Demand: The Ultimate Currency in Digital Advertising

Advertising, at its core, operates within a continuous cycle driven by the basic economic principles of supply and demand. Publishers provide ad inventory, and advertisers invest in these platforms based on their effectiveness in driving consumer engagement and transactions. This demand for ad space perpetuates the cycle, particularly in digital walled gardens like Amazon, Google, and Facebook, where targeted consumer engagement meets sophisticated ad-delivery mechanisms.

As the digital ecosystem grows more complex, simply participating in this cycle is no longer adequate. Publishers and retailers must adopt advanced strategies to grow demand effectively within their gardens, evolving to help advertisers leverage these complexities to their advantage.

Build it and they will come?

Platforms like Amazon, Google, and Facebook, with their billions of active users per month, have attracted massive advertiser demand. With over 50% of all online audiences now in cookieless environments, the reliance on first-party data makes these platforms particularly attractive for advertisers. The “big three” account for over 60% of all digital ad spending — a number that continues to rise.

As ad budgets increasingly favor walled gardens, the supply side has experienced a renaissance. According to eMarketer, over 200 retail media networks have been launched worldwide as of August 2024. New social platforms have joined the scene, and even non-traditional sectors (finance, travel, telco, delivery, etc.) are creating their own media networks, such as Chase, United Airlines, T-Mobile, Uber, and more.

Everyone holding first-party data is becoming a publisher, building ad platforms independently with solutions like Koddi or through partnerships with third-party onsite and offsite providers like Criteo, The Trade Desk, or Epsilon Retail Media.

But at the end of the day, opening up supply isn’t enough. While initial novelty and access to new audiences brought with it advertiser budgets and quick wins for retailers, this advantage is fleeting. Many networks are already struggling to hit fill rates and maintain advertiser interest. With hundreds of competitors now in the field, the focus must shift from building and connecting supply to effectively growing and scaling demand.

The true challenge now lies in not just attracting advertiser interest, but also continuously enhancing the value provided. As the market matures, scaling demand requires incorporating advanced demand-capture capabilities and ongoing optimization. Advertisers are increasingly sophisticated, seeking more personalized and data-driven strategies. They use first-party data to create highly targeted campaigns and gain deeper insights into consumer behavior. Therefore, platforms must evolve beyond offering basic ad space to deliver innovative solutions and advanced tools that meet these elevated expectations. Success in this environment will create a win-win for both advertisers and publishers by fully leveraging the potential of sophisticated, data-driven advertising.

Looking towards the future: data-driven demand strategies

To successfully navigate the complexities of modern digital advertising and scale growth, platforms must go beyond offering inventory with rudimentary demand levers. Here are five key areas of focus:

1. Unification of Supply and Demand: As retail media networks evolve, deep integration between supply and demand becomes crucial. Unifying these elements will streamline operations and drive sustainable growth by creating a more cohesive and efficient platform for managing media investments. Retailers must work towards providing seamless experiences where advertisers can easily access and optimize their campaigns across multiple touchpoints.

2. Omnichannel Integration: The expansion of retail media into commerce media and the formation of partnerships between walled gardens highlight the need for a robust omnichannel approach. Integrating various channels and media types into a unified strategy will enhance engagement and impact, allowing advertisers to effectively reach consumers across all touchpoints. This holistic approach ensures that marketing efforts are synchronized and effective, leading to better ROI.

3. Advanced Analytics and Insights: Future platforms will harness advanced analytics to provide deeper insights beyond traditional ad metrics. By leveraging comprehensive data, these platforms will enable more effective optimization and transparency, helping advertisers understand and maximize the true incremental value of their campaigns. Predictive analytics, machine learning, and AI will play pivotal roles in personalizing content to drive higher engagement rates.

4. Enhanced Targeting and Personalization: With the increasing sophistication of advertisers, there is a growing demand for more personalized and data-driven strategies. Platforms must utilize first-party data to create highly targeted campaigns that resonate with specific audience segments. By offering granular audience targeting options and dynamic creative optimization, platforms can help advertisers achieve greater precision and relevance in their messaging.

5. Advanced Planning and Forecasting: While optimization is often associated with managing ongoing campaigns, its application in campaign planning is equally vital for mastering demand in digital advertising. Currently, 85% of marketers still rely on basic tools like Excel for media planning, which significantly limits their ability to harness data effectively. Integrating AI into campaign planning will streamline the process, enhance targeting accuracy, and better forecast demand shifts. This ensures that advertising strategies are proactive and responsive to market dynamics.

The new currency

Clearly, the future of digital advertising is demand. But to realize that future, retailers and publishers must act quickly to innovate and implement advanced, data-driven strategies in the present. Long-term success requires being able to span both walled gardens and the open web while removing complexity from these high-yield environments. With the right solution, the better-positioned platforms will be able to capitalize on their investments to unlock and harness scaled and diversified ad demand across the multiple consumer touchpoints of commerce media.