Australian digital advertisers prioritize first-party data amid AI challenges

The Australian digital advertising industry has firmly embraced first-party data collection and artificial intelligence adoption amid mounting privacy regulation pressures, according to IAB Australia's latest Data: State of the Nation 2025 report released on August 6, 2025.

The comprehensive survey, conducted in July 2025 among 103 advertising decision makers across agencies, marketers, trading desks, media owners and technology vendors, reveals that 92% of industry professionals consider data usage critical or very important for commercial success in digital advertising and business growth.

First-party data has emerged as the cornerstone of digital advertising strategies. According to the report, 80% of respondents rated first-party data as critical or very important for targeting and creative decisions, with 61% marking it as critical. Geographic and location data followed closely, deemed critical or very important by 85% of survey participants.

The findings underscore a significant strategic shift within Australia's digital advertising ecosystem. Transaction data has experienced the largest increase in importance over the past year, while usage of demographics and prior ad exposure have declined. This transition reflects industry adaptation to signal deprecation and privacy regulation changes.

Confidence in leveraging contextual targeting has grown substantially over the past year. The survey found that 89% of respondents express at least some confidence in their ability to competently leverage contextual targeting opportunities. This represents a significant improvement from previous years, suggesting successful industry adaptation to privacy-first advertising approaches.

Australia's advertising professionals demonstrate varying levels of preparedness for regulatory changes. The report reveals moderate understanding of Australia's Tranche 1 Privacy Act Reforms, which include Children's Online Privacy Code, transparency requirements for automated decision-making, cross-border data transfers, and tort provisions for serious privacy invasions. On a scale from 1 to 10, where 1 indicates no understanding and 10 represents expert-level knowledge, 44% of respondents scored themselves 6 or higher.

Despite moderate awareness levels, 67% of industry professionals report feeling at least somewhat prepared for these regulatory changes. The most common preparation strategies include increasing emphasis on first-party data collection, cited by 55% of respondents, and increasing use of AI or machine learning solutions, mentioned by 50%.

The survey identifies specific areas where privacy legislation impacts advertiser media plans. Over 80% of respondents report that data mix and measurement approaches face at least some impact from new privacy regulations. Additionally, 74% indicate these changes affect personalization tactics.

Industry professionals are actively implementing various tools and partnerships to manage privacy legislation changes. Contextual targeting leads implementation efforts, with 41% already having deployed this approach. Data clean rooms follow at 38% implementation, showing significant growth from previous years. The survey also reveals substantial exploration of AI, machine learning, and data modeling solutions, with 47% currently testing these technologies.

Artificial intelligence adoption across the media campaign lifecycle remains nascent but growing. The report shows that 32% of advertising decision makers have deployed AI in limited campaigns or achieved full operational status. An additional 51% are in exploratory or testing phases, indicating widespread industry interest.

ChatGPT and similar general-purpose AI tools dominate current usage patterns. According to the findings, 71% of respondents use general-purpose AI tools, while 56% leverage AI features within existing platforms such as The Trade Desk's Koa and Google Smart Bidding. These accessible tools serve as entry points for broader AI integration within advertising workflows.

The most common AI application involves audience identification and segmentation, with 64% of respondents exploring or deploying this use case. Campaign optimization across channels ranks second at 51%, followed by automated campaign setup at 40%. These applications reflect AI's current role in streamlining operational processes and improving targeting precision.

AI performance meets industry expectations in specific areas while facing challenges in others. The survey reveals that 81% of respondents agree AI delivers on efficiency expectations, including time, resource, and cost savings. However, reliability expectations receive lower agreement at 52%, and effectiveness expectations achieve 63% agreement.

Data security emerges as the primary concern for AI adoption, with 72% of respondents identifying this as a significant challenge. Concerns about AI accuracy and transparency follow closely at 67%, while 62% cite lack of industry standards as a major obstacle. These findings highlight the need for comprehensive governance frameworks as AI adoption accelerates.

Industry professionals express strong demand for standardized guidelines and protocols. According to the survey, 81% of respondents consider AI data privacy and protection protocols valuable for the industry. Ethical use guidelines receive support from 64% of participants, while accuracy and reliability standards attract 63% backing.

The digital advertising industry's data landscape continues evolving amid technological advancement and regulatory change. PPC Land has extensively covered industry privacy developments, including the IAB Tech Lab's release of the Publisher Advertiser Identity Reconciliation (PAIR) protocol in January 2025, which enables secure audience matching while protecting user privacy.

Privacy-enhancing technologies are gaining traction as industry solutions. The report highlights increased adoption of data clean rooms, with implementation rising significantly year-over-year. Market Mix Modeling and new attribution measurement forms are among the most explored testing areas, reflecting industry adaptation to measurement challenges in privacy-constrained environments.

The survey reveals geographic and behavioral data remain highly valued for advertising applications. Website behavior signals, ad viewer behavior signals, and transaction data all receive strong importance ratings. This data hierarchy demonstrates continued reliance on performance indicators that maintain effectiveness under privacy regulations.

Australian advertising professionals demonstrate measured confidence in various data-related capabilities. Beyond contextual targeting, 75% express confidence in maintaining direct customer relationships, while 74% feel confident about having identity solutions in place. AI knowledge confidence lags at 60%, suggesting continued need for industry education and training.

The findings align with global industry trends while highlighting Australia-specific adaptation patterns. The IAB Tech Lab's 2025 roadmap emphasizes privacy compliance and AI integration, reflecting similar priorities across international markets.

Digital advertising measurement approaches are experiencing significant transformation. The report indicates substantial exploration of modeling approaches, particularly Mixed Media Modeling, as traditional attribution methods face limitations under privacy constraints. This shift represents fundamental changes in how advertisers assess campaign effectiveness and allocate media budgets.

Implementation challenges persist despite growing AI adoption. The survey identifies complexity of setup and maintenance as significant barriers, alongside legal, governance, and compliance concerns mentioned by 55% of respondents. These operational hurdles suggest continued need for industry support and standardization efforts.

Professional development needs emerge clearly from the survey data. With 61% citing lack of AI knowledge as a concern and 30% reporting need for upskilling or hiring staff in data and privacy areas, the industry faces substantial human capital challenges. This skills gap represents both obstacle and opportunity for organizations investing in workforce development.

The report's findings come as Australia's digital advertising industry navigates multiple simultaneous changes. Signal deprecation, privacy regulation expansion, and AI technology advancement create a complex operational environment requiring strategic adaptation. Industry organizations like IAB Australia continue developing resources to support professional adaptation to these changes.

Future industry development depends heavily on successful navigation of these intersecting trends. The survey suggests organizations balancing innovation adoption with privacy compliance requirements while maintaining advertising effectiveness. This balance will likely determine competitive positioning as the industry continues evolving.

The third wave of IAB Australia's Data: State of the Nation survey series provides longitudinal perspective on industry adaptation. Previous surveys conducted in April 2024 and October 2022 establish baseline measurements for tracking industry progress across multiple dimensions of data strategy and technology adoption.

Timeline

• October 2022: IAB Australia conducts first Data: State of the Nation survey
• March 2022: IAB Australia publishes cookiepocalypse guidance paper
• July 2021: IAB Australia launches contextual targeting handbook
• April 2024: IAB Australia conducts second Data: State of the Nation survey
• September 2024: IAB Tech Lab launches Privacy Taxonomy for standardization
• October 2024: IAB Tech Lab unveils ADMaP privacy-first attribution protocol
• October 2024: IAB Tech Lab releases AI in Advertising Primer
• January 2025: IAB Tech Lab unveils 2025 technical standards roadmap
• January 2025: IAB Tech Lab releases official PAIR protocol
• July 2025: IAB Australia conducts third Data: State of the Nation survey among 103 industry professionals
• August 6, 2025: IAB Australia releases Data: State of the Nation 2025 report

Key Terms Explained

First-party data encompasses customer information collected directly by organizations through their own properties and interactions. This includes purchase history, website behavior, email engagement, and demographic details gathered through direct customer relationships. First-party data provides superior targeting accuracy and measurement precision compared to third-party alternatives, particularly as privacy regulations limit external data collection methods. The survey reveals 80% of Australian advertising professionals consider this data type critical or very important for targeting decisions.

Contextual targeting refers to the practice of delivering advertisements relevant to the content being consumed and the user's immediate environment during that session. This approach analyzes page content, keywords, topics, and surrounding context rather than relying on individual user tracking. The method has experienced significant growth as privacy measures eliminate third-party cookies and restrict IP address usage. Survey findings show 89% of respondents express confidence in leveraging contextual targeting opportunities.

Artificial intelligence in digital advertising encompasses machine learning algorithms, automated decision-making systems, and predictive analytics tools that optimize campaign performance. AI applications include audience identification, bid optimization, creative generation, and performance analysis. The technology promises efficiency gains through automation while raising concerns about data security, accuracy, and transparency. Currently, 32% of Australian advertising professionals have deployed AI in limited campaigns or achieved full operational status.

Privacy regulations represent legislative frameworks governing personal data collection, processing, and protection in digital advertising contexts. Australia's Tranche 1 Privacy Act Reforms include Children's Online Privacy Code provisions, automated decision-making transparency requirements, and cross-border data transfer restrictions. These regulations fundamentally alter how organizations collect and utilize consumer information for advertising purposes. The survey indicates 67% of industry professionals feel at least somewhat prepared for these regulatory changes.

Data clean rooms are secure computing environments that enable multiple parties to analyze combined datasets without exposing underlying personal information. These platforms allow advertisers and publishers to perform audience matching, attribution analysis, and campaign measurement while maintaining strict privacy controls. Implementation of data clean rooms has increased significantly year-over-year, with 38% of survey respondents having deployed this technology.

Signal deprecation describes the systematic elimination of traditional digital advertising identifiers, particularly third-party cookies and device identifiers. This process reduces the availability of user tracking mechanisms that have historically powered digital advertising targeting and measurement. The deprecation forces industry adaptation toward privacy-preserving alternatives and first-party data strategies. The phenomenon represents one of the most significant structural changes affecting digital advertising operations.

Measurement approaches encompass methodologies for tracking and analyzing digital advertising campaign effectiveness and return on investment. Traditional attribution models face limitations under privacy constraints, leading to increased exploration of Market Mix Modeling, incrementality testing, and privacy-preserving measurement techniques. The survey reveals over 80% of respondents report that measurement approaches face at least some impact from new privacy legislation.

Identity solutions provide technical frameworks for recognizing and targeting audiences across different platforms and touchpoints while respecting privacy requirements. These systems include deterministic matching, probabilistic modeling, and encrypted identifier technologies. Identity solutions enable continued audience targeting and measurement capabilities as traditional tracking methods become unavailable. Survey data shows 74% of professionals express confidence in having identity solutions in place.

Transaction data comprises purchase information, conversion events, and commercial activity records that demonstrate actual customer behavior and value creation. This data type has experienced increased importance over the past year as organizations seek more reliable performance indicators amid signal loss. Transaction data provides definitive proof of advertising effectiveness through direct business outcomes rather than proxy metrics.

Data security encompasses technical and operational measures protecting personal information from unauthorized access, breach, or misuse throughout the advertising ecosystem. Security concerns intensify as AI adoption increases data processing complexity and regulatory requirements impose stricter protection standards. The survey identifies data security risks as the primary concern for AI adoption, with 72% of respondents citing this as a significant challenge requiring industry attention and standardization efforts.

Summary

Who: IAB Australia Data Council surveyed 103 advertising decision makers and influencers across agencies, marketers, trading desks, media owners, and technology vendors in the Australian digital advertising industry.

What: Release of the Data: State of the Nation 2025 report revealing industry perspectives on data usage, privacy regulation preparedness, AI adoption, and digital advertising capabilities. The survey shows 92% consider data critical for commercial success, with growing confidence in contextual targeting and emerging AI implementation.

When: The survey was conducted in July 2025, with results published on August 6, 2025. This represents the third iteration of the survey series, following previous editions in October 2022 and April 2024.

Where: The research focused on Australia's digital advertising market, with equal representation from buy-side and sell-side organizations. The findings reflect Australian industry adaptation to global privacy regulations and technology trends.

Why: The report aims to help IAB Australia prioritize industry education and training while developing initiatives to help marketers safely and ethically capitalize on data usage for digital advertising amid signal deprecation, privacy regulation changes, and AI advancement.