adoption as a more natural and less-intrusive format.
The fight for premium
Pretty much everyone in the ad industry has come to the realization that despite the massive breadth of the Internet, there remains a remarkably finite amount of high-quality inventory on media properties consumers actually view.
With advertisers increasingly gravitating to premium inventory, two problems arise. First, greater demand for this finite resource will present challenges in gaining reliable scale across the best inventory. The second issue is the nature of what exactly constitutes "premium." Right now, there’s no standardized definition. Pair that with a greater demand for this top-quality inventory and the logical result is that sellers have every incentive to present any type of inventory they happen to have as premium.
The result will be twofold. First, there will be an industry-wide scramble among the various players to secure a reliable, ongoing portfolio of premium inventory. Second, we can expect discussion on finding a standard way to grade different sources of inventory.
A smarter mousetrap
Expect advances in artificial intelligence and machine learning, particularly in leveraging external events to automatically trigger digital campaigns. For instance, a movie star wearing a particular brand’s T-shirt in public could trigger an ad campaign from a retailer selling the item. Or a volatile day on the stock market could trigger a campaign for conservative investment products.
Campaigns could also be inversely triggered. For example, a restaurant campaign could be automatically dialed back after news of an E. coli outbreak at a different chain. Analysis of each triggered campaign will enable the AI to continually improve its ability to pair external events with complementary campaigns.
Location, location, location
Location’s importance as an advertising tool will continue to grow. Rather than simply looking at location, advertisers will increasingly cross reference location with audience profile data to create more relevant and useful ads.
For instance, rather than just sending out coupons to nearby shoppers, department stores will pair proximity data with audience data to deliver different ads to different audiences. Younger men might see ads for graphic tees, while older men might see ads for suits and ties. This is likely to be broken out in much more sophisticated ways based on hundreds of different audience attributes beyond simply age and gender. By tying sales and foot traffic back to these ads, advertisers will be able to refine their campaigns to the highest-performing tactics.
Advertisers will also use location as an important contextual proxy, tailoring their messages based on where audiences physically are and what devices they are using.
Addressable TV makes significant strides
Casual observers might be forgiven for thinking that addressable TV is already a robust reality based on the fact that the industry has been talking about it for the past several years. In fact, inventory is sparse, measurement is a work in progress, and targeting options are limited. According to Modi Media, the market for addressable TV is currently in the hundreds of millions of dollars, a fraction of the total TV market.
One of the major concerns that has held up more widespread adoption of addressable TV is broadcaster and cable/satellite worry that they will lose control of their rates if they allow advertisers to buy in this new manner. In 2016, we should see several advances that address these issues, and in turn, lead content owners and distributors to make more inventory available for non-linear buying.
Better targeting solutions that combine set-top box data with real-time audience profile data will help advertisers more accurately identify the most profitable prospects (thus boosting rates for addressable segments). Media companies will also benefit from new software and data-mining technology that allows them to better identify where it’s most financially advantageous to break flat rate ad blocks into multiple addressable segments.
Digital advertising is increasingly a winner-take-all environment with a handful of the biggest players monopolizing the most valuable resources and revenues. Google and Facebook, which collectively control more than half of the entire digital ad market, are exhibits one and two for how size drives success.
In the quest for scale, industry consolidation will continue to accelerate. Mid-sized companies will merge to maintain their viability. Larger players will combine inventory and technology to better compete with Google and Facebook, creating a handful of key platforms that are independent of DSPs.
Matt Sweeney is CEO of Xaxis North America.