The Trade Desk, the fast growing global technology platform for buyers of advertising, sees a disconnect between where advertising dollars are being spent and where consumers go.
Advertisers are putting cash into walled gardens, such as social media platforms, that only account for a third of the time that people are spending online.
“Time is a very precious commodity and people are very deliberate with where they are spending their time,” said Sam Ward, director, business development at The Trade Desk
“So being tactical about how we can effectively reach the right audience in those environments is really important.”
The Trade Desk is outpacing the media industry for growth. The company grew revenue 23% to $US1.95 billion in the December quarter with a record $9.6 billion of spend flowing through its global technology platform for buyers of advertising.
A study by The Trade Desk, Not all time online is equal, surveyed 2,002 Australian consumers in late 2023 on their online media habits, attitudes and experiences.
The survey found that the majority of Australian advertising budgets are invested in online platforms where consumers are the least actively engaged.
Media habits have changed in a way that has big implications for advertisers, according to the study.
More Australians are engaged on the open internet, with one-third (33%) say they feel informed and attentive when consuming content in these spaces. A quarter (26%) of respondents reported being focused on social media.
The Trade Desk says finding people where they are actively seeking information translates to much higher engagement.
This is because consumers interact with brands differently depending on whether they are in a “lean back” mode, where content is automatically presented via an ongoing feed such as in social media, or if it’s a more “lean in” activity where they are seeking information or making purchases.
“The disconnect that exists between where people are effectively engaged and spending their time versus where the advertising dollars are going,” said Ward.
“We are seeing a big shift,” he said. “We are seeing that big disconnect where walled gardens see two-thirds of total advertising investment, but that's not necessarily where consumers are.
“For us, it's really important that we're educating our partners, educating the markets and educating brands about where that disconnect is.
“And also repositioning the power of the open internet when it comes to reaching the right consumers, where they're heavily engaged, and they're effectively in the right mindset to be receiving relevant ads.”
Journalism on the open internet, where consumers engage with free online content, has advertising as its primary source of funding.
Major New Zealand media group Newshub last month announced the closure of its newsroom following a collapse in advertising revenue
“That’s pretty devastating news,” said Ward.
“And then the week after that there was the announcement by TV NZ and said that they had to let go of 80 people as well.
“So the impact of advertising on walled gardens, and that disproportionate amount of spend, is having a pretty significant impact on journalism and the ability for journalism to still thrive and function.
“And we need to make sure that the market is aware of the value that the open internet plays so that journalism ultimately isn't compromised.”
According to the survey, more than a third (37%) of 18-34 year-olds say their use of the open internet has increased, while another 32% expect it to increase further.
Despite Australians spending 64% of their online time on the open internet, these platforms only account for only 33% of ad budgets.
“Why are advertisers spending two-thirds of their money on closed systems where Australians only spend one-third of their time?” says the study.
“It’s a good question. The answer has a lot to do with a lack of awareness around how far the needle has shifted and how big the opportunity is on the open internet. It is also partly related to the legacy control these large tech giants wield.
“But the reality is young Australians are steadily more immersed in platforms that resonate with authenticity and mirror their values.”
Among respondents aged 18-34, there was nearly 50% increase in time spent on podcasts and music streaming, and 36% uptick for BVOD. Time spent on online games saw a 42% rise.
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