Targeted internet advertising was supposed to solve the John Wanamaker problem: an idea expressed by the retailer a century ago that half of all ad dollars are wasted—there’s just no way to tell which half. But here we are more than two decades into the internet age, and the ad conundrum has grown more complex. So many ads, so much waste.
In 2024, the problem will get worse, largely due to
Alphabet’s
Google. To track where consumers travel online, digital advertisers for years have relied on “cookies,” little bits of code stored in web browsers to track your internet wanderings. The idea was to deliver more-relevant ads.
But Google has long threatened to end the practice in Chrome, which controls 65% of the web browser market. In December, Google said it intends to phase out third-party cookies in the second half of 2024, and the ad industry is bracing for disruption. (
Apple’s
Safari browser, No. 2 with 19% market share, already blocks third-party cookies.)
To get a handle on this year’s ad outlook, I checked in with Mark Zagorski, CEO of
DoubleVerify,
a company in the thick of ad targeting and integrity issues.
DoubleVerify’s role is to make sure advertisers get what they pay for—that ads sold actually get seen—and to stop ads from appearing adjacent to problematic content.
Zagorski returned from the recent CES tech trade show in Las Vegas cheered by what he heard from ad buyers. “Sentiment is certainly more upbeat than it was a year ago,” he says. “Last year, there were macro worries about a potential recession, and plenty of doom and gloom. This year there’s a sense that we might be OK. The ad market isn’t ready for a boom, but the tone wasn’t nearly as pessimistic as it was a year ago.”
Here are some of Zagorski’s other thoughts on the 2024 ad outlook:
Cookies Crumble. “There’s more fatalism about the coming cookie apocalypse,” he says. “There’s an understanding that Google is really turning them off.” The urgency for understanding that information will only grow in a world without third-party cookies, he says.
Zagorski thinks it should be a boon for his own business. DoubleVerify tracks the “what, how, and where” for customers’ ads. No cookies required.
Going Ex-Twitter. Zagorski says that DoubleVerify has been working for years with X on brand safety measurement and “suitability” issues. But he says that X nonetheless has seen customer ad volumes “significantly” decline. “Advertisers have just turned off the platform,” he says, noting that some content on X still makes advertisers nervous. That isn’t likely to decrease in an election year.
TikTok Rocks. “The value of social media is undeniable to advertisers,” Zagorski says. “That’s where the people are, and particularly short-form video.” The trend started with TikTok, but he notes that brands are buying ads on
Meta Platforms
’ Reels and Google’s YouTube Shorts, too.
Hate-Speech Revival. Zagorski notes that elections tend to spur an increase in online misinformation and hate speech—and the problem expands in markets where there are competitive races. “Elections create more noise, so advertisers get more wary of where their ads run,” he says. A DoubleVerify user survey last year found that over 60% of consumers were less likely to buy products from a brand associated with misinformation or disinformation.
AI? Aye-Aye-Aye! A new issue for advertisers is the proliferation of “made for advertising” sites, or MFAs. These are AI-powered versions of what used to be called content farms. Some players create thousands of articles a day across multiple websites that crop up in Google searches, he says. “Some of that stuff actually works,” Zagorski says. “People go to these sites and click on the ads.”
Amazon’s Prime Time. Late last year,
Amazon.com
announced plans to sell ads on Prime Video, the company’s TV streaming service. Now, starting Jan. 29, Amazon is going to include limited advertising in both films and TV shows. Subscribers can stay ad-free by paying an additional $2.99 a month.
Zagorski thinks most consumers will decline the extra charge, and that Amazon’s TV ad sales will be wildly successful. Amazon’s position as both advertiser and broadline retailer means it can partially solve the Wanamaker problem—the company can show targeted ads, and track whether they result in on-site purchases.
Evercore ISI analyst Mark Mahaney estimates Amazon Prime Video ads could drive $5 billion to $15 billion in incremental revenue this year—about 1% upside to his 2024 estimate, if you use $7 billion—with fat margins. Mahaney thinks video ads could drive $3.5 billion of incremental operating income this year, a boost in the high-single-digit percentage range.
Amazon offers a sneaky play on the transformation of the ad business—and so does DoubleVerify.
Zagorski sees strong growth in demand for ad verification services in short-form video, in connected TV, and in international markets. This past week, the company announced new brand safety tools for Facebook and Instagram news feeds and Reels.
William Blair analyst Arjun Bhatia wrote in a research note this past week that DoubleVerify is set up well for 2024, with a combination of Meta, short videos, and connected TV driving outsize growth. He sees growth of 22% this year and 23% next year. Bhatia calls it “a positive setup for DV in 2024 and beyond.”
Write to Eric J. Savitz at [email protected]
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