AdTech in 2019: 3 Trends Backed by Data, Not Crystal Balls
Every year-end brings a flood of AdTech prediction pieces. Rather than adding another opinion-driven forecast to that pile, it's worth looking at what the data and recent events actually signal about where the industry is heading. Three themes in particular stand out as substantive storylines going into 2019 — not because someone predicted them, but because the groundwork was already laid in 2018.
1. GDPR Investigations
The EU's General Data-Protection Regulation (GDPR) was the dominant compliance story of 2018, and by most indications, enforcement activity is only going to intensify. The regulation is still young, and the events of the past year suggest that data-protection authorities are moving from awareness into action.
The investigation by France's data-protection authority, CNIL, into mobile AdTech vendor Vectaury was one of the more pointed examples of regulators targeting practices that sit at the core of the programmatic ecosystem. CNIL wasn't an outlier, either.
Both the Dutch Data-Protection Authority (Dutch DPA) and the UK's Information Commissioner's Office (ICO) fined Uber €600,000 and €433,000 respectively for failing to disclose a 2016 data breach within the required 72-hour window. The breach had occurred in 2016 but wasn't made public until more than a year later — exactly the kind of conduct GDPR was designed to penalize.
On the civil side, European consumer-rights organization Noyb filed lawsuits against Google and Facebook for non-compliant GDPR practices. Privacy International separately filed complaints against Criteo, Tapad, Quantcast, Acxiom, Oracle, Equifax, and Experian, specifically targeting their consumer-profiling operations.
The bottom line: These cases collectively represent the early wave. A more prominent AdTech company facing serious regulatory consequences in 2019 seems less like a prediction and more like an inevitability.
2. Advanced TV
The shift away from traditional broadcast television has been building for years, but the advertising revenue data coming out of streaming platforms in 2018 made it hard to dismiss as a niche trend.
Roku's ad business surpassed its hardware revenue in Q2 2018 — a meaningful milestone that reflects where the platform's value is actually accruing. Advertising revenue grew 96% year-over-year in that quarter, while hardware (player) revenue grew just 24% over the same period.
Hulu crossed $1 billion in ad revenue back in 2017, a figure that will only climb as its subscriber base expands. Meanwhile, Netflix — which as of 2018 offered only an ad-free paid subscription — was reportedly weighing whether to introduce advertising as a way to offset subscriber growth plateaus.
Survey data reinforces the momentum. A 2018 Advertiser Perceptions survey commissioned by Videology found that 79% of advertisers expected to use Advanced TV — broadly defined as all non-traditional TV formats, including smart TVs and over-the-top (OTT) devices — within the next 12 months.
The catch, as with mobile before it, is that ad dollar growth tends to attract fraud. Advertisers entering the advanced TV space will find both real opportunity and familiar headaches around ad fraud and brand safety.
The bottom line: As consumers continue to abandon traditional TV in favour of ad-supported streaming services, the advanced TV advertising market will keep growing — along with the complexity of operating in it.
3. Ad Fraud
Ad fraud is nothing new to digital advertising, but 2018 marked a genuine turning point: for the first time, the FBI arrested eight people in connection with a large-scale ad-fraud operation. That kind of law-enforcement involvement is unprecedented in the history of online advertising and signals that the scale and organization of these schemes has crossed a threshold that regulators can no longer ignore.
Ad fraud takes many forms — hidden ads, domain spoofing, and more elaborate coordinated operations of the kind that attracted FBI attention. Alongside the law-enforcement development, 2018 also saw continued growth in ads.txt adoption.
Ads.txt is an IAB-led initiative designed to eliminate domain spoofing and illegitimate inventory arbitrage by allowing publishers to publicly declare which companies are authorized to sell their inventory.
Research from Pixalate showed a 5.4x increase in ads.txt adoption across 2018, suggesting the upward trend has real momentum heading into 2019.
The bottom line: Eliminating ad fraud has been a stated industry priority for years with limited measurable progress. The FBI's involvement and the tangible traction of ads.txt together represent the most credible shift in that direction yet. The challenge ahead is that fraud tends to follow the money — and as advanced TV ad budgets grow, OTT will become an increasingly attractive target.
Other Areas to Watch in 2019
Beyond those three core themes, several other topics are likely to generate significant industry conversation:
Digital out-of-home (DOOH): Like advanced TV, DOOH is becoming an increasingly attractive channel for brands looking to extend reach beyond traditional display environments. Its programmatic integration continues to mature.
Direct-to-consumer (DTC) brands: The DTC movement — brands building direct relationships with customers and bypassing traditional retail distribution — was in full swing heading into 2019, with implications for how advertising budgets are allocated and measured.
Voice search: 2019 won't be the year voice search fully arrives as an advertising medium, but the groundwork for what that ecosystem eventually looks like is being laid now. More clarity on formats and attribution models should emerge over the coming years.