TechBytes with Peo Persson, Co-founder and CPO of DanAds
Hi Peo, please tell us how you managed to stay on top of your Martech and Adtech business in 2020?
For everyone in the business, it was a year of survival rather than a year of growth.
What we got wrong in 2020 was expecting things to continue as normal. That the media industry would continue to grow, and, in turn, companies would have advertising budgets to optimize this growth. Instead, PWC’s Entertainment and Media Outlook 2020-2024 report anticipates that online advertising in the UK will be down by 5% this year while print advertising and out-of-home advertising will be down by 24% and 30%, respectively. These numbers paint a bleak but accurate picture of 2020: a year of survival rather than a year to evolve and increase the efficiency of our software for our customers.
How should adtech customers plan their budgets in 2021?
Tighter budgets will mean more targeted ad
It’s unlikely the advertising industry will recover or start next year as quickly as many anticipate. The financial impact of COVID will long be felt by publishers and advertisers alike. What this will mean for the year ahead is investment in advertising that is much more conservative, and ad campaigns that are more strategic, targeted, and cost-efficient as a reflection of this. To maximize the limited resources available to them, companies will look even more to digital and online spaces to appeal to more specific audiences. The decline of traditional media will accelerate this shift as its advertising impact declines and premiums increase.
Would the democratization of digital media continue into 2021 and beyond?
Yes, the democratization of the digital media industry will continue
“An industry where all the small and medium-sized businesses are forced to advertise exclusively with the two biggest tech giants (Facebook and Google) is not democracy. The big publishers have started to realise there is a great window of opportunity to open up this segment and build a relationship with these advertisers that will generate revenues now and in the future. For advertisers, the major advantage to this shift is the “gold” of first party data that can only be found in the publishing space.”
Tell us more about the new advertising norms in the industry.
I would like to point out the two aspects as my predictions for the adtech markets.
- Role of Self-service advertising or on-demand advertising
- Transparency in advertising
Self-service advertising will pass the point of no return
“The growing influence of self-service across industries and wider society has been catalyzed by the COVID pandemic as individuals and businesses are forced to interact in more efficient and impersonal ways. Although it hasn’t happened yet, its impact will soon also be felt throughout the media sector as publishers look to invest in more cost-efficient, speedy and seamless advertising tech to compete with Google and other tech giants for buyers’ interest and dwindling revenues.
Platforms that provide this service will be invaluable to the survival and competitiveness of these outlets, which lack the expertise or resources to develop and maintain their own. Those publishers that fail to acknowledge and keep pace with this change will quickly be left behind with the legacy of on-demand advertising.”
Transparency will make or break the advertising industry
“Programmatic advertising has, in the past, been blamed for contributing to the lack of transparency within the advertising industry due to complex supply chains which make it difficult for brands to see where their budgets are being spent. As purse strings continue to tighten in almost all industries, 2021 will be the tipping point for many brands who cannot afford to throw money into supply chains where up to 15% of advertiser spend is left unaccounted for. There are several pitfalls that need addressing and it is becoming ever more apparent that programmatic advertising is not a one-size-fits-all strategy. I expect that self-service advertising, an inherently more transparent system that allows businesses to place their own ads without the assistance of an advertising sales representative, will be the saviour as well as the driving force that will enable brands to better understand the supply chain, work with partners they can trust and, most importantly, reduce unnecessary ad spending.”
How did companies like TikTok and social media advertising platforms impact businesses? How should traditional adtech companies reinvent their strategies for 2021?
Companies will shift advertising spend away from Social Media and towards traditional channels or direct audience channels
“People of all ages are changing the way they digest content. When social media was first launched, nobody would have foreseen TikTok becoming one of the biggest content platforms 2020.
But the fact is, both people and companies are fed up with social media and their failure of stopping false or misleading news content. We saw a slight move towards increased transparency from the social media platforms during the US Presidential elections through the flagging or restriction of the spread of misinformation – which was promising. In 2021, I expect companies to move more spending to platforms and media where they know that their brand is being shown in a contextually appropriate, transparent, truthful, and safe environment.
Tell us more about your thoughts on Facebook advertising monopoly and how it impacts the quality of content for advertising.
The 2020 boycott of Facebook specifically and social media, in general, is a clear example of companies taking a stand and caring about the safety of their brand and having a positive impact on the actual content being shown next to it.
Monopolies held by big tech giants will come under even more immense scrutiny, shifting businesses away from traditional programmatic advertising.
It is no secret that good journalism drives advertising. However, the increasing costs associated with traditional programmatic direct advertising have made it nearly impossible for small businesses to meet the minimum spend requirements. Google’s unassailable dominance over general Internet search has become a huge problem for a number of our customers, including TripAdvisor, Expedia and other traditional publishers. As a result, many are left in unfortunate positions, being required to let go of journalists as a result of dips in revenue, creating a vicious cycle that requires intervention. Things really came to the fore towards the end of the year with the US Justice Department filing its lawsuit against the company last month and the joint letter to the EU calling for antitrust action.
Competition within the tech industry works in cycles and we have seen this in the past with telecommunications giants such as Nokia and Sony Ericsson, as well as with companies like IBM in the consumer banking industry. But while the introduction of new laws to protect smaller publishers is necessary, it is no quick fix and publishers cannot rely on this as a definite solution. I think that in 2021, we will see large scale reformation of the advertising industry, with more reliance on self-service, which helps to promote greater competition and transparency, putting downward pressure on intermediaries’ fees. This lack of dependency on Big Tech enables publishers to receive a larger share of this value, in turn, making a vital contribution to the sustainability of quality news media in the country.
Thank you for answering all our questions!
Peo Persson is the Co-founder and CPO of DanAds.
DanAds is the leading provider of transparent self-service advertising technology, powering the likes of Hearst Magazines, Reach PLC and Bloomberg Media Group, helping publishers receive a greater share of advertising revenue than they would from traditional programmatic ad purchases, through which a significant proportion of profit is lost to non-transparent third parties in the supply chain.
DanAds was founded in 2013 with a belief that transparency between advertisers and publishers is necessary to increase engagement, revenue, and future scalability.