Banner ads, more commonly known as display, have evolved mightily since they were first used. Essentially, the advent of programmatic around the 2010s significantly changed the way advertisers and agencies bought, managed, optimized and measured placements in this medium. On the publishers’ side, the impact has been seen in their business models and the ways they monetize their sites. For users, it’s their digital experience that has been the most affected. This medium, considered by many to be the unloved stepchild of Internet advertising, has left no one indifferent, and its current situation begs the question of what the future will hold. Here is a recap of the current state of programmatic buying and how it might evolve in the digital ecosystem.
After years of booming growth, we’re finally starting to see investments in programmatic buying reach a plateau. According to eMarketer, more than 86% of digital ad spending is done via programmatic buying. From this we can deduce that we’ve developed a powerful dependence on this method of buying, to the point that no one even questions it anymore. We’ve been in a real honeymoon phase, where programmatic has been considered a fast, effective, miracle solution to reach high quality inexpensive audiences. In contrast, our dependency on programmatic buying has had the considerable negative effect of weakening, in a substantial way, the Canadian advertising ecosystem. Essentially, the dramatic decline in CPMs (cost per thousand impressions) has had such an impact on publishers’ revenues that they’ve had no choice but to increase the ad inventory available on each page, to the detriment of the user experience. And as for users, there is a rising tide of insistence that stricter standards be imposed on the use of their personal data. That aside, the most recent changes in the industry, particularly in terms of the management of user data, are sure to force major changes to the programmatic industry, and the revolution is right around the corner.
Apple got the ball rolling in fall 2018 with the implementation of Intelligent Tracking Prevention (ITP), a setting change that put the brakes on the use of third-party cookies in Safari. A short time later, Mozilla Firefox moved in the same direction with the addition of Enhanced Tracking Protection. One year later, the functionality became activated by default. More recently, Google announced the end of third-party cookies in Chrome as of 2022. Considering these three browsers hold a more than 85% market share, it’s safe to say that in a sense, the death of third-party cookies is imminent.
However, Google won’t abandon the advertising game like Apple and Firefox. That probably goes without saying, since Google’s main revenue source is advertising. The company is hoping to use its API-driven Privacy Sandbox to help compensate for the loss of third-party cookies. The goal is to use APIs to measure conversions and potentially to supply audiences to programmatic ad suppliers through the tool. It will be very interesting to see the various ways this huge change will impact the industry. How will publishers’ ad revenue be impacted? How will this affect the quality of audiences available to advertisers? Will there even still be audiences available? Will attribution be affected? Will view-throughs survive? How will Google benefit from this change once it has an even greater stranglehold on the data generated through its Chrome browser? In short, there are still many unanswered questions and it will be very interesting to see this situation unfold up close.
All these recent changes have gotten us thinking about our approach to display buying. For years now, many of us have dropped contextual media buying (targeting environments/sites) in favour of buying third-party audiences, which was considered to be a faster, more efficient solution. However, we forgot a very important factor in this type of media purchase: it’s very difficult to maintain control over the quality of the placement environment. On the one hand, placement exclusion lists don’t guarantee total control, and on the other, combining inclusion lists with audiences has the inevitable impact of greatly reducing potential reach. In contrast, contextual buying can guarantee good placements that maximize the visibility and reach of a display initiative.
You can draw a parallel between our approach to display buying and nutrition. Fast food and microwave dinners are fast and efficient, but would you consider a diet made up entirely of these foods to be healthy and well-balanced? The answer is obvious. It’s the variety in our diet that makes it healthy and well-balanced, and we should be taking the same approach to planning and executing display purchases.
In conclusion, we are witnessing major changes that are affecting display advertising. For display, programmatic buying seems to have reached its limits, and users’ sensitivity to the use of personal data has forced the major players to implement mechanisms that will completely shake up the way advertising audiences are bought and used. It will be up to the digital experts to find alternatives so that advertisers can still reach their business goals. After years of smooth sailing, the wake-up call has arrived and the honeymoon is over!
It’s now time to return to a healthy, balanced regimen, to introduce more contextual buying into our digital media campaigns and to pay attention to the changes that will be imposed on us by the disappearance of third-party cookies. We are spoiled in terms of the initiatives we run in Quebec and Canada, because we have a strong media ecosystem here. This is even more true for our provincial campaigns. In addition, Quebec media outlets have long been saying loud and clear that they need advertisers, that without them, they can’t survive in the face of the giants of the web. Now it’s up to us to extend a hand to them.