Research Briefing: Publishers bank on their own first-party data amid Privacy Sandbox concerns

First-party data plays a key role in 64% of publishers’ ad strategies

Publishers are apprehensive that the Privacy Sandbox could significantly reduce the effectiveness of targeted advertising in Google Chrome. This, in turn, could lead to a substantial dip in ad revenue, a prospect that is causing considerable unease. 

Google’s Privacy Sandbox initiative proposes a set of APIs for players in the ad tech ecosystem to access user information in a limited way that better ensures user privacy in a manner that doesn’t outright decapitate programmatic advertising. While the initiative is intended to enhance privacy on the web, any reduction in targeted ads’ effectiveness decreases publishers’ ad revenue. 

Publishers are concerned the changes will disproportionately benefit large platforms, which have more resources to adapt to and leverage the new advertising mechanisms. Meanwhile, sources noted the Privacy Sandbox puts large-scale publishers (i.e., those without a handle on their first-party data strategies) on a level with the long tail of the internet when it comes to commanding higher CPMs.   

Digiday+ Research recently asked publishers about the type of data that plays the most significant role in generating positive ad revenue outcomes for their companies. In both 2023 and 2024, respondents said that first-party data has the most impact.

Publishers also predicted that the percentage of ad impressions served by first-party data will increase in 2024 and 2025.

This focus on first-party data indicates that publishers see their own first-party data as an alternative selling point following the death of the third-party cookie. Taha Ahmed, chief growth officer at Forbes, said that first-party data is closely linked to various revenue strategies. “We also use it [first-party data] to build top and middle funnel, to bring in better audiences, and we use it to drive newsletter users who then subscribe,” Ahmed said. “We want to continue to provide as much value to the user at every stage and build our first-party data, which then will enable newer revenue opportunities.”

Insights and stats:

• Sixty-four percent of publisher respondents said that first-party data plays the most significant role in generating positive ad revenue outcomes for their organizations in 2024, up from 53% in 2023.
  
• Eighty-two percent of publishers said that first-party data will play an important role in their ad strategies in 2025, while only 3% said the same of third-party data. 

• Subscriptions are a large source of first-party data for publishers. “It is a very connected strategy for Forbes. First-party data, building a proprietary database on the audiences that we have, and building our models around it is so critical. We use that as the center from which multiple revenue streams get enabled.” — Taha Ahmed, chief growth officer at Forbes

Read more about how publishers are optimizing revenue streams

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Even as first-party data grows in importance, subscriptions aren’t the revenue driver they once were for publishers. This is according to Digiday+ Research surveys of publisher professionals, conducted every six months. Nearly half of publisher professionals (44%) told Digiday in Q1 of this year that they don’t get any revenue from subscriptions, up significantly from the 26% who said the same just six months prior. In other words, the percentage of publishers who make at least a little revenue from subscriptions fell from 74% in Q3 2023 to 56% in Q1 2024. 

The stats:

• The percentage of publishers who make a large or very large portion of their revenue from subscriptions has been trending downward. In Q3 2022, 27% of publisher pros told Digiday that subscriptions accounted for a large or very large portion of their revenue. That percentage fell to 21% in Q1 2023, and fell significantly to 11% in Q3 2023 before hitting 7% in Q1 2024.
  
• Publishers may be shifting to an acceptance that subscriptions are no longer a big revenue driver. Forty-one percent of publisher pros said in Q1 2024 that they’re not focused at all on building their subscriptions business in the next six months, compared with 33% in Q3 2023.

• The percentage of publishers who said they’ll put a very large focus on growing subscriptions revenue, in particular, has contributed the most to this trend. Throughout 2022, the percentage of publishers who put a very large focus on subscriptions held fairly steady at 27% in Q1 of that year and 29% in Q3. However, it fell to just under a quarter (23%) in Q1 2023 before falling again to 15% in Q3 2023 and 9% in Q1 2024.

Read more about publishers’ subscriptions revenue

X, formerly Twitter, is once again telling advertisers it’s serious about brand safety. Last week, X announced that it was promoting internal employee Kylie McRoberts to head of safety and bringing on Yale Cohen, formerly Publicis Media’s evp and global head of digital standards, as its head of brand safety. Cue the eye rolls and déjà vu from marketers who have weathered broken promises and watched a parade of safety heads come and go since Elon Musk’s reign began in 2022. It’s no wonder they’re skeptical about considering X a safe haven for their ads.

Insights and stats:

• More than one-third of marketers (35%) said that brand safety concerns are the biggest challenge they face on X, according to Digiday+ Research’s CMO Strategies series. Keep an eye out for Digiday’s updated CMO Strategies series reports coming soon.
  
• Only 2% of marketers said X took the largest portion of their company’s marketing budget in 2023. By contrast, No. 1 Instagram and No. 2 Facebook received the majority of marketers’ budgets in 2023, with 83% and 54% of survey respondents selecting each platform respectively.
  
• “We were going through a remediation process with X to get them back into compliance, but the clock ran out on their [Trustworthy Accountability Group] certification. So they did not complete that audit or file their recertification application. And you have to do a new audit every 12 months for it to be current.” — Mike Zaneis, CEO of Trustworthy Accountability Group

Read more about how marketers’ social platform budgets stack up

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