In January Google announced it would remove third-party cookies from its Chrome browser by 2022, fundamentally changing targeted advertising across the open web. In March, the novel coronavirus pandemic hit the U.S., causing marketers to halt spend and forcing scores of companies to lay off staff. Over the summer, the California Consumer Privacy Act became enforceable and Apple said it would put limitations around its IDFA; both moves put severe limitations on consumer data available to marketers.
With budgets shifting and privacy concerns mounting, the ad industry is heading into 2021 with little certainty.
To get a sense of how marketers are preparing for next year, the IAB questioned more than 250 ad buyers from brands, agencies and marketing firms for its 2021 Marketplace Outlook Survey .
There’s some clarity around how marketers will spend their media budgets next year, but not much.
Marketers began demanding flexible terms from media owners since the onset of the pandemic. For example, the Association of National Advertisers called for a “transformative shift” to the television upfront, the decades-old process of buying TV inventory months in advance.
Ad buyers have also flocked to programmatic channels where they can more easily start-and-stop campaigns. Ad tech firms suffered through layoffs at the beginning of lockdowns when marketers first stopped spending, but now programmatic advertising is back to normal levels as marketers can quickly turn their campaigns back on.
Overall, 54% of budgets next year will be executed programmatically, according to those surveyed.
A lot of digital dollars are flowing into connected TV as marketers try to follow consumers ditching cable in favor of streaming.
Buyers surveyed said 71% of their total budgets will be in digital media. Digital video, which includes CTV, will account for 13% of overall digital media budgets.
Linear TV continues to be the loser, a trend that’s been exacerbated by the pandemic. Given the financial impact of the virus, traditional linear pay TV subscribers are expected to decline by 27 million over the next four years, down to less than half of all occupied U.S. households, according to MoffettNathanson.
As a result, a majority of buyers will move dollars out of linear TV and into ad-supported streaming next year. On average, those buyers are shifting 21% of their linear TV budgets into CTV, according to the survey.
Foundational pieces to the mechanics of targeted advertising, third-party cookies and Apple’s IDFA, have a short shelf-life.
Plus, CCPA is now enforceable (though California recently passed a new privacy bill that’s more similar to Europe’s GDPR). With a new president set to enter office, a national privacy law may follow, too.
Heading into next year, ad buyers are still trying to understand what these data privacy changes mean for their business.
Recent consolidation in the ad-tech industry has centered around the future of privacy and TV. Comcast’s FreeWheel bought Beeswax to beef-up its demand-facing offerings in TV, while TransUnion bought Tru Optik for more than $100 million to bring identity to CTV.