Advertisers have found themselves on the wrong side of the privacy debate. Whether the allegation points to surveillance or predatory advertising, or to suggestions of personal data harvesting without consent, advertisers need to recalibrate the narrative and change the way they use personal data to develop new audiences and foster new consumer relationships.
Cookiepocalipse
Deprecating third-party cookies and identifiers impacts marketers and advertisers. Close to 80% of marketers are very or moderately reliant on third-party cookies. Brands benefit from understanding their consumers. A typical marketing funnel endeavours to track and lead a consumer through the various stages of awareness, interest, desire and action. Marketers benefit from tracking consumers through those phases. Cookies helped track digital footprints, as do cross-channel consumer relationship databases. The deprecation of third-party cookies puts pressure on both brands and third-party data providers. Brands and advertisers are under pressure to collect more first-party data and data management providers rely more on lower-quality sources of data.
Advertisers still rely heavily on third parties for target audience data. A recent IAB Europe survey suggests 64% of European advertisers still prefer third-party data over other sources with demand for third-party data increasing by 25% from 2020 to 2022. Only 35% of stakeholders used first party data in 2022, down from 70% in 2021. 43% of all stakeholders continued to use third-party data, marginally down from 44% in the prior three years. It appears financial considerations and evolving regulations around how primary data can be collected and used has damped interest. OwnYou is a more reliable alternative to system that rely on third party data.
Advertisers have already lost 50-60% of the signal fidelity from third-party identifiers thanks to Apple and Mozilla’s privacy agenda. That gets worse when Google deprecates third-party cookies in 2024.
Walled Garden operators are choking advertisers
While the publishing and advertiser landscape remains highly fragmented, across each main geography, only a few companies control high-quality user profiling data. For instance, in the US, Google and Facebook have a stronghold on user profile data and they control the two most powerful advertising platforms. Facebook is a Walled Garden; they collect and use personal data to provide targeted advertising, and advertisers benefit and pay for high-quality target audience profiling. The Walled Garden business model monetises consumer data to generate more than $100bn in revenue every year, or approximately $35 of revenue per user. Google spent more $31.6bn on R&D in 2021 and Facebook spent $25.7bn. While not all of that spending was on advertising technology, the numbers help explain why the competitive environment is challenging. And why advertisers have little to no pricing power. More money to the platforms necessarily means less money for both advertisers and publishers.
Also, as the privacy agenda gathers pace, so have the major platforms increased the height of their walled gardens with limits on how mobile IDs are used (Apple and Google) and with the deprecation of third-party cookies across all browser providers, including Apple’s Safari and Google’s Chrome (now due in 2024). This has two immediate consequences; less pricing power against increasingly monopolistic platforms and a deterioration in attribution, and therefore lower returns on advertising spend.
A difficult choice
Advertisers must choose, more than ever, on whether to plough more advertising revenues into the walled gardens, knowing they can no longer rely on user level identifiers, or risk deteriorating data and poor audiences targeting. Relying more on walled gardens means trading in transparency and control for more safety and better reliability, as the platforms pivot towards cohort-based reporting that relies on differential privacy, which inevitably leads to longer time lags and less resolution.
Low quality third-party data
Advertisers have long relied on probabilistic models that rely on third party data for audience targeting, typically weaved together from multiple unreliable sources. Neuman et al (2019) evaluated the accuracy of over 90 third-party audiences across 19 data brokers and concluded that average accuracy is only 59%. When looking at gender and age individually, they found that audiences for gender are on average less often correct than random guessing (42%) and age accuracy ranged from 11% to 32%. OwnYou, with verified identity, suggests 100% accuracy for demographic factors. All other factors, resulting from the intelligence stack, will carry probability metrics to help advertisers balance the size of the audience against accuracy.
Audience verification is challenging
Not all audiences are suitable for all products. Children should not see advertising for products only available to adults. For instance, alcohol should not be marketed to minors. This is not currently possible to enforce online. OwnYou’s verified credential architecture provides unique checks and balances for publishers and advertisers, without compromising the user experiences, without additional user workflows, and while maintaining user privacy. A zero-knowledge proof (ZKP) age verification check is a trivial sign-on step, once we have verified credentials in place.
Low quality first-party publisher data
Most publishers do not have accurate demographic information on their users, even for subscribers. Most subscribers do not provide detailed demographic data. Even if the information is requested, self-labelling impacts quality, either through errors or deception. Advertisers typically use Nielsen’s “Digital Ad Ratings” to track campaigns and viewer demographics. OwnYou provides a unique source of verified demographic data.
Fraud
Digital advertising fraud is expected to cost brands $44 billion in 2022 , reaching up to 45% of total spend. Some estimates have the number running as high as $81bn in 2022, rising to $100bn in 2023 . Ad fraud is the practice of inflating impression, click or conversion data for financial gain, at the cost of the advertiser. Ad fraud can be defined as invalid traffic (IVT), which refers to any activity which is made up of non-human traffic. IAB breaks that down into general invalid traffic (GIVT) and sophisticated invalid traffic (SIVT). GIVT is performed without the express intent of committing ad fraud, whereas SIVT is design with malicious intent. OwnYou does not pretend to fix all ad fraud. However the verified credential workflows, and associated costs and complexities substantially reduce the risk of bot traffic or spoofing. OwnYou limited does not fix fraudulent publishers, but it does make it substantially more difficult for bad actors to fake traffic.
Fewer lemons
In the programmatic lemon market game, success is defined by the advertiser’s ability to correctly price the quality of ad impressions sold in programmatic auctions. Advertisers should endeavour to only pay a price less than or equal to the ads intrinsic value. Intrinsic value is defined by the quality of the ad, with viewability taken as a proxy for quality; whether the ad is visible and for how long. Quality matters. Getting the rid ad in front of the right consumer, at the right time, will lead to a more favorable outcome. Too many advertisers rely on a pray and spray strategy, where CPM paid is often not sufficiently correlated with viewability, and therefore quality. While the publisher is responsible for presenting inventory correctly, OwnYou can substantially improve suitability and relevance, which will impact viewability.
