How programmatic advertising will evolve this year on the heels of audio growth and privacy changes

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Audio advertising is experiencing record growth, as privacy regulations continue impacting targeting tactics, according to a State of Programmatic study released on Tuesday by Comscore’s programmatic division Proximic.

Based on the findings of Proximic’s survey of hundreds of marketers across different industries in the U.S., programmatic advertisers are preparing for a year of many changes. This points to a need for marketers to adapt with new targeting methods and data partners to be prepared for regulatory changes.

The research found that connected TV ad spending is stagnating while audio and podcasting continue to rise. While the net new marketers investing in CTV is slowing down, it remains a major part of most clients’ media plans, alongside linear TV, digital and social. Audio and podcast advertising, however, saw record growth, with the largest year-over-year gains compared to other channels from last year — with 5% of marketers expected to invest in CTV for the first time this year.

It is expected to be a cumulative 5% increase to the overall share of marketers investing in this media type, Comscore noted.

“CTV has been a more accessible medium over recent years with the help of programmatic technology, so it’s not surprising if many marketers who were going to adopt advertising on this media type have already done so,” said Rachel Gantz, managing director of Proximic by Comscore.

While it’s hard to draw a direct comparison between CTV and audio, Claire Russell, head of media at independent agency Fitzco, said she sees strong promise in audio given its growth potential.

“There are three main contributors to this, which include the huge investments in content from publishers, increases in listenership, and advances in measurement as well,” Russell said. “Podcasts are a particular standout and place of interest for our clients.”

Others say audio will always remain secondary to CTV in the future. “We don’t see audio overtaking CTV. In fact, over the last six months, we’ve seen renewed interest in CTV inventory,” said Paul DeJarnatt, vp and head of digital at Novus, who noted that from his experience, about 70% of audio budgets are spent in music-related content and about 30% in podcasts.

George Tarnopolsky, vp of programmatic at Good Apple, agreed that audio is not yet exceeding CTV investment. But the agency is seeing “a much faster rate of growth for audio advertising,” Tarnopolsky said, adding that contextual targeting for audio content has contributed to this acceleration.

“Today we can target deeper based on actual content, like phrases and keywords, within the episode. This product development is opening up a new, rich set of contextual signals for us to target audiences with precision,” Tarnopolsky said.

Among the overall advertising channels, digital is still at the top as the most important channel for marketers. Nearly 90% of all marketers spent on it in 2022, and 58% said it is their top or second priority as part of their overall strategy, even as other popular media have emerged.

But as the privacy landscape continues to change, marketers face challenges with third-party data and identity-based targeting. While this targeting still leads as the dominant method in targeting, contextual data is expected to surpass cookie-dependent data, with 47% of marketers expecting to adopt ID-free tactics by the end of 2023, the report noted. Some 44% of marketer ad spend in 2023 will be via third-party ID-based targeting, while 25% of the spend will remain in audience targeting using first-party data. Another 32% is budgeted to ID-less contextual segments.

Russell mentioned that most of Fitzco’s targeting is already cookieless, since the eradication of third-party cookies has been coming for several years. “So we’ve had plenty of time to adjust, test new tactics, follow along the evolution of things like Unified ID 2.0, and ultimately insulate our clients against this changing landscape,” she added.

Nitin Sinha, head of paid media at Laundry Service, also said the agency has always recommended a mix of ID-driven and ID-free tactics for clients’ strategies since Apple’s iOS 14 changes back in 2021. “Modern platforms like TikTok, Twitch and others offer excellent targeting capabilities without having to rely on cookies or their other ID-based alternatives,” Sinha said. “And first-party data is still a very effective performer for most advertisers, so a healthy balance of tactics is going to serve most clients well.”

Other agencies are similarly testing cookieless solutions through other tools, such as Dstillery’s ID-Free. “We are not overly concerned about the ever-impending death of the cookie in the context of recent privacy changes,” added Sean Edwards, associate director of programmatic marketing at Exverus Media.

Additionally, marketers will keep pivoting to keep up with privacy law changes — the Proximic report found 30% said they anticipate changing data partners due to privacy updates, and 75% will shift to cookie-free targeting and look at contextual and predictive segments. Some 54% plan to increase their use of contextual data as these challenges arise.

However, the study also showed how marketers are still struggling with signal loss. Some 18% are uncertain about how to plan and use cookie-free targeting, and 16% said that no one in their organization is advocating for the use or testing of these strategies.

This all adds up to another reason audio may have another advantage in the marketplace as privacy rules change: “Losing cookie-dependent data has little impact on podcasts and audio, which is why this is still such a great place to advertise,” said Katie Kelly, director of programmatic advertising at Code3. “While some of the attribution pieces will change without in-depth listener data, we’re still able to see how data from attribution partners and the advertiser without compromising listener privacy.”

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