Demand Side Platform Systems Market is Rapidly Growing in 2020

Image link: https://www.pexels.com/photo/chart-close-up-data-desk-590022/ It’s no secret that, on the whole, ad spending is down for 2020. As a direct result of the worldwide pandemic – and the economic uncertainties that have arisen from the spread of COVID-19 – around one…

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The post Demand Side Platform Systems Market is Rapidly Growing in 2020 appeared first on prReach Blog.

May 21, 2020 —

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It’s no secret that, on the whole, ad spending is down for 2020. As a direct result of the worldwide pandemic – and the economic uncertainties that have arisen from the spread of COVID-19 – around one quarter of all businesses have put a halt to their ad campaigns, while almost half are said to have quickly adapted their strategies. In total, it’s estimated that digital ad spending for Q1 and Q2 2020 is down by around one third.

However, it appears that not all digital marketing methods are experiencing the same level of decline. Of course, this is a challenging time across all media channels, with 2020 expected to be the first year that digital ad spending has declined since online marketing was first introduced. That said, some platforms are faring better than others. With 92% of consumers believing that brands should be continuing to advertise during this time, many businesses are looking for new ways to reach their audience during this period of international crisis.

Accordingly, the demand side platform (DSP) market is showing signs of rapid growth which is expected to be sustained throughout 2020 and beyond. With a natural and ongoing shift from traditional media to digital channels, DSP adoption has grown consistently over recent years anyway. But the unique circumstances of 2020 are understood to be accelerating this shift, making DSPs a strategic necessity for brands to thrive.

What are Demand Side Platforms?

Demand side platforms, or DSPs, are a form of programmatic advertising that automates ad placement for optimised marketing. The platforms act as ad brokers, enabling businesses to manage ads across multiple online media channels through a single interface, with real time bidding and integrated campaign reporting.

These digital portals make it easier for businesses to extend their reach across a broad range of marketing platforms, and engage with the right people, in the right place, at the right time; three essential aspects to consider when advertising during a global crisis.

Exploring Market Growth

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While other areas of advertising are showing clear signs of temporary decline, demand side platforms are demonstrating quite the opposite. DSPs are uniquely positioned to withstand the marketing challenges created by Coronavirus. They are quickly becoming the strategy of choice for businesses seeking to identify a compromise between budget reductions and marketing continuation, giving them the best chances of emerging strong and healthy once restrictions are lifted and lives return to normal.

Research undertaken last year initially anticipated a 25% CAGR for the demand side platforms system market for the period 2019 – 2027. However, this was updated in early 2020 to reflect the natural shift to digital media, with industry insiders predicting a 30% CAGR through 2020 – 2025, taking the value of the DSP global market from $10,410 million to $29,680 million. These predictions were further updated recently in line with COVID-19. While some areas of marketing are known to have been hit hard, reports suggest that the global DSP market will grow by an additional 2.4% for a 32.4% CAGR growth to 2024. This makes demand side platforms one of the only digital marketing channels expected to not only retain market share but actually grow significantly during this challenging time.

The question is, why are demand side platforms growing at such a rapid rate when other channels are declining? Here are two of the biggest drivers of this growth:

Improved Targeting

COVID-19 has had a major impact on business continuity in practically every sector. Some have been forcibly closed by Government regulations, while others are struggling with lost profits due to massive and instantaneous changes in shopping behaviours. But to emerge on the other side with all engines firing, it’s vital for brands to ensure visibility and awareness while taking measures to minimise unnecessary or invaluable spending.

Many organisations have been forced to adapt their strategies to derive more value from their ad spend during this protracted period of economic downturn and uncertainty. For many, this means improving targeting capabilities to ensure that all marketing investment has a notable impact. Put simply, it’s more important than ever to  reach the right people, at the right time with as little wasted spend as possible. DSPs are known for their ability to systematically target the most relevant and qualified audiences to really maximise effectiveness. These systems analyse areas such as audience interest and buying frequency to place ads in front of the right eyes.

With businesses becoming increasingly concerned about their financial stability, marketers need to do more with less. Programmatic advertising, and demand side platforms in particular, are emerging as a valuable tool that enables businesses to maintain brand visibility and awareness even with a reduced marketing budget.

Meeting Demand

Consumer behaviours have changed notably in 2020. Not only are customers changing what they buy, with spending on hobbies, tech, health and fitness, and pets up by 31%, 14%, 9%, and 8% respectively, they are also changing how they buy. With many bricks and mortar stores closed, and a reluctance to visit those that remain open, shoppers are becoming increasingly interested in ordering items from online stores.

This provides digital advertisers with a new opportunity to reach demographics that wouldn’t typically be enthusiastic about buying online. Many people are working from home, while others have been furloughed under the Government scheme, which means that as a nation, we’re naturally consuming more online media than we once were. There is a huge increase in digital audience pools, and to really tap into these pools and leverage this growth, businesses are finding that they need the support of a demand side platform to ramp up advertising across all relevant channels simultaneously.

Stay-at-home orders have been a challenging area to navigate, and there’s no doubt it’s been a tricky time for businesses. However, it’s also provided organisations with a chance to win new customers; it’s driven a whole new demographic online, and DSPs have emerged as one of the most efficient ways to reach out and engage with these new audience pools through the online channels that they feel comfortable exploring.

Winners and Losers

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Despite the growth of the demand side platform systems market, not all DSPs are riding the wave. It has been reported that MediaMath, a New York-based adtech firm with its own independent DSP, has been forced to cut its workforce by 8% as a result of the current circumstances. The company’s President, Conrad Gerszke, stated that “ad budgets are under review as spending patterns and media consumption are shifting, supply chains are disrupted, and companies are re-thinking how to reach their consumers.” This has resulted in a decline in demand for its demand side platform.

So what differentiates DSPs like MediaMath from those such as Google DV360, Amazon DSP, and Facebook Audience Network, which all appear to be thriving? The answer lies in how these DSPs gain audience data. Some DSPs rely on cookies and third party data, which is becoming problematic as privacy laws become increasingly stricter around the world. Following on from the launch of the General Data Protection Regulation (GDPR) across Europe, changes in the US began to take place earlier this year with the California Consumer Privacy Act (CCPA). DSPs can no longer rely solely on cookies or third party data, so those which have access to first party data are seen as winners.

The three DSPs mentioned above all have access to first party data in one way or another. Amazon’s DSP is driven by purchasing data, Google’s by search data, and Facebook’s by interest data, which means that all have insight into the real time consumer journey during the crisis. This allows them to optimise ad placement in the most beneficial way for businesses who want to target the right people at the right time. This data takes the guesswork out of advertising to really optimise campaigns and ensure they’re bringing complete value to the business; essential when marketing budgets are reduced and businesses need to achieve more while spending less.

Of these platforms, Amazon’s DSP appears to be leading the way. This particular platform was already positioned as one to watch even prior to the pandemic. In Q4 2019, spending on Amazon’s demand side platform grew by a whopping 44% from the previous quarter, signalling the biggest quarterly spending increase of the entire year.

Future Growth

When examining the growth of the demand side platform systems market, it’s important to remember that much of the growth seen so far in 2020 has been the result of instantaneous changes to campaign strategies that took place practically overnight. Marketers are still working to identify best practices in the current landscape. It is expected that over time, more will begin to see that the key to maintaining sales and visibility during times of crisis is by tapping into new online audiences through DSPs which enable optimised targeting that maximise budgets.

As restrictions are lifted throughout the latter half of 2020, it is expected that the shift in consumer behaviour to favour digital interactions with brands will remain. Ultimately, insiders are predicting that programmatic advertising will account for around three quarters of all digital ad spend by 2023, primarily driven by the rapid growth of the demand side platform systems market during the 2020 worldwide COVID-19 pandemic.

The post Demand Side Platform Systems Market is Rapidly Growing in 2020 appeared first on prReach Blog.

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