Programmatic advertising is undergoing a change, driven in large part by external threats — from regulators, platforms and browsers — to the slicing and dicing of user data.
At ExchangeWire’s ATS event in London, ad tech execs gathered to mull future business models, the demise of the third-party cookie and the privacy-focused direction taken by the browsers. Some key talking points:
Agencies aren’t as adept with data as they let on
If there’s one message the agency holding group bosses have tried to relay to shareholders over the last 12 months, it’s that they have a plan for data. Problem is, most of those execs haven’t been able to make data more accessible across their businesses. That’s according to S4 Capital CEO Sir Martin Sorrell, who believes none of the holding companies — bar Dentsu Aegis — have a robust data strategy. He cited IPG’s media business as an example of a company that hasn’t managed to use its purchase of data firm Acxiom to its advantage in media pitches.
“The area is so sexy that there’s not a lot of thought that goes into it [buying data businesses],” said Sorrell. “I’ve spoken to people at IPG, Dentsu and Publicis and the common threat to all three is a view that there was a lack of detailed analysis as to why they were doing it. A senior person I spoke to at IPG on the media side wanted to leave because they didn’t think the Acxiom acquisition had been integrated.”
The demise of the third-party cookie
The death of the cookie is closer than it has ever been. Moves made by Google, Apple and Mozilla to squeeze third-party cookies from their browsers have made sure of that. The reverberations from these changes have sent shock waves throughout ad tech that will be felt for quite some time. From the emergence of new tech solutions like Infosum touting compliant ways to share first-party data for targeting, to the search for data clean rooms that offer advertisers the data and analytics needed for granular targeting, there’s a new economy forming from the remnants of cookie targeting.
All these changes could eventually weed out the endless arbitrage of data in the digital ad supply chain that doesn’t add value. In the short term, however, the cookie crackdown from browsers has caused massive headaches for advertisers and their agencies. At GroupM, for example, the world’s largest media buyer is getting its head around how to replace what amounts to between 20% and 30% of the audience market that has been wiped from media plans in the wake of Apple’s anti-tracking update.
“If your job is to fundamentally connect advertisers to consumers, then the reality of having to go to a client and tell them they can’t talk to 30% of their audience is a major issue for us,” said Richard Lloyd, chief data officer at GroupM in the U.K. at the conference.
DSPs vs SSPs
DSPs are going direct to publishers, while SSPs are going direct to advertisers. Ad tech’s most dominant players are converging on one another as the need to step into each other’s arena intensifies. SSPs don’t think it’s enough to aggregate lots of inventory sources together and then put it on the marketplace, while DSPs can no longer bring inventory together from suppliers they know little about. Advertisers want more value and are increasingly threatening ad dollars to get it.
“DSPs and SSPs are going to become more similar,” said an ad tech exec. “Those businesses will become reduced to dumb infrastructure that’s just passing bids and data through. The business models will come down to relationships. If you’re an SSP and you have relationships with the leading companies out there, then you’d want to leverage that relationship because that’s where your power comes from. It’s no longer derived from getting a billion impressions, which no one cares about.”
The future is the authenticated web
The authenticated web concept is simple: users will have given their permission for any of the digital experiences they receive. For publishers, it means logged-in users and other means of attaining direct, consented audience data. Question marks remain over whether this will cause CPMs to rise given the value of consented data — now critical under the General Data Protection Regulation and the data privacy policies of the browsers. However, that’s no easy or quick task.
The push for identity-based solutions that aren’t reliant on third-party cookies, is actually coming hardest from the buy-side, according to Andrew Casale, president and CEO of Index Exchange. The future marketer will be focused on a totally different way of communicating with consumers, that is entirely CRM-data based, rather than cookie-reliant.
“That’s a big challenge,” he said. “We would have to recreate every single media event [to not revolve around the third-party cookie]; that’s not trivial.”