Research Briefing: Despite challenges, marketers plan to increase programmatic spending in 2024

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In this edition of the Digiday+ Research Briefing, we examine the challenges marketers are facing within the programmatic ad market, what publishers are saying about diversifying revenue streams and how YouTube refined its pitch ahead of last week’s upfront event, as seen in recent data from Digiday+ Research.

58% of brands and retailers are investing in generative AI

Programmatic marketers are having a tough go of it. At the Digiday Programmatic Marketing Summit last week in Palm Springs, California, agency executives participated in closed-door town hall discussions, in which they were granted anonymity for their candor. And they were quite candid about the challenges they are having to confront. 

They’re facing inventory quality issues raised by the recent controversies surrounding made-for-advertising sites, Forbes and Colossus. There’s also the brewing measurement mess as third-party cookies eventually go away. And of course, there’s AI, which actually may be among programmatic marketers’ greatest potential allies in dealing with some of the other challenges — though AI poses its own predicaments.

“We’re doing contract renewals with some clients, and some are flagging, ‘Hey, anything that you’re using AI for needs to be explicitly stated.’ And there’s now caveats like, ‘Hey, creative, you can’t use AI here.’ Because there’s a level of, people are afraid. Inclusivity is not built into AI,” said one agency executive. 

Well over half of brands and retailers were already using generative AI by the end of last year, according to a Digiday+ Research survey. Fifty-eight percent of brand and retailer professionals said in late Q4 2023 that their companies were investing in or using generative AI or natural language processing tools.

Chatbots were the most popular use of generative AI technology among brands and retailers. Just under half of brand and retailer pros (49%) said that their company is using chatbots or AI assistants. Copy generation was the second-most popular use of AI, with 46% of brand and retailer pros saying their companies use AI to generate copy. Social media listening rounded out the top three, with 40% of brands and retailers saying they use AI for this application.

Insights and stats:

  • “From a conservative company that gets audited, they’re very, very hesitant to put anything like cost information into an AI unless they know it’s a closed bubble where competitors can’t get or nefarious bad actors can’t get.” — an agency executive who attend the Digiday Programmatic Marketing Summit
  • Despite various challenges with programmatic marketing, marketers are still overwhelmingly investing in programmatic ads. More than three-quarters of brand and retailer pros (77%) said their companies currently use programmatic site display ads, and an even larger 80% of agency retailers said the same of their clients, according to a Q1 2024 Digiday+ Research survey.
  • A significant chunk of marketers are increasing their programmatic spend this year too, according to Digiday’s Q1 survey. Thirty-eight percent of brand pros said in Q1 2024 that their spending on programmatic site display ads increased over last year, and 42% of agency pros said the same of their clients.

Read more about marketers’ programmatic investments

Digiday+ Research digest

Executives at Condé Nast, Forbes, The Atlantic, The Guardian and The Independent recently shared their thoughts on affiliate commerce, revenue diversification and global revenue opportunities with Digiday for our publisher revenue strategies series. Here is a selection of their comments on key industry revenue trends.

Publisher insights:

  • “It’s [affiliate commerce] a tiny fraction of our revenue. We just published a big list of the best novels of the century. … We’ll get revenue, but it’s a rounding error in our numbers right now. I’d love for it to be big … but we’re not going to turn down the money. We work in media. We don’t turn down money.”  — Nicholas Thompson, CEO, The Atlantic, on affiliate commerce
  • “We’re a quality news brand with an audience that have a high disposable income and like the nice things in life, so it seemed crazy to us that we didn’t have a wine partner. We’ve built a fantastic white-label relationship to have our own independent wine club. That’s proving to be a real money spinner for us. As that e-commerce relationship grows, that diversification into those bigger, more strategic brand partners, is going to be really important for us.” — Andy Morley, CRO, The Independent, on revenue diversification
  • “We have a huge opportunity with live experiences like Vogue World which can be activated in a market like Paris and can draw global talent and distribute across a huge global network of platforms. You can do a single production that can create working media opportunities for marketers in every market where their product is available to a consumer.” — Craig Kostelic, chief business officer of global commercial revenue, Condé Nast, on global revenue opportunities

Read more about how publishers are optimizing revenue streams

As the most-watched streaming service on TV screens for 15 months running, brands can hardly avoid advertising on Google-owned YouTube. But, ahead of last week’s upfront event in New York City, YouTube refined its pitch to advertisers to create more scarcity. Specifically, it is raising the threshold for its YouTube Select program that packages inventory across the top channels on the platform and introducing a new option for advertisers to overtake individual channels in that package. Among ad-supported streaming platforms, YouTube receives the largest portion of marketers’ ad placements and budget allocations, according to Digiday+ Research’s recent installment of its CMO Strategies series

The stats:

  • Three-quarters of brand and agency respondents (75%) said in Q1 2024 that they currently place ads on YouTube and more than half of respondents (60%) said YouTube consumed the largest portion of their budgets in 2023. 
  • After YouTube, Amazon Prime Video (with ads) tied for second place with Hulu when it came to ad placements. Thirty-six percent of brand and agency respondents said that they placed ads on both Hulu and Prime Video, respectively, as of Q1 2024.
  • Hulu also came in a distant second to YouTube when it came to ad budget allocation. Thirteen percent of brand and agency respondents said that they devoted the largest portion of their 2023 ad-supported streaming budget to Hulu. [Prime Video (with ads) was excluded from Digiday’s 2023 budget allocation analysis because Amazon did not launch the ad-supported tier until January 2024.]

Read more about marketers’ ad spending on streaming platforms

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