NDA, in partnership with Xandr, is collecting the views of some of our industry’s leading figures for their predictions on 2022 and beyond. Next up is Mike Butler, Agency Lead, Northern Europe, at Xandr. You can read all our experts’ predictions on the hub here.
Against a backdrop of tough consumer privacy regulations, increased consumer consciousness and numerous anti-competition lawsuits, digital ad land is evolving. Our new goal is to create a digital marketing ecosystem that puts user privacy at its core. The next twelve months will be key to laying the foundations for a future-proof programmatic ecosystem. Here’s what I believe these foundations might look like.
The age of first-party data
The biggest tech players and owners of the ‘walled gardens’ have grown due both to their coverage and their detailed understanding of their audiences, but the ability to differentiate buying strategies on these platforms is limited. Brands, looking to continue delivering a relevant advertising experience to the end consumer, are searching for viable alternatives.
We can expect most companies (not just those in the advertising industry) to focus their attention on building a direct relationship with customers that allows and encourages the consensual exchange of first-party user data. Companies that might struggle to build their own first-party dataset will need to look for partners who can surface their own datasets to buyers in an efficient and privacy-first way. It’s important to remember that the key to success will be that the customer remains fully in control of the exchange.
The rise of cookieless programmatic transaction types
‘Cookieless’ inventory will make up an increasing percentage of RTB (real-time-bidding) spend. This type of inventory is currently underutilised (lower competition and lower CPM) but more advertisers are waking up to the opportunity this presents.
Today on Xandr’s platform, around 80% of the inventory leverages third-party cookies, 20% does not. This percentage is likely to flip in the coming years as third-party cookies are phased out. Our industry will need to look for alternative ways to drive results without the insights third-party cookies help provide. There’s been a lot of innovation in this space and we, as an industry, are developing smart solutions that are privacy safe to help us with targeting and frequency capping. Greater adoption of machine learning will turbo charge our efforts here.
At the same time, addressable audiences are becoming more valuable but also more difficult to activate. Given that first party cookies work on the publisher’s footprint, sellers and buyers will need to collaborate closely to match 1:1 audiences. I believe deals will continue to be the dominant transaction type when it comes to this kind of audience based buying. Managed service and IOs (insertion-orders) are also going to become more common as new walled gardens/closed marketplaces are established.
In our new privacy-first world, it is likely that we will see many new and existing players in the advertising space adopt a ‘walled garden’ go-to-market strategy as it maximises control while minimising risk. We’re seeing these kinds of gardens pop up with increasing regularity across new media formats such as ConnectedTV (CTV) and Broadcaster Video On Demand (BVOD).
Where this will become really interesting is within retail media. In the US, retail media has been a rapidly growing marketplace for a number of years. Retailers such as Walmart, Walgreens, Kroger created their own ad businesses, following the path of retail media’s undisputed market leader Amazon. And why not? The pandemic has accelerated existing consumer behaviour trends driving e-commerce to new heights. Large audiences, making frequent purchases, across a range of products has become an opportunity too big to ignore for many retailers. Most recently, UK supermarket heavyweight Tesco launched its own retail media business ‘Tesco Media and Insights, powered by Dunnhumby’. In partnering with the data science company to leverage the data from the 20 million households that are members of its Clubcard loyalty program, this new platform allows brands to understand customer preferences and deliver a richer, more personalised experience in a privacy-first environment. This trend shows no sign of slowing down either – eMarketer’s latest forecast predicts a jump of 53.4% for US retail media ad revenues this year to $31.49 billion, representing 14.9% of the digital ad market.
Gates will provide access
With increasing numbers of ‘walled gardens’ emerging, it will be imperative their groundskeepers don’t follow a similar pattern to those established by the dominant tech giants of our industry. In much the same way that calls have been made for the existing walled gardens to become less closed off, transparency will be key for those operating within the confines of these new walls, allowing for better relationships across these new ecosystems and a deeper understanding of the operations within them.
While I don’t expect to see governments and regulators to take such drastic action to ‘break-up’ the walled gardens, I can easily see this partial ‘opening up’ of their walls with the giants being asked firmly to make their walls lower and increase transparency.
There’s power in partnerships
At the centre of everything next year will be the continuation of deeper, closer partnerships between the various players in the digital industry. There are very few solutions to the identity challenge that do not involve both the buy- and sell-sides of the programmatic ecosystem. If we don’t want to default to ‘whatever is easiest’ and want to create a healthy ecosystem built on a foundation of consumer privacy-first thinking, then both sides will need to lean on and learn from each other. Partnerships must be front and centre of all our activity next year. In the words of Henry Ford, “coming together is a beginning, staying together is progress, and working together is success.”