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IAB and PwC Outlook 2021 Report Urges Digital Ecosystem to Reset Consumer Value Exchange

IAB Outlook: 2021 Digital Ad Ecosystem 1

Industry Leaders Identify Pressing Challenges for the Future Growth of Digital Marketing

NEW YORK – (MARCH 8, 2021) – The Interactive Advertising Bureau (IAB), the national trade association for the digital media and marketing industries, announced the release of “IAB Outlook: 2021 Digital Ad Ecosystem,” the IAB-commissioned PwC report.

Unveiled at the IAB Annual Leadership Meeting today, IAB Outlook: 2021 builds on this year’s theme “The Great Reset,” providing insights into pressing challenges marketers face. Among these include how the increased consumer time spent with digital media has illuminated a “trust gap” among consumers, brands, publishers, and platforms; growth opportunities ahead; and risks and opportunities in the consumer value chain.

The report is the result of interviews with 20 senior thought leaders across brands, agencies, publishers, and their supply chain partners. An updated version of the report will be released in September 2021 and will be released on an annual basis thereafter.

Five major trends to watch

  1. Consumers no longer think the exchange of free content for ad delivery is good enough–the value exchange must be reset
    Interviewees acknowledged that the consumer journey changed course during the pandemic. How consumers engage with brands and content — and think about who they trust with their data — has evolved. As a result, the traditional value exchange of ad-supported media — free content in exchange for seeing ads — is losing its value. Consumers have grown accustomed to content without interruption from streaming services, and advertising pods may feel too long and too disruptive. At the same time, privacy concerns continue to rise.

    “To put it bluntly, the old value exchanges just aren’t enough. The model is broken. Publishers and media companies have to reimagine reciprocity or risk the flight of consumers to competitors,” said Sue Hogan, Senior Vice President of Research & Analytics, IAB.

  2. Expect more Walled Gardens with higher walls, as third-party identifiers go away
    Senior executives interviewed raised alarm bells, fearing that the industry is ill prepared for the loss of third-party cookies and identifiers. Publishers are at risk of losing substantial advertising dollars to Walled Gardens, as brands already struggling to build first-party data supplies may find themselves too reliant on those Walled Gardens to connect them to consumers.“Marketing, at a fundamental level, is about knowing your customer,” said David Cohen, Chief Executive Officer, IAB.

    “Whoever knows that customer best has the most to gain, and whoever has the least knowledge has the most to lose.  Having a robust first-party relationship is becoming more of a business imperative in the “Great Reset”

  3. The rising importance of retail media
    Some retailers, spurred by the pandemic and accelerated changes in digital shopping habits, have already evolved into media companies and are building real strength.

    “Where consumers first learn about a product, choose brands, and complete the purchase are all converging — and very measurable — in retail media,” said CJ Bangah, Principal, Technology Media and Telecommunication, PwC US. “As brands demand more accountability, the center of gravity has begun to shift in favor of retail media and formats that clearly demonstrate ROI.”

  4. Attributable business results are now media imperatives
    As marketing is redefined and new consumer purchasing paths captured, currency and measurement must move from impressions to outcomes. Future innovation will require both human and machine working in tandem. This means that ad formats must be brand safe and have clear measurement and attribution built in.
  5. For all to thrive, hate speech, fraud, and misinformation must be solved for
    Clear drawbacks to digital media include the proliferation of hate speech, misinformation, fraud, and more. Organizations within the internet value chain must take appropriate care of the consumers who engage with them. Creating a safe online environment where both consumers and businesses thrive requires mutually beneficial solutions.

“The challenges for our industry have never been more complex. The stakes have never been higher, and opportunities have never been greater,” Cohen concluded. “With new consumer behaviors and needs at the core we have an opportunity to reinvent addressability — balancing personalization, privacy, and safety with emerging technologies. We have a rare moment to reset this ecosystem to make it work better for all participants.”

The report can be downloaded here.

Methodology
To develop a perspective on where the ecosystem needs to focus to unlock the growth potential of ad-supported digital experiences, PwC conducted a series of candid interviews with 20+ industry leaders across the buy and sell side of the ecosystem. Responses per company are confidential. Executives interviewed spanned a variety of functions and roles (e.g., CMOs, CIOs, CROs, Business Development), and represented the following company types: Agencies, Brands, Publishers, OEM Manufacturers of digitally connected devices, Retail/Media, Tech Providers (Advertising and Marketing), and Telecommunications/Media.

About PwC US
At PwC, our purpose is to build trust in society and solve important problems. PwC is a network of firms in 157 countries with over 276,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com/US

©2020 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. Please see www.pwc.com/structure for further details.

About IAB
The Interactive Advertising Bureau empowers the media and marketing industries to thrive in the digital economy. Its membership comprises more than 650 leading media companies, brands, and the technology firms responsible for selling, delivering, and optimizing digital ad marketing campaigns. The trade group fields critical research on interactive advertising, while also educating brands, agencies, and the wider business community on the importance of digital marketing. In affiliation with the IAB Tech Lab, IAB develops technical standards and solutions. IAB is committed to professional development and elevating the knowledge, skills, expertise, and diversity of the workforce across the industry. Through the work of its public policy office in Washington, D.C., the trade association advocates for its members and promotes the value of the interactive advertising industry to legislators and policymakers. Founded in 1996, IAB is headquartered in New York City.

IAB Media Contacts
Kate Tumino / Britany Tibaldi
212-896-1252 / 347-487-6794
[email protected]  / [email protected]