How has COVID-19 changed digital advertising for the better?

With improved transparency, control, and collaboration, our industry can build a more efficient, trusted, and balanced environment, writes Smart AdServer’s Pierce Cook-Anderson

Major global upheaval sparked a higher level of introspection in 2020. As an ambitious and self-analytical industry, digital advertising was aware that rapid growth and technological development had allowed inefficiencies to continue unchecked. But because of this dizzying progress, there also wasn’t much time to tackle them.

COVID-19 changed all that. As well as highlighting the importance of consistent advertising to maintain audience connections, the crisis put a brighter spotlight on long-standing issues that can diminish the value for every member of the digital media ecosystem: consumers, brand advertisers, agencies, and publishers alike.

Amid renewed motivation to start building a better ‘new normal’ centred on closer, more direct relationships – as well as a higher consideration for users' privacy – we’ve seen a huge uptick in action. With too many changes to cover in one go, here are just two key areas that have experienced notable progress.

Illuminating the supply-chain

Recognition of the difficulties created by the complexity of ad tech isn’t new and nor is the desire to address this problem. Pre-pandemic, efforts to drive market rationalisation were already gaining incremental headway, especially uptake of supply-path optimisation (SPO). But with the outbreak of COVID-19 came significant acceleration. 

As financial turbulence caused advertisers to tighten their belts, publisher revenue suffered. According to the Association for Online Publishing (AOP), Q1 2020 saw a 17.1% decline in year-over-year display income; driving losses of £41.2 million in the UK. Combined with the urge to harness as much short-term yield as possible before third-party cookies finally fade for good, it wasn’t surprising that many publishers sought to increase their monetisation partners.

In doing so, they inadvertently fuelled existing issues. Expanding selling scope multiplied pathways to each ad opportunity and led to duplication in transactions. In addition to making digital ad trading infrastructure even more intricate, this severely impacted market efficiency. On the positive side, however, this increased revenue for publishers and supply-side platforms (SSPs) and also prompted sharper focus on the need to simplify ad tech and reduce transparency challenges; particularly following wider recognition of the “unknown delta”.  

Not only is there a louder call for clarity, but also increased impetus to drive change. With agencies placing more importance on finding the most streamlined route to high-quality inventory, SPO adoption is moving faster. Better collaboration between tech players on the buy and sell-side is offering more straightforward access to publishers for brands and advertisers, while DSPs are looking to streamline their SSP network by removing resellers and those that don’t bring real value or direct connections. 

Alongside IAB Europe’s comprehensive new guide on mastering SPO, it seems the return of direct relationships in programmatic, and increasing measures to reduce opacity, could be on track to send digital advertising in a clearer direction that will encourage players to act in a more trusted and transparent way.

Escalating progress on consent 

Consumers are becoming more aware of their online privacy and are determined to take control of their data and how it is used. While this is yet another well-established trend, 2020 delivered sizeable evolution in both how digital advertising can operate amid the ongoing privacy evolution and the quest to find a viable solution. For example, 2020 saw initiatives like IAB Europe’s Transparency & Consent Framework (TCF), as well as increasing management of non-consented traffic.

As audience concern around data use and demand for better protection has grown, industry players have realised that sustainable success is increasingly dependent on how they perform in the “consent economy”. Among buyers, this has translated into a rising move away from open auctions and towards private marketplaces – where they have greater ability to tap first-party data from consenting users, visibility into available inventory and ad transactions, and jurisdiction over who they trade with. On the publisher side, private marketplaces offer a means by which they can manage and control their relationships – maintaining knowledge of their audience while building semantic contextual offers that will ultimately create high-value opportunities for brands.

In fact, programmatic direct is set to account for 54% of all UK real-time bidding spend this year. Now more than ever, buyers appreciate that privacy-conscious handling of consumer data is essential to maintain trust. As a result, they want to ensure that individual rights are consistently safeguarded by leveraging mechanisms that allow them to operate with autonomy and transparency. From the seller perspective, this means the biggest rewards are going to those who can offer robust assurance of compliant data management and facilitate secure deals through direct channels.  

2020 demonstrated that from here on, we can expect stronger emphasis on close relationships that bolster confidence in overall advertising — and programmatic — by allowing all sides to work together openly, efficiently, and with privacy top-of-mind.

It goes without saying that 2020 was filled with considerable hardship across ad land, but the digital advertising industry can be proud of its achievements through such uncertainty. Disruption has powered resolve to acknowledge and address industry issues and, although there is some way to go before all challenges are removed, it is clear the industry is still viable and moving in the right direction. Barriers may still inhibit growth in many areas – including connected TV – but through the gains achieved in improved transparency, control, and collaboration, the industry can build a more efficient, trusted, and balanced environment that will make for a highly productive 2021.