The ad tech industry has seen its fair share of changes over the last decade, marked by substantial yearly shifts in the sector. 2020 was no exception, and the year lived up to its promises.
The month of December was an opportunity for many to take stock and plan for the year ahead. We had the privilege of talking with many publishers in recent weeks about what is at stake for them in 2021. Hereafter, we would like to share what has come out of these discussions.
The challenges and opportunities that await us can be summarised in three main points:
- To consolidate and diversify “revenue streams” by focusing on video.
- To streamline data
- To rethink Privacy and adapt to new buyer behavior.
1 / Revenue consolidation and diversification – and a particular focus on video
Publishers will continue to consolidate their technological assets. In 2020, a key milestone was reached regarding revenues earned from display header bidding thanks to the broader use of Prebid. In 2021, Publishers will be focusing their efforts on video format, while closely monitoring their advertising performance as well as their web performance.
- Video inventory development
In 2020, monetization partners and SSPs adapted their video offer in order to meet new trends. Out-stream and in-stream video formats have become easily accessible and constitute a credible and significant source of revenue in header bidding.
However, this format is not without challenges, and to manage these, a strong strategy is essential.
Publishers have three main objectives:
- To develop a video inventory related to current editorial performance – the idea is to focus on the most profitable content;
- To take into account the constraints of monetization and existing content (duration, ad insertions, etc.) at the video content creation stage;
- To deploy high-performance video stacks as well as monitoring tools to manage operations.
Once again, Prebid is the strongest player – most of the time supported by custom video players.
- Web & Ad performance – a direct impact on revenue
Website performance – and more specifically, ad stack performance – has an immediate impact on revenue. Recent announcements by Google have only reinforced the sense of urgency and the need for publishers to tackle this issue.
Regarding ad performance, publishers will increasingly determine a monetization partner’s relevance according to its incremental or unique value, and places will be prized. 2021 is, therefore, also a decisive year for server-side technologies – such as Prebid Server. They will have to keep their promises as several publishers will engage in A/B testing to gauge the interest of such solutions.
Regarding web performance and inventory, publishers will continue to work on the quality of their websites with a particular focus on visibility. There are two trends here: working around layouts and templates and implementing advanced strategies – such as ad refresh, lazy loading, dynamic formats, and so on.
2 / Building a global view of all revenue streams
The rise of programmatic advertising is forcing publishers to invest in data in order to better understand this complex ecosystem and make informed decisions. Indeed, the complexity and the number of monetization channels now make it very difficult to manage investments (sales, subscription, etc.) and make easy decisions.
In 2020, publishers mainly focused on their ability to operate and make the right decisions on a daily basis using data. 2021 should be the year that publishers engage in building a consolidated view of their overall performance and of the relationships between the various sources of revenue.
Among key metrics that are popular with publishers, two stand out: the average revenue per user (ARPU) and the revenue per editorial content.
- Measuring the ARPU
Despite the ARPU being the favorite metric around, it is still extremely complex to calculate today. A publisher counts on a multitude of revenue streams to monetize its audiences and users. Advertising can come from the open market or negotiated deals. Subscriptions are also another way to generate revenue, and they are becoming widespread. In order to make the right trade-offs and decide whether to serve the user with ads or suggest a subscription, it is necessary to first estimate the intrinsic value of each one of them.
In 2021, publishers will be working with the ARPU – and to make that estimate, they will be doing so through the simplest of channels: advertising (open and direct).
- Measuring content revenue
More and more publishers are deciding to invest more to better measure the performance of editorial content. This comes down to understanding which formats work best (articles, files, slideshows, reports, videos) and which editorial line is being adopted.
There is a strong desire to connect editorial metrics – page views, session times, user journey – with real income. Traditional metrics no longer have that much weight in decision-making unless they are linked to income.
3 / Rethinking privacy and adapting your buyer offer
Last but not least, the topic of privacy.
The industry is bracing itself for the end of third-party cookies. However, this does not mean a return to contextual advertising. The general consensus is that there will be no “big bang.” And people seem to agree that the industry will adapt and technologies will evolve.
This has been reflected in the arrival of Identity Providers in 2020.
This is what we, at Pubstack, have taken away from our discussions with publishers:
- Publishers will wait for the offer to become stronger and for the outcome of the first experiments to be available.
- Publishers are confident because, for the first time ever, the industry has taken up the subject of privacy and seems to be providing functional solutions.
- The end of third-party cookies is also seen as an opportunity to regain control of data assets and better control data partners – who will have to connect as first-parties.
- New user journeys (subscription, ad-block recovery)
The other big issue around privacy are the recent decisions made regarding the paywall by the French Data Protection Authority (“CNIL”) – and other similar initiatives in other countries. By allowing publishers to inform users and offer them different choices for accessing content, it will be possible to imagine new user journeys combining advertising, ad recovery, or subscription.
What will stand out for publishers in 2021 are the three following key points:
- Publishers will consolidate and diversify their different revenue streams by focusing especially on video formats. In parallel, they will be closely monitoring their advertising performance by determining a monetization partner’s relevance according to their incremental or unique value. Web performance will also be something to pay attention to, with a particular focus on visibility.
- Publishers will engage in streamlining data by building a consolidated view of their overall performance and the relationships between the various revenue sources. That said, Publishers will push on measuring the ARPU to identify the best monetization approach per user, and on measuring content revenue to understand which formats and editorial lines work best.
- Publishers will need to rethink Privacy and adapt to new buyer behavior. The depreciation of third-party cookies provides many opportunities: regaining control of data assets, acquiring better control data partners, and introducing new user journeys that will combine advertising, ad recovery, or subscription.
The new year has begun. New challenges and, therefore, opportunities await us. Having the best partners next to you is a crucial success factor, and for Pubstack it is a pleasure to help our partners thrive in a complex programmatic world and keep shaping the AdTech Industry’s future.