The decline of third-party cookies has raised some pertinent questions about the future of programmatic advertising, which has expanded rapidly over the last two decades.
While programmatic advertising will have to evolve, it will nevertheless retain its role as an essential digital marketing tool.
Programmatic display ad spend in the US is estimated to hit $148.8 billion in 2023, up 16.5% year on year, and is forecast to climb another 13% to $168 billion in 2024
After a dramatic 41% increase in overall programmatic ad spend in the US in 2021, growth has slowed over economic uncertainty. With some forecasts still predicting a 71% chance for a recession in late 2023 or early 2024, the slowdown may well continue.
Given the opportunities and challenges, let's look at which programmatic advertising trends are likely to gain traction in the coming year.
Table of contents:
Recent Programmatic Advertising Stats
- 75% of marketers still rely on third-party cookies
- 97% of businesses that use customer data platforms (CDPs) report positive in terms of revenues and customer loyalty
- CTV ad spend in the US increased 25% year on year in 2023
- 61% of ad buyers planned to invest in retail media networks (RMN) in 2023
- Programmatic advertising will account for 91% of total digital display ad spend in 2023
- Global digital out-of-home (DOOH) ad spend is projected to increase 57% over 2023-28
- 91% of businesses will use video as a marketing tool in 2023
9 Recent Programmatic Advertising Trends
In the post-pandemic years, the most pressing issue facing the programmatic advertising space is the rise of privacy-first initiatives. These initiatives are aimed at giving users greater control over their data, which is the lifeblood of most marketing campaigns.
Still, global digital ad spend is projected to increase from $549.51 billion in 2022 to more than $601 billion by the end of 2023. The Asia-Pacific region is primarily driving growth, as the traditional strongholds in North America and Western Europe continue to struggle with high inflation and slowdown.
Below are some of the programmatic advertising trends that have emerged in recent years and are likely to shape digital ad spend in the coming years.
1. In-Housing Programmatic Campaigns
Only a few businesses managed their programmatic ad buying 10 years ago. The situation today is rather more complex.
In 2021, more than two-thirds (68%) of marketing agencies had adopted the in-house model (PDF download) for programmatic campaigns. This came after a brief dip to half of agencies in 2020.
Companies' desire for greater transparency within the programmatic process may have driven the switch, which strengthened their marketing strategies. Other potential advantages of in-house programmatic advertising include cost savings and resource efficiency.
However, rising performance costs and complexity due to recent developments such as the imminent end of cookies may encourage companies to adopt a more hybrid approach in the near future.
2. Sunsetting Cookies and First-Party Data Solutions
Marketing without third-party data is on its way, implying that the programmatic advertising process will need to find reliable workarounds.
Since 2018, the advent of privacy legislation, such as Europe's General Data Protection Regulation (GDPR) and the California Privacy Act, has made it more challenging to use tracking cookies to target and modify ads based on online user behavior.
The newer legislative frameworks dismantle long-standing techniques of tracking user behavior, while allowing advertisers to obtain user data with their consent.
Google has already started working on identity solutions, most recently launching the Topics API in January 2022. Topics is designed to identify a handful of user interests, via the Chrome browser, which represent their top interests for that week. These interests are then used to pool users into anonymous groups for advertising purposes.
The API was born out of Google's now-canceled Federated Learning of Cohorts (FLoC) initiative.
Shared user IDs have also been hailed as another viable workaround to the end of cookies. The Interactive Advertising Bureau's (IAB) DigiTrust service tried to spearhead this, but eventually became financially unviable.
Meanwhile, Trade Desk developed the Unified ID 2.0 (UID2) open-source framework in response to Google's move to sunset cookies. UID2 requires users to provide consent in the form of an email address.
First-party data offers tremendous value to both publishers and advertisers—so while the amount of available data may shrink, the quality of said data will improve in the long run.
3. Growth of Connected TV (CTV)
US connected TV (CTV) programmatic display ad spend is projected to climb to $25.09 billion in 2023 from an estimated $20.7 billion in 2022.
The recent shift in ad spending to over-the-top (OTT) and CTV began during the pandemic when lockdowns led more people to streaming services such as Netflix and YouTube. US streaming revenues rose 41% in 2020.
However, the OTT market was hit hard in the post-pandemic years as a result of declining subscriber growth, market saturation, and soaring costs. The coming years may see a renewed focus on ROI and profitability instead of a relentless push for new subscribers.
This is only possible with a shift away from the traditional subscription-only, ad-free models. In 2023, virtually all major streaming services—including Netflix, Disney+, and Hulu—have added ad-supported subscription tiers.
This makes the CTV segment one of the most intriguing programmatic advertising trends to watch in 2023. Those in the advertising industry need to pay attention to the procurement process, methods, and measurements that need to be reevaluated.
CTV programmatic display advertising may still be in its infancy, but those who adjust now to stay ahead of the curve will reap the rewards.
4. Advancement of Digital Out-of-Home (DOOH) Ads
Following a difficult couple of years for the medium, owing to government-mandated stay-at-home orders in response to the pandemic, marketing professionals are looking for innovative methods to target customers who are back on the go and DOOH is resurgent.
DOOH ad spend in the US is expected to reach $4.87 billion in 2023. With digital ad screens popping up across the country, the programmatic strategy appears to be positioned to take a larger share of that spend in a few years.
This type of programmatic advertising has several benefits, including:
- Broad reach
- Resistant to ad blockers
- Unobtrusive placements
This segment should benefit in the cookie-free future because of its different methods of audience targeting and the chance it gives for contextual marketing to take center stage.
Brands that use programmatic DOOH can create memorable, eye-catching experiences that will leave a lasting impact on customers.
5. Rise of White Label Software
A white-label software is a generic piece of software built and marketed as a service to businesses. Businesses can buy access to a white-label advertising platform to give them administrator-level control of their ad campaigns.
This not only increases the control brands have over their campaigns but also provides transparency to the ad-buying process. This ties in with the fact that many companies still favor in-housing house their active marketing campaigns.
For many companies in search of greater programmatic control, the white label software as a service (SaaS) model is likely to be a better and more affordable starting point than developing bespoke platforms.
6. Programmatic Audio
Programmatic audio advertising works in much the same way as programmatic display advertising, automating the sale of ads in audio content such as podcasts.
Advertisers can buy targeted ad inventory from audio publishers via a single system. This paves the way to tap into listeners from across a range of devices, including:
- Smart speakers
Audio ads differ from TV and display ads in that they don’t rely on visual engagement. As a result, digital audio can reach consumers in a way that visual advertising can't.
While music can evoke different feelings, the podcast experience can be likened to listening to a friend. The US audience for podcasts has been growing consistently in recent years, with 62% of the American population having listened to a podcast at least once.
While the number is much lower for monthly listeners (42%) and weekly audiences (31%), the numbers are still much higher than those recorded in the pre-pandemic years.
Moreover, 80% of podcast listeners will listen to most if not all of an episode, making them a lucrative target audience for programmatic audio advertising.
Another bonus aspect is the fact that most audio commercials cannot be skipped. Because there is no ad blocker for audio advertising, ads will receive more exposure.
The importance of contextual targeting in digital advertising is only set to grow, given that ads are placed based on the context of the website rather than a user's online behavioral data.
One can assume—rather safely—that anyone seeing such ads will be more interested in them owing to the web page's context.
Users have become tired of seeing irrelevant ad creatives in the wrong places, leading to the rise of banner blindness. So, advertisers must improve the ad experience by using more relevant and personalized ads in the appropriate context.
8. Video Ads
Video ad spend continues to rise year after year and for good reason. Video consumption accounted for 65% of all internet traffic in 2023. Netflix alone accounts for 15% of the global internet traffic.
US advertisers will spend almost $74 billion on programmatic video ads by the end of 2023, up from $52 billion in 2021.
Video remains the most popular media type for high-impact display ads.
Programmatic video advertising spend in the US overtook the non-video segments in 2021 and will continue to account for a majority share in 2023. It's safe to say that automated video ad buying is now the standard for distributing digital video commercials. For those looking to switch to a video ad network, check out Publift's guide on the best video ad networks.
9. Mobile Gaming
The number of people who play mobile games is projected to rise from around 1.8 billion in 2021 to more than 2.7 billion by 2027. The uptick is being driven by the arrival of 5G networks, which promise faster data transfers and increased connectivity.
Until recently, however, there was a widespread belief that mobile gaming audiences were either too small or too niche for big companies to be interested in. That viewpoint has shifted.
Mobile gaming revenue is expected to climb from a projected $124.9 billion in 2022 to $222.7 billion by 2027. At the same time, the average revenue per user (ARPU) in the mobile gaming segment is projected to hit $90.16 in 2023.
The mobile gaming landscape has transformed into one that advertisers should begin focusing their digital ad spend on.
Ads can be integrated directly into the game by allowing users to gain tokens or coins when they watch the commercials, or they can appear at the bottom of the game screen in much the same manner as traditional banner ads.
As such, brands not already participating in this space need to begin considering a possible entry as well as which gaming ad networks would meet their needs.
Marketers can use programmatic advertising to better direct their campaigns across targeted channels. They can use automated systems to help reach the most desirable markets and demographics while using new data to discover new opportunities.
Those not already using programmatic ads in some capacity are missing out on the opportunity to save money and improve the results of their online ad campaigns.
This year will see marketers get back to focusing on these programmatic trends and tapping into new opportunities created by the pandemic—for instance, the rise of connected TV, DOOH, and audio advertising—as part of a successful marketing mix.
Publishers need to be prepared for advertisers to make their move in searching for new ways to reach an evolving audience base.
Publift helps digital publishers get the most out of the ads on their websites. Publift has helped its clients realize an average 55% uplift in ad revenue since 2015, through the use of cutting-edge programmatic advertising technology paired with impartial and ethical guidance.
If you're making more than $2,000 in monthly ad revenue, contact us today to learn more about how Publift can help increase your ad revenue and best optimize the ad space available on your website or app.
What are the latest trends in programmatic advertising?
Sunsetting cookies in anticipation of the 2024 deadline is a top priority in programmatic advertising in 2023
Other major trends include the growth of connected TV (CTV) ads, increasing focus on digital out-of-home (DOOH) ads, and the growing popularity of white-label software.
The rising popularity of mobile gaming, podcasting, and video streaming also opens up exciting new opportunities for programmatic advertising around the globe.
What is the future of programmatic advertising?
The future of programmatic advertising involves a greater reliance on AI and machine learning. Harnessing these emergent technologies is essential for gaining access to first-party data, improved targeting, and improved audience segmentation.
In terms of the preferred media, video ads through OTT and CTV may dominate future digital spending to a disproportionately high level. Further expansion into new channels such as gaming and audio is another strong possibility.
Is programmatic advertising growing?
Programmatic advertising is forecast to account for more than 90% of total ad spending in 2023. The segment will continue to evolve and grow in the coming years. From an estimated $418 billion in 2021, global programmatic advertising spend is expected to reach $725 billion by 2026.
While growth may slow in 2023-24 owing to the ongoing fears of an impending recession, marketers in the US are expected to spend $168 billion in 2024 on programmatic ads, up from just $127 billion in 2022.