With consumers and regulators demanding increased transparency around data collection and usage, a reckoning is on the horizon for Big Tech and the advertising industry at large. The unregulated collection of personal data has fueled an entire industry that now sits at an inflection point with the recent privacy announcements by Apple and Google. So how will these changes affect marketers and the larger digital advertising ecosystem?
For starters, publishers, media agencies and ad technology vendors must find a way forward as they navigate the fallout from a complex and confusing issue.
Apple Introduces New Privacy Controls
With Apple’s introduction of privacy controls through iOS 14.3, Apple gives users the option of sharing their data with developers to use their Identifier For Advertisers (IDFA). What is the IDFA? Think of it as a device ID associated with your mobile phone and used for tracking and attribution. It allowed advertisers to precisely target and track users within non-browser apps on iOS devices, a move that was seen as a savior when significant browsers such as Mozilla and Safari began phasing them out.
By doing so, Apple is stripping advertisers’ ability to use data from apps to tell them where you’ve been and what your interests are — thus, limiting the effectiveness of their once hyper-targeted ads. These same ads are the bread and butter of many publishers like Facebook, who generate the lion’s share of their advertising revenue from harvesting this data.
Is Apple doing this altruistically? The jury is out, but Facebook claims that “Apple is attempting to push free apps, which often sweep data up and feed it to advertisers, to move to subscription models. Apple, through its App Store, collects a 30% cut of in-app purchases, which critics dub ‘the Apple tax.’”
Google Ceases Identity Based Identifiers
Next up is Google. David Temkin, director of product management, Ads Privacy and Trust, announced that the company was “making explicit that once third-party cookies are phased out, [Google] will not build alternate identifiers to track individuals as they browse across the web, nor will we use them in our products.”
Temkin also noted Google’s disapproval of the usage of email-based identifiers. In the same blog, Temkin stated, “We realize this means other providers may offer a level of user identity for ad tracking across the web that we will not — like PII graphs based on people’s email addresses. We don’t believe these solutions will meet rising consumer expectations for privacy, nor will they stand up to rapidly evolving regulatory restrictions, and therefore aren’t a sustainable long term investment.”
This move is significant for a few reasons. First, it affects the current digital ecosystem by exposing advertisers who depend on open ad exchanges and lack quality first-party data (more on that later).
To back that point up, ex-programmatic guru and co-founder of Content Engine Leland Morris says, “The shift away from cookies, adoption of iOS14 and Google’s latest announcement regarding the deprecation of digital IDs should really come as no surprise to digital marketers. This conversation has been happening for years. The greatest impact will be felt by marketing teams that are heavily reliant upon data-driven, open exchange buys and third-party data. On the contrary, organizations that have invested in getting their first-party data in order and/or have built custom second-party data relationships will still be able to activate programs using digital IDs. They’ll simply need to align their strategies (demand side) with supply-side vendors through which targeting-enabled inventory will flow. To prove this point, Google is still offering people-based inventory via DV360.”
Secondly, and perhaps more importantly, Google is taking an industry-wide stand on tracking as a whole by stating that they’re ceasing the development of any identity-based identifier entirely while also casting doubt on email-based solutions to the problem. Interesting to note is that the DSP TradeDesk is working on, you guessed it, an email-based answer to the sunsetting of cookies called UID 2.0.
However, many in the industry are skeptical that Google will be taking its own medicine. In January 2021, Google stated its intent to move to its Privacy Sandbox technology for interest-based advertising (FLoC), and they released new data showing how this innovation can deliver results nearly as effective as cookie-based approaches.
Google stated, “Technology advancements such as FLoC, along with similar promising efforts in areas like measurement, fraud protection and anti-fingerprinting, are the future of web advertising — and the Privacy Sandbox will power our web products in a post-third-party cookie world.”
In layman’s terms, FLoC aims to replace identifiers with a process that puts users into groups or “cohorts.”
Google also claimed that the test drove upward of “at least 95% of the conversions per dollar spent when compared to cookie-based advertising.“ The only problem with this metric is that Google won’t release detailed data on how they could successfully use FLoCs to deliver. Much like Apple (and any business), Google usually makes decisions that are based on their self-interest.
What’s Next for Marketers?
So, after all this, where does it leave marketers? I’ve broken down my recommendations into three areas of focus.
1. Don’t expect a quick fix.
While solutions like TradeDesk’s UID 2.0 sound good on paper, the idea that every publisher is willing to agree on a unified set of standards surrounding identity is far-fetched; there is too much money at stake, too many competing interests and too much ambiguity around what is actually going to happen. Then you have to factor in that publishers and Big Tech haven’t always seen eye to eye (to say the least). Finally, remember the plans and conversation around third-party cookies started in 2019 and we’re just now starting to see and feel the repercussions. So while the industry is working to find a solution to this problem, there will be bumps in the road.
You can also expect an impact on conversions and targeting across Facebook, Google and other platforms as the fallout continues. If you rely on open exchanges, you need to go in eyes open and monitor your data to make changes on the fly.
2. Context is king.
While contextual targeting is back in a big way, it’s far from a new tactic. Many of you might have run programmatic ads based on contextual targeting (backed by deterministic) data. Serving ads about cybersecurity products to prospects reading about a data breach makes sense, and it’s a continuation of that mindset.
StackAdapt, a self-serve DSP, recently rolled out its own page-level contextual targeting called Page Context AI. It’s a self-serve tool that allows you to “custom contextual strategy by inputting in context and out of context phrases so that our patent-pending algorithm can determine the best ad placements based on a publisher or site’s content.”
I’d expect more tools and solutions like this to roll out over the next few months. While it’s not a replacement for targeting and tracking, marketers will have to adapt.
3. First-party data is your friend.
At the end of the day, first-party data is going to allow you to bypass the walled gardens and market to your contacts that have given you their consent. It allows you to bypass the “black-box” targeting of many of the top ad platforms by uploading your hashed contact data directly into their system, allowing you to feel confident about your targeting. Ensuring your ability to drive up match rates takes on added importance given the current landscape.
Google itself stated in its blog that it “will continue to support first-party relationships on our ad platforms for partners, in which they have direct connections with their own customers. And we’ll deepen our support for solutions that build on these direct relationships between consumers and the brands and publishers they engage with.”
Keeping these tips in mind should help you navigate the waters while also being realistic about the challenge and opportunities these privacy-based changes have brought about.
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