Here’s How Ad Tech Can Thrive in a Possible Recession

Whether or not it happens, businesses need a worst-case scenario plan

Every January, advertising executives start with a clean slate and new business objectives. Last year, our industry struggled with issues of quality in programmatic. We did some solid work to elevate the discussions, put forward some innovative solutions and improve the ecosystem, but in 2019, we have an additional thought on our mind: recession.

There is no crystal ball that can tell us if we’re hurtling toward a deep recession or just a minor diversion, but we’re most likely facing more global economic instability. In the U.S., we’re learning new terms like “suborning perjury” that are not good. I want to get right to the question that seems to be on the minds of everyone in the ad industry: What will happen to us if the economy takes a downward turn, and how can we not only survive it, but thrive?

Regardless of whether or not we’re headed into a recession, there are still plenty of conversations to be had about how to sustain a healthy advertising technology business, so long as we can demonstrate that we’re delivering real value in a way that makes sense to customers.

Imagine the worst and plan for it

Ad-tech innovators should take a hard look at their businesses and how a recession might affect growth, and then lock down a plan with clear metrics and markers that signal recessionary changes in business.

The best way to survive a recession is to plan for it. Like any good doomsday prepper, you need to have a plan before the zombies attack, not after. Ad-tech innovators should take a hard look at their businesses and how a recession might affect growth, and then lock down a plan with clear metrics and markers that signal recessionary changes in business.

Mary Barra and her team at General Motors have already put in place a robust recession plan that, while painful in the short term (especially for those workers at closing plants), firmly puts the company in a position to be a leader in electronic vehicles over the next five years. Say what you want, but they’ve got a plan, have played the scenarios, made some bets and are moving forward. Can you say the same for your company, especially when marketing is usually the first area to be cut in a recession?

Don’t assume that the walled gardens will win

The Google and Facebook duopoly gobbles up a large portion of the global digital ad market, and that’s not going to change completely. Google and Facebook have about 15 percent of the total marketing spend, leaving 85 percent of total ad spend up for grabs. A recession would likely give marketers an additional nudge to reassess consolidation of spending and data with the duopoly and consider alternatives that can deliver efficient scale with greater flexibility and transparency. That’s an opportunity.

And with increased scrutiny on privacy and data protection from regulators around the world, challengers can potentially capture more spend by highlighting their ability to deliver audience insights while keeping user and publisher data safer than Facebook or Google might.

Be irresistible

A corollary to the previous point is that a recession would likely drive marketing dollars away from experimental tactics toward a consolidated group of core partners that deliver proven value. Programmatic media will be no exception, accelerating a trend toward consolidation that began in 2018. Whether it’s publishers looking to put more money in their own pockets versus vendors or buyers pushing forward with supply path optimization (SPO) to avoid overpaying for impressions, an economic downturn will likely just hasten a process that’s already ongoing and has been for more than a year.

Making the short list will require every vendor to clearly showcase their unique value and provide full transparency surrounding how they get paid. Great service will also remain critical, and strong communication coupled with a transparent business model will be key in becoming a preferred partner.

Focus on value over cost

Will the recession finally get us beyond last-click attribution? Probably not, but the focus on proving value will likely warrant better approaches to tying factors like viewability and attention to actual sales.

With regard to programmatic inventory, I am hopeful that the industry has learned its lesson about cheap inventory over the past 10 years. Brand safety risk aside, the hidden costs of sifting through massive volumes of fraudulent and non-viewable impressions are beginning to come to the surface. Sophisticated performance marketers have also modeled the benefits of optimizing toward ads that deliver a longer time in-view, in many cases optimizing media buying toward inventory that will deliver this optimal number of seconds. Winners will deliver efficient and effective scale, but not cheap impressions.

It may be too soon to tell whether we’re in for a hard recession or just a minor ad spend pullback, but one thing is clear: When it comes to programmatic, the companies that are prepared and truly align with the needs of publishers and brands, offering them sustainable, measurable and transparent value, are the ones that will weather the storm.