The rise in video streaming during the pandemic has created many advertising opportunities in the connected TV channel. Kagan estimates the video demand-side platform, or DSP, vendors' revenue grew to $1.79 billion in 2020 and forecasts that it will reach $3.26 billion in 2025 due to the expansion of CTV ad spend as well as the traditional digital video channel.
Earlier in 2020, many advertisers paused their ad spend in all areas of the market including TV and digital media, which impacted the ad tech vendors involved in trading advertising programmatically. However, declines in the second quarter were generally short-lived, though industry sectors were not impacted equally, with some such as travel hit much harder than others.
Some DSP vendors are looking for growth opportunities in the linear TV market moving to programmatic trading since that opens a large new advertising channel that they have previously been unable to access. A DSP needs to offer programmatic guaranteed options to connect to supply that has been negotiated outside, but executed programmatically.
A DSP provides advertisers with a way to aggregate supply from many publishers and manage their ad spend. If the DSP operates across many channels rather than in a single advertising channel like mobile, the advertiser can plan and execute its ad campaigns in many areas rather than just one. DSPs can help advertisers manage frequency across the platforms and devices where they are placing ads. It also identifies common audiences across platforms and provides analytics and reporting from one platform.
However, the path forward for DSP vendors is not without problems. For the last decade, the value of ad inventory has been based on the identity of its audience. If a DSP does not know the identity attached to a bid request, it will have to bid based on what the supply side knows about the viewer. Many DSPs have their own data management platforms and identity graphs to understand the publisher audience for which they are receiving bid requests. One industry goal is to improve audience targeting by increasing the DSP match rates between publisher data and advertiser data.
In the last three years, there has been increasing demand from advertisers for transparency to understand where their ad dollars are going. The pandemic has only increased the desire of advertisers to understand how all the ad tech vendors in the ecosystem are proving their value.
Both the buy and sell sides are working toward a more transparent ecosystem. Understanding the buying paths helps eliminate intermediaries that are adding their own tech fees. Work is ongoing on a buyers.json file that will enable advertisers to list buy-side partners for all programmatic transactions. With cookie deprecation and the importance of publisher first-party data, publishers are going to need to know who should have access to their data and under which conditions.
DSPs that want to bid on CTV inventory are adding support for competitive ad separation, ad podding and large bid requests. Rather than a single pre-roll, mid-roll or post-roll ad in video, longer-form premium video has ad breaks comprised of multiple ads. Each ad pod has multiple slots, which need to be considered together rather than as individual slots to avoid showing the same ad repeatedly. SSPs and ad servers are adding this capability, but DSPs need to understand the signals about the ad pod coming from the supplier. DSPs were not constructed with the ability to understand that ad slots may be back to back. Today, DSPs are working with their SSP partners on an individual basis in ad podding since standards are not yet in place.