Last year saw a wealth of changes in the adtech space, many of which are re-shaping the industry. Where some grappled with the difficulties brought by changes to third party cookies, others embraced new tools like AI to solve the challenge of personalizing ads while staying on the right side of new privacy constraints.
Similarly influential has been not only the rise in M&A activity, but CTV advertising firmly establishing itself as a successful method for delivering ads to highly targeted audiences based on demographics, behaviors and niche interests. In fact, this in itself is a huge shift, with many gravitating towards using first-party data to target ads. And as privacy restrictions grow, first-party data is quickly becoming the industry go-to.
With these things in mind, what can we expect to see from the adtech industry in 2025?
1. The third-party cookie debate will remain
As third-party cookies track an individual’s behavior while browsing the web, it’s no surprise that concerns around privacy and regulation are at the top of the agenda. With regulatory demands growing via the likes of the EU General Data Protection Regulation (GDPR) and various privacy acts in the USA and beyond, third-party cookies are falling short at many privacy-related hurdles.
Of course, the decline of third-party cookies isn’t anything new. FireFox and Safari blocked their usage five years ago, but other major players such as Google have pushed back similar action three times to date. This has left the adtech space somewhat in limbo, unable to fully disregard third-party cookies altogether. Yet this delay has also enabled advertisers to finesse alternative approaches, looking into high-quality first-party data collection and ad alternatives.
Whenever Google finally decides to close the curtain on third party cookies – whether in 2025 or beyond – it will mark an entirely new era for the adtech industry.
2. AI as adtech’s next big thing
AI isn’t just a buzzword in the adtech world, but a technology that is transforming multiple aspects of the industry. AI is creating highly personalized content relevant for audiences based on first-party data collection alone, which is a big step up from problematic third-party cookies. It has also been revolutionary for adtechs and their back end infrastructure, helping to automate processes and customize audience insights. And, adtechs have been using tools like generative AI to build other creative assets as well.
However, big technology needs big infrastructure to support it, which means that the demand from adtechs for high-performing graphics processing units (GPUs) is already growing rapidly. Large marketing organizations like WPP are already firming up partnerships with computing giants like Nvidia to capture the potential of generative AI-enabled ad campaigns.
Throughout the next year, AI is going to have a continued impact on every corner of the adtech space, fueling better ad-stack optimization, campaign efficiency, and the enhancement of ad placements. So far, we know that 97% of advertisers already credit AI for increased ad performance, and it’s a trend that is unlikely to go away anytime soon.
Also Read: Leveraging MACH Architecture to Transform Marketing Technology for Future Growth
3. The rise of optimized adtech infrastructure
With vast quantities of data to process, it’s understandable that infrastructure remains one of the greatest overheads for any adtech business. As many organizations look to achieve sustainable growth, striking the balance between these operational costs and innovation is a challenge in itself.
Increasingly, adtech platforms are looking to better optimize their operations at the infrastructure level. Cloud spend is a careful balance and done wrong it can cost a fortune – particularly when it comes to high compute demands. But, in some cases, cloud cost management practices – commonly known as FinOps – can help find the inefficiencies in an adtech’s existing hyperscale infrastructure stack and reduce costs.
It’s likely that 2025 will see the industry adopt this approach to transform their operations and technical back end. As is the experience with many businesses, it won’t be the best fix for all adtechs, so we’re likely to see more digital advertisers looking into full or partial migration to hypersale cloud alternatives as well.
4. Greater M&A activity and a move towards consolidation
The second half of 2024 saw buying and selling in the adtech industry pick up after a lackluster first period, with deals including mergers between Outbrain and Teads, plus Seedtag’s purchase of Beachfront in a bid to tackle the CTV inventory market. These moves are part of an ongoing trend that is seeing adtech vendors consolidate offerings to help grow their market share.
Despite economic uncertainty for almost two years, and much of the industry historically wanting to ‘wait and see’ when it came to their next move, 2025 will likely see the opposite. More adtech organizations will push forwards with M&A activity and investment in an attempt to re-optimize profit margins and fuel growth following a period of prolonged stagnation.
5. Accelerated growth of CTV advertising
The rise of streaming services like Netflix and Amazon Prime are shaping the adtech industry in exciting new ways, with audience viewing habits paving the way for the growth of connected TV (CTV) and over the top (OTT) platforms. For adtechs, this presents new opportunities to accelerate efforts when it comes to programmatic video advertising.
Interestingly, research shows that many adtechs are already seizing the opportunity brought by audience streaming habits and this growth hasn’t cooled off yet – CTV ad spend is predicted to grow 10% per year in the US between 2024-2027, and to near double by 2028 in the UK. And, as a platform that can accommodate various budget sizes, it’s only natural that more companies will look to activate CTV campaigns.
For many adtechs, CTV offers a winning combination of highly-targeted, measurable advertising and strong engagement rates, all underpinned by first-party data. But of course, it needs to be done right – quality control is essential in order to hit audiences with the right content at the right time, and adtechs need to consider cross-device strategies to deliver consistent brand messaging.
A transformative shift
The adtech industry is set to undergo exciting changes in the next year as it accommodates technological advancements, regulatory changes and ever-evolving consumer trends and habits. One thing for certain is that having the right infrastructure in place to effectively manage the wealth of data involved will be crucial for adtechs to keep ahead of the competition, keeping profit margins healthy and audiences engaged.
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