Why the ad tech industry is losing relevance in the digital age
- by admin
The internet is not going away, it’s just becoming more and more centralized, making it harder for content creators and publishers to thrive in the new world.
This is particularly true for digital advertising, which is a critical component of most online platforms.
A recent report from the Digital Advertising Alliance (DAA), an industry group, found that digital ad revenue has plummeted in the past two years and is now less than half what it was in 2011.
The decline has affected the entire ad ecosystem, with a growing number of ad networks shutting down and many publishers losing their advertising revenue.
Digital ad revenues are expected to grow by 6% to $3.9 billion in 2020.
While that’s still small, it marks a substantial decline from the $3 billion in digital advertising revenue that ad networks collected in 2015, according to the DAA.
That same report found that more than half of the industry’s revenue comes from digital ad-driven advertising.
As a result, advertisers are increasingly turning to ad tech to fill the gap.
The most prominent digital ad technology companies are Digital Ad Services (DAS) and Adwords, which are backed by Google and Facebook, respectively.
The companies claim that they are the most efficient digital advertising solutions available today.
Digital advertising revenue fell by $3B in 2020, according the DIA.
But there are several reasons why the ad industry is going offline, not least of which is the increasing centralized nature of the digital world.
Digital ads are becoming more centralized and less about content creators.
The rise of ad tech platforms such as AdWords, Google AdWords and Twitter Ads means that the ad space has become increasingly centralized, according Paul Smith, founder and CEO of digital ad startup Adsnap.
Smith said that digital platforms now “are largely driven by the advertisers, and not content creators.”
The rise in ad tech is also making it easier for advertisers to target their advertising to audiences that they have already established relationships with.
Smith told Business Insider that “the more ads you can target to, the more money you can make.”
And, of course, digital platforms are increasingly centralizing content and creating artificial intelligence algorithms to find audiences for ad-based campaigns.
“Ads have become so central, you don’t even need content creators to build your own ad.
It’s all automated,” Smith said.
Advertising companies are also struggling to survive amid a massive wave of digital advertising.
In 2018, the industry lost more than $2 billion on digital ad campaigns, according DAA data.
That’s according to an analysis by research firm comScore, which also found that ad spend grew at the slowest pace since 2010.
That trend continued in 2019, when ad spending fell 7.5% to more than US$1.8 billion.
The DAA said that the “ad ecosystem is increasingly fragmented, fragmented, and increasingly fragmented,” as well as the increasing importance of ad technology platforms such AdWords.
Smith has some advice for digital marketers: “The key to succeeding in digital ad is to understand how to monetize content, not just target it,” he said.
“The ad tech space is increasingly centralized and the digital ecosystem is becoming increasingly centralized.
That means ad tech companies are becoming increasingly central, not content producers.”
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