Dora Michail-Clendinnen is Chief Strategy Officer at The Ozone Project and NDA’s new monthly columnist.
Much has already been written over the past week or so regarding the recent Google blog-post in which they reaffirmed their previously stated aim to deprecate the third-party cookie, move their advertising business away from user-level identifiers and focus on a privacy-first, cohort approach to ad targeting.
Their announcement has implications not just for their own business of course, but for the industry as a whole. What struck me as I read all of the thoughtful commentary on the subject though was how little has been written about the opportunity for advertisers and publishers to take more control of the situation and build an ecosystem that creates greater value for both.
Within the debate, a couple of points have been universally acknowledged. Firstly if there is no viable alternative to the third-party cookie once it’s rendered obsolete, there is likely to be less advertiser value placed on the highly engaged audiences a publisher curates, which will inevitably lead to a degradation of yield in publishers’ open marketplace revenues. This is somewhat ironic at a time when many brands and agencies are focusing on high-attention environments for campaign impact.
Secondly, and from an advertiser perspective, publishers with compliant first-party data should represent a huge opportunity for consumer targeting and insight in the cookie-free world. There’s no questioning the value in this, but what really interests me is how it will be realised. To maximise the opportunity, advertisers and publishers must become more active players in the programmatic space, and this requires publishers in particular to shift away from being a passive recipient of revenue at the end of the supply chain.
Don’t make the same mistake twice
Whilst Google’s blog post led to many smart opinion pieces, much speculation across adtech Twitter and the fall in stock value of major adtech players (albeit, for many, from record highs), the Google narrative doesn’t have to be the only way we determine the next generation of programmatic advertising – but it does represent an opportunity.
Take the supply side of the advertising chain. For the past 15-20 years publishers have worked with adtech companies by giving them their inventory and data and in return have been provided with a steady flow of advertiser spend. The majority of the value generated in this transaction has been retained by the ad tech companies, which has fuelled billions of dollars of growth in the adtech sector. However, their gain has been at the expense of publisher businesses who have not seen anywhere near the growth they should have considering the value they bring through their direct relationship with consumers. You only have to read the headlines from the ISBA & PwC programmatic transparency study to appreciate that advertisers are also frustrated that more of their media investment is not funding ‘working media’.
Yet what we have seen over the past decade – publishers’ first-party data commoditised and their value eroded – may be about to play out all over again. Enormous investments are being made in next-gen ID solutions to replace the third-party cookie, and whilst it remains to be seen how these businesses will navigate the restrictions placed on them by Google, what is clear is that these models rely on publishers’ first-party IDs and/or hashed email addresses. In return they will be rewarded with ad revenue, whilst once again generating huge value for ad tech investors off the back of publisher businesses.
Rewriting the adtech rules
There is an alternative though. The architecture of the adtech ecosystem could be rewritten. The removal of the third-party cookie presents a once-in-a-generation opportunity for advertisers and publishers to force a reset in what is valued, and where that value is created. The technology that has driven the sector can be rebuilt for advertisers by publishers, who through collaboration and a willingness to go beyond the accepted norms, may no longer need to rely on a third-party platform for the creation of audiences, insights and the means of measurement.
The focus on measurement is a critical one. In rewriting the industry’s architecture, we must also redefine what success looks like for this new era, from both an advertiser and a publisher perspective. It’s only by understanding the real-world measures that will positively impact both, that we can be certain we’re pointing a re-architected solution in the right direction.
There is no doubt that this evolving ecosystem would continue to offer rich opportunities for ad tech businesses, but it’s also entirely possible to conceive of a better future where advertisers are offered direct access to a wealth of rich, first-party publisher data segments, consumer privacy is respected through the prevention of data leakage and publishers are rewarded equitably for their assets. All that would point to a better, fairer future for all