iab pwc/e social stories serve as a conduit for, and driving force behind, direct-to- consumer (DTC) retail. Large and small advertisers alike are able to deliver engaging content in new and innovative ways. Storytelling Catches Fire Led by social media, brand storytelling is a growing trend across platforms. Social media, is continuing to disrupt the industry and is providing advertisers new and unique ways to engage with consumers, including through “social stories”, which are ads catered specifically to the platform. As a result, the growth from social media continues to outpace the overall industry and has been a key driver of growth. Consumers, especially Gen Z, are adopting social stories at warp speed, while, at this rate, we approach a future where social stories may surpass social feeds in becoming the prevalent way consumers engage with advertisements on social media. With ads that take up the entire screen on a platform already conducive to consumer engagement, the stories format presents a potential antidote to the issue of capturing consumer attention. As a result, advertisers (a group that now includes social influencers) are rushing to push-out ads in a vertical video format in an effort to turn consumer interaction into actual conversions. Yet, given the substantial resources required to create ads in the vertical video format and to continuously create the dynamic and engaging content needed for stories, it will be up to social media companies to convince advertisers of the efficacy of the story ad platform in order to continue to grow the medium. While the presence of social media is still growing, recent regulatory pressure, from the passing of GDPR and other looming regulations, is leading social media sites (and others) to rethink their strategies as they grapple to balance revenue growth and compliance. Pressure is also coming from concerned users about the storing and use of consumer data and the fact that younger consumers are keen to jump from one social platform to the next. Introduction of GDPR/CCPA For the past several years, data driven advertising has experienced substantial revenue growth aided in large part by the access players have had to data on consumer preferences and the sophistication of models to evaluate the data. Recent regulations such as GDPR and the soon-to-be-enforced CCPA, which both arose out of increased curiosity and worry by consumers about how their online data is being shared and monetized, are impacting many US companies and this impact will likely grow. While still in its nascency, GDPR is precipitating a greater chasm in the balance of power between smaller and larger players. With their abundance of resources, larger players are in an advantageous position to continue their growth momentum and invest in compliance. Smaller players in the space may have more difficulty in setting up regulatory guardrails, with some going as far as blocking European visitors, limiting traffic and valuable impression opportunities as they work on finding solutions towards compliance. As can be expected, complementing the regulatory roll-out, there is an uptick in fines related to non-compliance. Even large sophisticated companies are not immune to the impact, and players across the space grapple with the complexity of adhering to the new laws. Talk around data regulation is mounting in the U.S. and is not expected to lose steam. More US states are contemplating following in the steps of the European and Californian leaders in enacting formal data governance. As can be expected, companies are proactively rethinking strategy and are working towards solutions to foster transparency and trust Key growth drivers, continuedPwC | IAB internet advertising revenue report | 6 to keep advertisers and users confident in their security and fair use of data. While these concerns will most certainly provide challenges within the market, there is potential opportunity for companies to successfully navigate regulatory compliance and innovate in the future. Programmatic Advertising Programmatic ad revenues currently account for 80% of all digital display advertising revenues. The benefit of programmatic advertising is the efficient buying and selling of ads, cost savings, and smart addressability. However, there is money that the buyer is spending that gets soaked up in the supply chain that does not make it to the publisher (i.e., platform fees). Over the past several years, platforms have been used to drive more effective advertising to potential consumers and have gained share of how ads are bought and sold. Walled gardens, or closed ecosystems in which all operations are controlled by the ecosystem operator, continue to drive greater adoption of programmatic, and have been particularly adept at attracting small businesses. Innovation of New Ad Technology In 2017, the IAB Internet Advertising Revenue Report highlighted technological advances and new business Key growth drivers, continued models as a driving force of the robust advertising environment. Since then, advertising platforms and publishers have continued to innovate in their use of data and other technologies to improve the effectiveness of their advertisements. The ever-increasing sophistication of digital advertising operations has proven to be invaluable to brands, advertisers and publishers over the last several years. Driven by the vast amounts of data available, and as the labyrinth of platform networks gets ever-more complicated, AI is on track to keep the momentum going. AI will allow advertisers to harness data and deliver ads with higher perfection (think greater relevance, matched context, and greater personalization), and, as a result drive revenue-earned per ad higher and higher. This development and its adoption has been of particular value to DTC brands, where the cost efficiency of customer acquisition becomes a defining factor in the long term success of the business. In any regard, we expect to see the convergence of big data and AI power continue to drive innovation in digital advertising to new levels. Smart Companies will need to deftly navigate the use of these powerful new tools with consumer concerns over privacy and the use of highly personal data. Over zealous or inappropriate use of these tools can lead consumers to the tipping point, and lead to the call for major changes to the overall environment. Blockchain technology continues to be a buzzword when it comes to digital advertising. Although the digital ledger and smart contract may fill an important need, this technology is still in its infancy with respect to digital advertising. Regardless of where we stand at the moment, blockchain presents a number of opportunities for the digital advertising space, and publishers and advertisers continue to explore how these technologies can be implemented to connect with the digital advertising stack with greater efficiency. In fact PwC recently issued a report “Is blockchain the answer to digital advertisings trust gap?” which provides further insights as to the possible opportunities blockchain can provide in the advertising ecosystem.* 5G technology is looming large. In the very foreseeable future, data will be processed and exchanged at incrementally higher speeds than weve experienced thus far. In anticipation, enterprises across the United States are looking to put themselves in the best position for the roll-out of 5G over the course of the year. 5G will enable advertisers to operate at higher efficiency with the potential to reduce latency, spur advancements in location-based technology and programmatic technology, as well as to allow for developments in creative formats. What this means for consumers is an overall improvement in the mobile video experience. * PwC, Is Blockchain the answer to digital advertisings trust gap?, 2019