Perspective - The year of the fast and furious in adtech

It was another year of fast and furious activity across adtech in 2023. 

We saw big tech platforms going bust (MediaMath) which had a ripple effect on the adtech ecosystem (publishers, SSPs, data providers as well as brands). 

Google announced the potential deprecation of other IDs such as IP addresses, which promotes further use cases for a walled garden-only solution.

Global advertisers, especially technology brands, reduced spending amid global economic uncertainty. Retail media and Connected TV put their hands up as the fastest growing media channels. 

The advent of the data clean room in digital advertising was marked by an increase in advertisers testing the waters, partnerships and integration being formed, and possibly more confusion given the complexity of the market. Expect to see big moves in this space in the next year as the pretenders and the contenders fizzle out or grow exponentially. 

Artificial intelligence became table stakes for every adtech offering. Machine learning has taken its rightful place at the center of all data related activity. Brands realise they can collect and analyse consumer behaviour data to uncover valuable patterns and trends that will give you the competitive edge. They know they can stay ahead of customer demand with AI-powered inventory forecasting. 

It was a year of preparation for the move from a deterministic web only to a hybrid approach amplified by probabilistic, a realisation that AI is more than a fad, and will up-end content creation, ad targeting, and campaign execution, and the ongoing need to prove ROAS (return on adspend) performance, often in extremely competitive markets, or shaky economic circumstances.

These are some of the key developments we see happening in 2024: 

AI Won’t Take Over Advertising, but the Race Gun Has Been Fired 

Brands and agencies remain cautious when it comes to handing over large portions of their operations to artificial intelligence. But that doesn’t mean they aren’t looking to master the tech and seek future advantages (and efficiencies). Therefore, companies — particularly agencies — will scramble in 2024 to upskill talent with help from the right partners.

Meanwhile, media buying agencies will focus on training specific AI models to get ahead, as more ad buying is likely to be executed and optimized by machines over time. We’ll continue to see the rise of AI consultants as a competitor to agencies, which will likely drive agencies to expand their services in this realm to better compete, and serve clients. 

Clean Room Shakeout

This has been a much hyped sector over the past few years. As important as this technology is, there are likely too many new entrants in this space, which may lend itself to consolidation around a small pack of leaders. This is still a highly nascent technology, and the need for varied use case testing remains high.

Clean rooms owned by specific tech platforms, such as Google’s or AWS Cleanroom, will gain more traction. And don’t count out Snowflake — given its huge resources and investments in this industry (not to mention the fact that it's built on AWS) — it could be  the last independent company standing.

Google Holds the Industry Hostage With Another Cookie Delay — Which Proves Disastrous

While Google has promised to take things slowly with its cookie shutdown early next year, signs indicate another delay may be in the cards. Expect brands and publishers to once again drag their feet on preparing for a cookieless future. Here’s where things get potentially ugly. At some point during the year, Google abruptly decides to make good on its plan by shutting down cookies overnight to meet the current Q4 deadline. 

The ripple effects would be vast and painful, as we’d likely see significant underdelivery during the holiday spending season, leaving marketers with missed goals, and consumers dissatisfied with less personalised experiences and product recommendations.

Big Tech Meets its Match 

The fallout from Google’s antitrust battles and Meta’s clashes with the EU may make us hopeful that big tech’s grip on digital advertising will be loosened, but a weakened duopoly just means other giants jostling for the top spot. Google and Meta’s reduced market share will be eaten up by Amazon and The Trade Desk. As for social media, all bets are off when TikTok finally rolls out a full-fledged advertising suite.

Major Moves in Cookie Deprecation and IDs 

Though regulation might throw a spanner in the works, it’s likely 2024 will usher in the long-awaited cookiepocolypse. Despite having years to prepare, the removal of third-party cookies from Chrome will send the industry — advertisers in particular — into a frenzy. Expect to see brands and agencies frontloading their budgets as they rush to get results before the deprecation date, which is still tentatively set for the second half of the year.

Fortunately for the advertisers giving up cookies, the rest of the industry has already moved on to a robust set of replacements. Many of the platform giants have adopted email-based identifiers, and expect to see a continued push for interoperability across IDs, perhaps facilitated by an industry-recognised ID alliance. 

This will also see advertisers pull back from open programmatic in favor of direct deals and curated marketplaces, tipping the balance of power from DSPs to SSPs. 

Zuzana Urbanova is Head of Data Solutions, APAC at Lotame