Technology | Media | Telecommunications

Friday, July 05, 2019

How AI will Transform Programmatic Digital Advertising

The ongoing commitment to spend more on advertising is primarily driven by legacy marketers. The majority of CMOs in these organizations have difficulty embracing progressive methods of market development, such as digital content marketing. They continue to explore new media but stay within their comfort zone.

As traditional advertisers witnessed the growth in smartphone use, they've shifted their digital ad spend -- such as display and search advertising -- to focus more on mobile devices. Most types of online advertising growth are now due to mobile internet use, which will overtake online desktop use.

Digital Advertising Market Development

According to the latest worldwide market study by Juniper Research, the total spend on digital advertising is forecast to reach $520 billion by 2023 -- that's rising from $294 billion in 2019.

That's a CAGR of 15 percent over the next 5 years; driven by the adoption of AI-based programmatic advertising to deliver highly targeted ads. Note, the overall digital advertising market includes online, mobile browsing, in-app, SMS, DOOH (Digital-Out-of-Home) and OTT (Over-the-Top) TV services.

The new market study found that Amazon's emerging digital advertising business, driven by its vast store of consumer retail data, will enable the company to capture 8 percent of global digital ad spend by 2023. Moreover, Amazon's ad growth is forecast to rise from just 3 percent in 2018.


The Juniper report predicts that Amazon’s advertising revenues will eventually reach $40 billion by 2023 -- that's a growth of 470 percent from its estimated advertising revenues in 2018.

Amazon will leverage its retail data and ongoing investment in machine learning technology to offer efficient targeting via its advertising platforms. That automation will attract users away from the established digital ad duopoly of Google and Facebook.

According to the study, Google’s advertising revenues will exceed $230 billion by 2023. Despite this, Juniper forecasts that the Google global market share of digital advertising spend will fall by 1 percent over the next 4 years due to the growth of competing platforms, including Amazon and Baidu.

Outlook for Digital Advertising Revenue Growth

Juniper analysts anticipate ad platforms will focus on increasing access to contextual advertising traffic data to maximize the efficiency of machine learning for targeting abilities. As a result of these efforts, 75 percent of global online and mobile ads are forecast to be delivered via AI-based programmatic advertising by 2023.

"Giving algorithms access to the vast amounts of data generated by advertising traffic, including purchasing habits, user buckets and geographical location, is critical to enabling advertisers to secure a return on their ad spend," said Sam Barker, senior analyst at Juniper Research.