Some ad-tech companies are pivoting amid open web ‘contraction’

Is ad-tech still committed to the open web, or anticipating its so-called demise? It all depends on who you ask.

As AI tools continue to drive declines in search traffic to brand and publisher sites, ad-tech executives have indicated publicly that bolstering business is top of mind, even if that means focusing on major platforms like CTV over the open web.

“Humans are not going to continue to read editorial websites for the next 10 years,” Tal Jacobson, ad-tech platform Perion’s CEO and director, said at the Needham Growth Conference in New York earlier this month. “That’s going to change because AI is changing it. But advertisers and brands are always going to continue to look for customers, and they’re always going to spend more money on advertising.”

Perion has spent recent months shifting its product offerings away from the open web, Jacobson said at the conference. To support market expansion, it acquired custom algorithm creation platform Greenbids in May. Advertisers can use the product’s AI-powered algorithm, now called Outmax, to optimize buys across mediums, including YouTube, CTV, and the open web. If the algorithm determines an open web ad buy won’t be the most efficient, it’ll pivot to whichever channel is.

Jacobson said CTV ad revenue is on the rise; the channel’s revenue grew 75% in Q3, according to the company’s latest earnings. Retail media and digital out-of-home (DOOH) revenues also climbed YoY. .

Sell-side platform Magnite has already begun to see the effects of AI on search and open web traffic, Michael Barrett, Magnite CEO, said onstage at the conference, but other inventory in audio and mobile have helped to stabilize that shift. With that said, Magnite’s ad platform focused on display, video, audio, native, and DOOH, still generates about a third of its revenue from the open web, Barrett said.

Magnite has looked to insulate itself against the drop in impressions caused by AI in search, which Barrett said it has achieved through selective curation of the publishers it represents. Onstage, he predicted that if the open web continues to contract, “lower value” sites will suffer, but advertisers will still spend on “brand focused” sites.

“We’ve already seen that [contraction] particularly in certain categories like recipes, health, news, and sports results,” he said. “But within those categories, you have folks that are outsized in terms of building a brand. Folks bookmark them. Folks still go to them…There are headwinds, and it’s a secular change that we’re going to have to muscle through for the next couple of quarters.”