“Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Justin Choi, founder and CEO at Nativo.
The pace of change in advertising is accelerating, but technology is no longer the sole driver.
Instead, privacy regulations and heated competition among the tech giants are fueling today's major marketplace shifts, creating complicated dynamics throughout the industry.
These challenges will be an opportunity for advertisers and publishers to sharpen up in 2020.
As 5G rolls out and speeds up consumer experiences, it will shine a spotlight on the ad tech latency tax
Many are understandably jazzed about the forthcoming 5G speed boost. But for publishers, the acceleration of certain online experiences will just make the latency associated with today’s ad tech layer more obvious and pronounced. As content gets faster, the slowness of ad tags on the page will become more painfully obvious.
Today’s myriad ad tracking, bidders and verification tags weigh down web pages, leading to slow load times, performance issues and – consequently – reduced monetization and audience retention.
Latency will be the next ad tech tax that the industry will highlight and need to address. For many publishers, latency is already top of mind as a user experience issue. In 2020, latency will be top of mind as a revenue issue too.
More commerce companies will become ad companies
A new breed of “publishers” is emerging to further challenge traditional publishers for ad dollars: commerce companies. These companies boast strong logged-in user bases, healthy first-party data stores, massive scale and – perhaps most importantly – clear relationships with consumers based on a tangible value exchange.
We’re talking about not only traditional commerce players such as Walmart, Target and eBay, all of which are exploring ad revenue as a source of growth, but also less-obvious players such as Starbucks and Uber. In fact, Uber threw its hat into the ad revenue ring just last month with the addition of ads to its Uber Eats experience.
Commerce companies’ delayed entrance into the ad game will prove fortuitous, as they are not dependent on legacy ad tech that won’t hold up in a 5G world. For the most part, they’re working with a clean slate and can employ the lessons of their predecessors for integrating ads into their users’ experiences.
For advertisers, these commerce companies will represent new opportunities to reach engaged consumers in data-rich environments, and those that explore the opportunities early are likely to see outsize results due to the novelty of the ad exposures among consumers. For publishers, the race is on to correct legacy user experience issues that will make them all the less attractive when compared to emerging commerce ad players.
Publishers will offer ‘free’ subscription products: Just give your email
Of course, publishers aren’t blind to the benefits and necessity of strong first-party data. The smartest publishers started employing freemium models three years ago, through which users could access content for the price of a simple login. Through this model, publishers strengthened their first-party data assets to better understand consumer behavior and preferences, which in turn helps them tailor experiences and monetize more effectively.
In 2020, though, the secret is out, and “log in to read this content” is going to become the rule, not the exception. The strategy will pay off for the few niche publications and must-read premiums with a strong enough connection with their audiences to get them to submit their email addresses.
The rest of the publishing industry will mostly contribute to a constant barrage of requests for sign-ups that will make browsing the open web a chore – driving users even further into closed apps and social environments where they can consume content without all the requests. Publishers that want to avoid becoming a part of this pile on should consider doubling down on other privacy regulation-compliant tactics for obtaining first-party data, such as newsletter sign-ups and other direct links to readers.
While the digital landscape of 2020 certainly poses challenges, the beauty of digital advertising is the creativity, passion and boundary-pushing that its practitioners bring to the space on a daily basis. In 2020, there will be opportunities to continue to challenge conventional wisdom and break new ground. But to build a harmonious ecosystem for advertisers and publishers alike, we must also challenge conventional technologies and demand more sustainable options for the future.