As the adtech industry forges ahead into this new year, and confusion and uncertainty reigns over new restrictions on audience tracking, it’s worth reflecting on the big seismic shifts that will happen independent of a shake-up in the ad targeting landscape.
The battle between the Walled Garden platform players and the Open Marketplace adtech providers will be intense. However, while that fight for ad dollars will dominate headlines all year, there will also be major disruptions in the areas of mobile and retail.
Mobile apps will continue their pivot to video, and see the emergence of an avalanche of AI-powered offerings, while a swathe of elements will influence the new retail (media networks) landscape, led by the Amazon juggernaut, and a vast ecosystem of players. In addition, pent-up private investment will spur more mergers and acquisitions.
What actually happened in 2023?
Having just emerged from a rollercoaster 2023, it’s worth it to have a deeper look at exactly what happened last year. This opportunity to reflect is captured perfectly in the benchmark LUMA Partners 2023 report, which noted that global deal value in adtech and martech dropped below $3 trillion in value for the first time since 2013. Still, LUMA, a top banker in the adtech market, predicts a better 2024 despite some of the end of year gloom that pervaded the sector.
“There continues to be an abundance of dry powder in the private markets that investors are actively looking to deploy into high-quality supply. Despite the headwinds in 2023, market participants in the Digital Media & Marketing Technology sectors are cautiously optimistic heading into 2024 due to a confluence of factors: strong digital ad spend growth (+14%), recent GDP growth, stabilizing interest rates, and improving investor sentiment.”
The firm, which tracks adtech and martech deals via its quarterly reports, said that brands will look to be more efficient with their digital ad spend.
“We anticipate continued focus by advertisers on efficacy and optimization (with AI as a catalyst), to be well-positioned for growth opportunities and to keep up with the speed of innovation in CTV, Commerce Media and the broader 1st party data landscape. With the anticipation of the cookie going away in 2024, the evolving data landscape necessitates privacy-compliant 1st party data networks which, in turn, will support the continued growth of commerce media and horizontal strategies that connect demand with supply.”
However, players at the coal-face of programmatic advertising, such as Martin Sorrell’s S4 Capital, warn that ad spending is not going to surge back to the pandemic era, when every brand poured money into digital advertising.
‘While it is early in the year, we are not expecting 2024 to show macro-economic improvement, and client caution on marketing spend will likely persist, although not at last year’s level given interest rates are likely to fall over time,” said S4 Capital CEO Martin Sorrell in a trading update at the end of January.
Mobile will be dominated by TikTok and shift to video content
Mobile app company data.ai produced a stunning forecast report at the end of 2023, which puts Tik Tok’s dominance into clear view. The company predicts microblogging apps will face further decline in 2024, driven by a convergence of competitors and usage shifts. The overall trends show consumers are swapping out text-based social networking apps for photo and video-first platforms.
The mobile app space is now taking serious attention away from traditional news publishers. In its report, data.ai adds there is a general shift of where news content is being absorbed – 43% of US TikTok users report they get their news on the platform, double from three years prior. The firm also predicts that TikTok will become the highest grossing app ever, approaching the $15 billion milestone in 2024 and earning more than $11 million a day. It will surpass Candy Crush Saga to claim the title as the highest grossing app ever, after growing ad spend by 70 percent last year.
Generative AI is set to play a big role in the mobile user experience in 2024, with downloads of apps that contain Generative AI functionality — whether directly Generative AI apps or apps embedding AI into their value proposition — growing by 40% year-over-year. Outside of AI Chatbots and AI Art Generator apps, apps which leverage “AI” experienced a 60% boost in downloads in 2023 — due to new feature additions and app launches. The top subgenres are photo editing, video editing and selfie and beauty editor apps, said data.ai.
TikTok’s rapid ascension to the top of the mobile app rankings doesn’t mean the land grab for share is over, as the average US consumer will install around 18 new apps this year, according to a recent survey by mobile ad provider Moloco. The survey also found that mobile apps will account for nearly 93% of mobile time, and consumers will look beyond the walled gardens for retail, entertainment and utility services. In 2013, desktop/laptop market represented the majority of US programmatic digital display ad spend. But now, more than 10 years later, mobile dominates, representing 71.1% of US programmatic digital display ad spend in 2023, said Moloco.
Retail media - seven challanges for the online retail ad world
Retailmediaworks CEO Colin Lewis has some big ideas to share regarding the evolution of retail and the media platform space this year. His view is that Retail Media is being influenced by a number of forces. The stakes are high: eMarketer predicts US retail media ad spend will more than double between 2023 and 2027, reaching a total of $109.4 billion. Lewis said the seven challenges for the retail sector, and for retail media players include a move to create new retail stores of the future. He notes that “retailers are reshaping business models to address the challenges of supply chain, increased labor costs, fulfillment costs, capital investment in eCommerce, and delivery technologies to drive new sources of revenue and profit.” Those disruptive forces will be supplemented by tech innovation, consumer shifts to healthier eating, the desire to create truly omnichannel experiences, concerns over environmental and sustainability issues, and the impact of AI.
That complexity and fast-changing landscape will have significant implications for the retail media boom, and is further muddied by the huge variety of different combinations used to run retail media advertising campaigns. Lewis references a 2023 report by the Digital Shelf Institute and Stratably which noted there were twenty two different functional combinations, with eCommerce typically owning the agenda. However, many advertisers are creating their own versions of cross-functional teams, resulting in a wholesale change to the way brands structure their retail media divisions.
As Lewis notes: “Digital commerce and retail media are driving a hybridization of brand, trade, shopper and commercial teams. Brands have realized that the most important thing is to maximize the whole company business and not just the channel.”
While the move to a cookieless web will dominate the trade press, mobile and retail will be two fascinating sectors to watch in 2024.
