We’ve made it to Q4—a big feat in 2020. Over the last six and a half months, we’ve looked at how COVID-19 impacted ad tech in various ways.
Like much of the advertising industry, ad tech went through a chaotic ride amid the pandemic. It experienced an initial slump, but then came out as a winner.
Now, we want to focus on the largest advertisers and how they’re shifting their programmatic spend.
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Financial Constraint Leads to Consolidation—But Brands Carry on with Programmatic
Early on in the pandemic, smaller companies in ad tech experienced financial pressure.
“There’s going to be a culling. This will expose ad tech companies that haven’t been prepared, mission critical or don’t have a strong value proposition,” said Steven Wolfe Pereira, CEO of media company Encantos and the former CMO at Quantcast, Neustar and Datalogix.
Companies that didn’t have sufficient cash reserves were expected to seize up when brands or any other part of the supply chain didn’t make payments on time. The ad tech payment system is complicated: any hiccup in payments could cause disruptions for financially unprepared companies.
Cash flow experienced a sudden drop as brands and agencies scrambled amid the uncertainty in March and April. But it didn’t take long for programmatic dollars to return. “We saw some of the best rates we’d seen since the beginning of March in the last two weeks of June,” reflected Salon Justin Wohl chief revenue officer of news and politics publisher.
Even though brands and typical pricing returned, consolidation in the market was underway. Here are some key mergers and acquisitions from this year:
- Foursquare’s merger with Factual
- PlaceIQ’s acquisition of Freckle IoT
- Most recently: Disney sold its ad tech company TrueX to Gimbal
Programmatic is critical for brands
With people engaging with mobile apps, social media, and OTT more than ever, automated digital media supply chains became more important for marketers. This led to brands leaning on programmatic buying during the pandemic.
A report from Zenith cited by IAB estimates that programmatic will reach $98 billion in ad spend by 2021, making up 68% of digital media advertising. Mobile will be one of the biggest channel drivers behind this growth.
Our data shows that overall programmatic spending is up about 10% YoY, year-to-date.
We analyzed the top 100 advertisers YTD (across all media formats) and looked at their programmatic spending compared to the same time period last year
- The top 100 advertisers have increased their programmatic spending 3% YoY: As the programmatic ad market is up 10%, this means the market is not benefitting so much from top advertisers, but from medium and small advertisers moving more dollars into programmatic.
- Looking at only the top 100 advertisers, the largest programmatic spenders come from Tech: Companies like Google, Verizon, and Apple increased their programmatic spending 30% YoY.
- One category that cut programmatic spending this year, from the top 100 advertisers, is Retail: Companies like Walmart, Macy’s, and Home Depot cut back on programmatic spend 15% YoY.
- The top 5 programmatic advertisers YTD: (In no particular order)
- These top 5 companies make up only 4% of all programmatic ad spending: The programmatic market is large and diverse.
For more insights on ad tech trends in Q4, continue reading our blog.
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