I got back from CES on Friday evening (in time for my kids’ bedtime!) after a packed and thrilling couple of days of meetings with leaders from across the adtech, martech, and digital advertising worlds.
Reflecting on everyone I spoke with, here’s what jumped out at me: Every discussion I had was focused on new hybrid domains where adtech is bumping up against some other ecosystem.
For the most part, folks seem to be done thinking about adtech as a standalone landscape; an arcane little island, if you will — disconnected from the broader tech world. Personally, I think this is great, if for no other reason than it’s going to keep things interesting.
The top three hybrid adtech domains I heard about over and over again were:
- Adtech + Cloud
- Adtech + (C)TV
- Adtech + Privacy
Why Are Hybrid Domains a Big Deal Right Now?
As a 15+ year-old domain, adtech has outgrown its insular and obscure beginnings.
Adtech and its adjacent domains have experienced such fantastic growth over the last several tech cycles that they are now overlapping. These overlaps are critical because they are where the most innovation is happening and where the next few years will be won or lost.
However, we’ve all become victims of our own success, forced to grapple with new unknowns brought on by unfamiliar domains and ecosystems that had, until somewhat recently, happily existed on their own little islands — often with underlying doctrines that aren’t naturally compatible.
Here are my thoughts on what’s driving the three hybrid domains I heard about the most at CES (adtech + cloud, adtech + TV/CTV, and adtech + privacy) as well as some of the tensions that are likely to crop up in the overlaps.
Adtech + Cloud
Whether it pivots around data clean rooms, data warehousing, or something else, adtech will be increasingly required to integrate with and augment clients’ cloud infrastructure on platforms like Amazon Web Services, Google Cloud, and Snowflake.
Amazon, for example, recently made a major announcement at re:Invent in November 2022 revealing AWS for Advertising & Marketing. I considered this to be the official “coming-out party” for the hybrid adtech + cloud domain, even though the space had been building for some years.
But here’s the rub!
Cloud is backend IT infrastructure, intended to be as stable, accountable, and secure as possible.
Adtech, on the other hand, is designed to deal with the messy realities of monetizing and capturing human attention on the web. We’re basically talking about logic versus emotion. Maybe we all need to go back and rewatch some old Star Trek movies to see how Spock and Kirk managed to get along.
Adtech + (C)TV
It was inevitable that television would get digitized.
However, in 2022 everyone came to the realization that “Television with a capital T” —the kind of mass media we all grew up with— was back, baby!
Multiple previously subscription-only services like Disney+ and Netflix launched ad-supported tiers in 2022 to meet demand from consumers and advertisers alike.
But here’s the rub!
Adtech and TV are at extreme opposite ends of two important spectra:
- Barriers to entry — Adtech was initially designed to monetize relatively low- or unknown-quality content from a new medium with a near-zero barrier to entry: the web. By contrast, ad-supported television (both the content and the ads) has stratospherically high production values compared to even top-tier websites and apps.
- Context — Creatively and contextually the web is an open format; it’s a blank canvas with few rules. Ad-supported television, on the other hand, is a very constrained format consisting of fullscreen video content with interruptive commercial breaks.
The digitization of TV and its ads is exciting, but there will be some push and pull from both sides as adtech finds a path to supporting an “upmarket” medium while television (I would imagine reluctantly) gives ground by lowering the barrier to entry (YouTube and TikTok, anyone?) and opens up to more flexible content and ad formats.
Adtech + Privacy
In nearly all my meetings, privacy came up as a source of possible competitive advantage for adtech, either breathing new life into existing methods (e.g., creative testing) or as a path for new solutions like data clean rooms.
Everyone’s got their angle right now. Frankly, this is a great sign. Neither denial nor hand-wringing was ever going to move the ball forward, so it’s good to see everyone playing the hand they’ve been dealt.
But here’s the rub!
Competitive angles require confidence and context, and these in turn require knowledge. And guess what! Teams are still short on knowledge when it comes to privacy.
Why? I think there are two things going on that are causing “privacy literacy” to take longer to attain than many companies might have expected:
- Technically, a lot of privacy changes are actually quite small but have disproportionately large impacts. For example, to understand the impact of the deprecation of third-party cookies, you have to understand the sheer weight of dependence that adtech placed upon their tiny TXT shoulders. It’s understandably not intuitive because that (over)dependence was truly and mind-bogglingly vast.
- Adtech is used to charting its own course and being the trailblazer, but now privacy is being forced upon the ecosystem from the outside (by Apple! cough cough!). If you’re in an industry that’s accustomed to adapting to externalities all the time, you’re better at rolling with the punches. But for most of its history, adtech WAS the externality (just ask the newspaper business).
In short: there’s a ton of opportunity for adtech in privacy and everyone now knows it, but adtech’s going to have to work for the knowledge needed to unlock those opportunities.
What Did I Miss?
There are a ton of really interesting hybrid domains right now and I only talked to a tiny, tiny fraction of the attendees at CES. What else are you hearing about, working on, or struggling with? I’m curious to know. Find me on LinkedIn and let’s geek out.