Ad tech’s optimistic posturing against Google’s renewed war against user-level tracking belies an uncertain outlook.
More than anything, the rebuke has ad tech vendors wondering who takes the pain, and can there be gain from the ensuing fallout. Naturally, they’re playing it safe until there’s a clearer answer.
“The market is in a state of chaos, many large publishers are in ‘shock freeze’ — at least in the short-term — while everyone figures out what to do next,” said Jochen Schlosser, chief technology officer at ad tech vendor Adform. “This isn’t an easy topic to understand, so there’s a lot of pressure on the expertise ad tech companies have internally to make the right calls and consult on limited intel.”
Companies that were bullish on one or two user-level identifiers, for example, spread their bets across a larger range of solutions if they weren’t already doing so.
Take PubMatic and Xandr, two of the biggest programmatic marketplaces in the space. Both businesses are testing Google’s cohort-based approach to targeting, which is also known as Federated Learning of Cohorts (FLoC). But they’re also supporting FLoC’s main rival in the Unified ID 2.0 user-level identifier as well exploring ways to help publishers develop their own solutions.
The smartest approach, it seems, is to hedge your near term bets.
“It’s important for companies in our space to have a multi-pronged approach so we’re supporting other identifiers and FLoC as well as the wider Privacy Sandbox initiative and contextual solutions,” said Rajeev Goel, CEO of PubMatic. ‘Everything we’re hearing from ad buyers right now is that they don’t want one choice when it comes to identity. And we’re well positioned to have a very high degree of addressability of audiences and inventory on our platform in a wide variety of alternative IDs.”
Still, a lot of those advances depend on publishers.
“If a publisher has predicated their data collection on giving people a better experience but then goes and creates what is effectively a new cookie pool with [ad tech vendors] then it’s not just regulators concerns to be worried about. There’s also the risk of undoing all the customer trust they’ve built,” Cory Munchbach, chief operating officer at BlueConic.
Without publisher data, user-level identifiers are reduced to being technology, not solutions. As it stands, ad tech vendors have a lot of work to do. Not only are publishers still figuring out how to collate and monetize data from their audiences, they’re also wary of sharing it.
“It’s vital that we keep in mind why the ad tech ecosystem is fighting so hard for these new unified IDs,” said an ad tech exec at a publisher in Europe on condition of anonymity. “The ecosystem’s goal with IDs is to recreate the world of yesterday, which was not a particularly nice place for publishers to be in: Here publishers were reduced to being providers of users (at a price that kept dropping); where first-party party data and journalism meant almost nothing; where cross-site tracking enabled third parties to build and expand ever larger data pools.”
In a nutshell, publishers want to feel like they can trust ad tech vendors again — i.e. think more carefully about privacy compliance. For this to happen, ad tech vendors would effectively have to rethink how they’ve struck data deals with publishers in the past. Criteo is currently working through this very issue and is trying to position itself as a vendor publishers can use to scale their data safely within programmatic marketplaces.
“It’s our feeling that we can preserve as much as 30% of the addressable internet if we do well with the solutions we’re developing, including our plan to build out an addressable footprint through our direct connections with advertisers and publishers,” said Todd Parsons, chief product officer at Criteo.
The defiant optimism following Google’s rebuttal of user-level identifiers is less about the likes of PubMatic and Criteo being in denial, and more an acknowledgment that there are few options on the table. There’s nothing left to do but fight and be optimistic to win.
The hope being that if ad tech vendors can convince publishers to support these alternative identifiers then it opens up a lucrative space where Google isn’t a competitor — individual cross-site tracking. Sure, advertisers have to spend dollars in Google’s walled garden — the major platforms have millions or billions of monthly active logged in users. Increasingly, however, advertisers also want options outside of the walled gardens.
“The whole industry has been presented with an unprecedented obstacle and is understandably taking an aggressive, optimistic and solutions-oriented tone to hopefully resolve it in time, or at the very least minimize the disruption,” said Bob Regular, CEO of ad tech vendor Infolinks. “When you see a tsunami coming, you hold on to the nearest object in hopes of surviving, that’s human nature.”
Google’s blog post has made sure of that. By unequivocally saying its advertising products won’t support any tools that gather lots of signals about a person’s online behaviour, Google appears to be daring the industry to prioritize other identifiers it believes do the opposite albeit in safer, more privacy-compliant ways — and will eventually get banned.
Put another way: Google seems to be trying to nudge the rest of the ad tech market to focus post-cookie tracking bets on its Privacy Sandbox initiative. And it’s given some vendors pause for thought. After all, Google has millions or billions of monthly active logged in users — that’s a lot of money for any advertising company to walk away from.
“Every major ad tech vendor will have to support what Google is doing because it won’t be long before it is pushing back against user-level identifiers in Chrome,” said an ad tech exec on condition of anonymity. “Whether this is fair or not is a topic for another conversation. Fact of the matter is you can still build a big business on top of Google — look at Mightyhive.”
Still, it would be naive for any of those companies to make a decision on where to prioritize their post-cookie investments before Google has clarified how it will benefit from the Privacy Sandbox. Will Google have privileged access to information around FLoCs?, for example. Some of these outstanding questions could come from the group of IAB Europe members Google has agreed to meet with over the following weeks to discuss its stance on user-level identifiers.
The worry, goes the thinking, is that Google’s next scalable solution is to obfuscate the concept of transparent consumer ID targeting. If Google still controls the Privacy Sandbox then observers worry they could use that influence to make it easier for advertisers to spend more dollars across its owned-and-operated platforms than on other platforms.
If this happens, then there’s a chance no advertiser, publisher, data provider or facilitator would ever be able to understand why a campaign ‘works’ or not and will be dependent on Google’s obfuscated solution for future success.
No wonder ad tech vendors are keeping all options open.
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