The AdTech space faced many hurdles in 2024: mixed messages around third party cookies; the challenge of personalizing ads despite tighter privacy constraints; and declining investment. Yet it also prompted transformation, such as generative AI helping achieve – to some degree – privacy-protecting personalization.
As we move into 2025, AdTech is certainly preparing for a comeback year – M&A activity is set to enjoy an upwards trajectory, CTV advertising looks to go from strength to strength, and AI will continue to bring significant efficiency wins across programmatic advertising processes. What’s clear is that there are some big trends on the horizon, many of which will define a new era for AdTech, but what are they?
Another year, another third-party cookie debate
Unsurprisingly, Google has changed tack on its previously outlined cookie depreciation plans, but it doesn’t mean that privacy-first data collection has ceased to be an issue for the advertising industry. The surprise halt to Google’s plans has left many in a state of limbo and, as a result, feelings remain mixed.
Much of the confusion lies in the fact that Google isn’t fully abandoning its Privacy Sandbox – the initiative responsible for developing privacy-first technologies that companies can use in place of cookies. Instead, Google’s plan is to give their users an “informed choice”, with a third-party cookie system operating in parallel to privacy-preserving options.
Speaking on a panel at DMEXCO this past September, Google representatives remained optimistic that Privacy Sandbox continues to make headway. Thao Tran, Managing Director of Global Partnerships at Google noted how many AdTech companies had completed testing on new platform technologies in 2024, suggesting that as more of the ecosystem builds on top of Google’s technology, its future will become ‘clearer’.
Naturally, the question of ‘what’s next?’ still remains. Yet with the Privacy Sandbox still very much alive (albeit under continued CMA security), many in the industry are relieved that the whole saga has come to an end of sorts. At the same time, it’s left others concerned over investments already made into cookie alternatives for the supposedly inevitable privacy-first future.
AI adoption and changing infrastructure needs
AI still remains one of AdTech’s hottest topics, shaping the programmatic advertising industry both supply-side and demand-side. SSPs and DSPs are already mobilizing AI and machine learning (ML) across processes like ad-stack optimization, traffic shaping, campaign efficiency and ad placement enhancement. In fact, around 87% of advertisers already report improved campaign performance thanks to AI.
All signs point to continued adoption of AI and ML in advertising through 2025 – with a renewed focus on personalization. By facilitating more comprehensive, real-time insights into customer preferences, the industry has high hopes that AI will unlock the full benefits of personalization at scale.
AI can also be trained to spot its own fakes, and ad fraud prevention and disinformation detection are other use cases being explored extensively. As Khurrum Malik, Chief Marketing Officer at Integral Ad Science (IAS) explains, “this is really important for brands as part of an integrated brand safety strategy. By 2026, 90% of the content online could be machine generated. IAS is using AI to fight that AI fire”.
And the impact of such rapid AI adoption? A not-so-insignificant side effect are the rapidly changing adtech infrastructure requirements. Demand for graphics processing units (GPUs) from the digital advertising sector is already increasing. As we enter the age of ‘generative advertising’, with companies like WPP partnering with tech giant Nvidia on generative AI-enabled advertising campaigns, the demand is set to increase only further. It reflects an industry-wide demand increase that’s fueling a projected 33.2% growth for the global GPU market between 2024 and 2029.
More M&A activity on the horizon
Increased deal activity since summer 2023 has bred hope for continued momentum throughout 2024, with some industry finance professionals categorizing the approach as ‘Survive, Revive, Thrive’. It’s a period that is likely to continue into 2025 too.
Increasingly, adtech vendors are broadening their marketplaces through consolidation – a reaction to slimming profit margins over the past 12 months. And following the result of the U.S. presidential election, many believe M&A activity and investment will continue to accelerate on account of anticipated deregulation under the new Republican administration.
Despite continued economic uncertainty, there seems to be renewed willingness for investment. The CEO of S4S ventures recently noted that the “mood is shifting from ‘wait and see’ to ‘it’s about time to do something’”, with the last two years having been “a very uncertain time, and nothing kills M&A like uncertainty”.
Optimizing infrastructure to drive value
Innovating in the adtech space is notoriously expensive due to the importance of time to market and the sheer volume of data that adtechs need to process per second. And, because programmatic advertising platforms are such high load systems, infrastructure remains one of the biggest overheads.
For many in the industry, 2025 will be about striking the right balance between operational expenditure and sustained growth, and adtechs are increasingly looking to achieve this through optimization at the infrastructure level. It’s no secret that forecasting private cloud spend is challenging, time consuming, and financially costly.
In 2025, we’re likely to see adtechs looking to cloud FinOps in a bid to reduce wasted infrastructure spend within their existing hyperscale infrastructure stack. That said, for some this will only go some way to fixing the problem, and so we’re likely to also see more digital advertisers looking into full or partial migration to hyperscale cloud alternatives over the next 12 months.
The rising importance of CTA advertising
The adtech industry is being shaped by global media viewing habits. As audiences have shifted to streaming services, connected TV (CTV) and over the top (OTT) platforms have become areas of increased focus.
With viewing habits more cemented in the streaming world than ever before, we can expect that adtechs will double down on this focus in 2025. Recent ad spend forecasts suggest that CTV and OTT video channels are still to see their biggest growth yet. U.S. CTV ad spend is predicted to grow 10% annually between now and 2027. And in the UK, it’s predicted to grow near double by 2028.
That’s not to say this new wave of CTV advertising comes without challenges. As Carol Star, VP of Ad Revenue International at Paramount shared at DMEXCO in September, “in CTV we have challenges on the publisher side when it comes to quality”, which can lead to problems like ad duplication. Ineffective campaign level frequency is an ongoing issue for publishers. As it stands there still aren’t enough ads to fill the available CTV inventory meaning audiences are often targeted with the same ads repeatedly.
There are a couple of reasons for this, one being that creating high quality video commercials is expensive for smaller organizations (so there simply isn’t enough inventory in production to fill the available ad space). But the problem is also exacerbated by ineffective management of the ad server on the publisher’s part.
It’s an issue that will need to be addressed in 2025. Frequency caps are one possible solution but there’s also hopes that AI will play its part in reducing production costs and push more inventory into circulation.
Momentum as 2025’s differentiator
What we can say is that 2025’s trends aren’t all that surprising – Cookies, AI and CTV are all themes that have been making the rounds in adtech circles for a couple of years now. But in 2025, momentum will be the key differentiator: Google has reached an indefinite decision for its cookie policy, and AI – which is no longer the new kid on the block – is being cemented as a standardized and essential technology across the adtech industry. And, after some initial challenges, CTV advertising is set to reach new heights this year.
Whatever 2025 brings – whether it’s any of the suggestions above or adtech trends we haven’t even considered yet – I think we can all agree that we’ve got an exciting year ahead.
ABOUT THE AUTHOR
Bradley Lewington, Global Sales Executive – Adtech of Servers.com
Bradley Lewington helps ensure that server infrastructure isn’t a constant concern for ad tech leaders, allowing them to focus on what’s important to them: reinvesting in their platforms, growing through acquisitions, or better-managing spending to attract further outside investment. This support could involve full migrations to dedicated servers or a hybrid approach combining dedicated machines and hyperscale cloud solutions.
In addition to his professional expertise, Bradley is an avid fan of Reading FC, golf, and Formula 1, and is a proud father to two girls.