The advertising industry is coming to the realization that privacy is good for business.
Advertisers have been bracing for the implications of full third-party cookie deprecation as the industry responds to the need to re-architect the way ads are delivered on the web. However, a global patchwork of privacy legislation aimed at protecting citizens is making it difficult for advertisers to understand the complete picture of requirements and whether they are at risk of exposure in various other markets that may have stricter requirements than their own.
The industry is reluctantly being forced to observe the most stringent of restrictions despite its own markets presenting opportunities that would, were it not for international privacy laws, be accessible to monetize. In years past, this would not be as difficult to navigate by using appropriate disclosures and privacy policies that covered off the transparency requirements. Today’s regulations, however, present the risk of crippling penalties for non-compliance.
IAB Canada and its members continue to work to deliver best-in-class open-source, privacy-enhanced technologies for the industry. Among them is the enhanced Transparency and Consent Framework currently being refined in Europe to comply with strict GDPR privacy rules.
While the industry grapples to build around the new cookieless, privacy-forward landscape, stakeholders are coming to terms with something we’ve always known: Respecting consumer privacy and providing full transparency are not just new legal requirements – they are good for business. Actually, they are great for business.
Propelled by consumer demand and their privacy-seeking behaviours (expressing the paramount importance of trust and transparency), the largest media properties in the world are now infusing privacy into their business offerings to create competitive advantage.
Ripe for disruption
For the past two decades, we have hinged our investments and activity on a technology that would one day reach its limit – bits of text placed by websites on the hard drives of visitors allowing marketers to track browsing history and the behaviour of consumers to sharpen their online advertising efforts. Third-party cookies have been the foundation of programmatic advertising and ad targeting. The approach, largely viewed as effective by the industry, has leveraged cookie technology to do a variety of neat things like identify granular audience attributes and re-target and control the frequency of ad exposures. It has become increasingly clear that these functions are on the chopping block as we see cookies exit stage left.
Inappropriate use (or abuse) of third-party cookies has fed a media literacy curriculum fraught with grievances around the “surveillance economy.” Third-party cookies have been exposed as the main culprit behind the creep factor.
Our industry is on the case. For two years now, the smartest minds in the sector have been developing a new, viable way forward that preserves the unique power of digital ad delivery while protecting consumer privacy.
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After hundreds of Shark Tank-style proposals and Zoom call debates, the industry has zeroed in on three general approaches for advertisers to connect with audiences without cookies.
Identified audiences that are consented and anonymized through tokens can be addressed in similar ways today. The OpenRTB framework that provides the backbone of programmatic advertising can identify audience attributes associated with an anonymized profile and apply them to the bid stream so that media buyers can buy against the profile. This approach would incorporate the use of a new mainstream technology called a “clean room,” which acts like a “black box” environment where data profiles can be shared, matched and anonymized without the ability for either contributor to re-identify the profile. This method is estimated to account for about 20% of addressability in the early post-cookie era.1
Contextual advertising has come a long way since the early days of the internet. Deemed one of the safest methods of online advertising, contextual placements match ad creative to environments that are relevant. This method is often purchased through direct publisher relationships but can also be bought programmatically by leveraging the standardized content taxonomies outlined by the IAB Tech Lab. Publishers tag their content according to the categories and make them readily available to bid on.
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One of the biggest challenges associated with context is scale. Publishers have finite contextual placements, and the increased demand will add a premium to this type of investment – particularly for competitive categories or ones that depend on seasonal ad exposure.
Seller-defined audiences offer a scaled approach to delivering contextual placements based on content signals that are crawled, organized, packaged up and signalled to the bid stream. Using AI technology and machine learning, content is crawled and categorized based on various models, including some refined predictive ones that can be categorized according to intent. Seller-defined audiences combined with contextual advertising are expected to deliver 90% of online addressability – Google’s recent unveiling of “Topics” is captured here, and advertisers should stay close to developments in this space.
While the industry cracks the addressability challenges, we must not lose sight of the fact that privacy by design will be the underpinning of any advertising method. All stakeholders are faced with the reality that first-party data will be the new foundation of advertising in the future. Without it, the solutions for placing ads in digital environments will be limited in effectiveness. First-party data will be key to making informed media-buying decisions in the next version of the ecosystem; to capture it, there may be some steep learning curves.
Context, once used to describe the environment in which an ad is placed, now must be applied to understanding how to offer value at various stages of a customer relationship with a brand. Customers can “signal” several clues that indicate context. From being a first-time visitor to a website to clearly being on a mobile phone while in a car, the technology exists for advertisers to assess added layers of context to respond appropriately. As advertisers look to shore up first-party data, understanding in which context a customer presents themselves can help shape responsive design rules.
The future will require brands to establish real value in exchange for data and potentially bake in variables to collect more robust data sets. They’ll need to consider whether a customer would be willing to provide an email address immediately upon entry to a website or whether it might be more palatable (and more likely to be provided) at a different stage in the user experience.
First-party data will increasingly become a creative exercise that is deeply connected to user experience design and could easily extend to gamification and complex incentive strategies. We are seeing the early stages of this unfolding via consent management platforms that are offering a new canvas for creative layers on their interfaces and A/B testing to optimize the likelihood of opt-ins.
Modular data management
The modernized tech stack will require organized outputs that can easily leverage the new methods of addressing audiences outlined above. Advanced customer data platforms use AI to identify segments that can be packaged, organized and connected to the media supply chain.
While publishers organize their inventory to ensure highest value, advertisers work to identify addressable customer characteristics that are related to unlimited data points. Whether segments are established for purchase funnel activity, life stage or other vectors, advertisers will need to have well-organized, modular data that can be easily leveraged for media use.
Organized first-party data can also help streamline omni-channel activity, allowing advertisers to create control groups as well as perform A/B testing and more accurate attribution modeling.
Getting it right
This is an exciting time for all stakeholders in the industry. It is our chance to get it right for consumers while opening a treasure trove of new opportunities for brands to connect with their audiences.
Privacy has historically been viewed as the “legal department” of advertising. Today, the topic represents a vibrant new creative opportunity for brands to build the trust and transparency their customers expect. This is not a time for short-sighted workarounds but rather a chance to step back and consider the long game of relationship building. It’s true that most new privacy laws require an organization to appoint a data officer, but it’s important for all of us to embrace privacy as integral to our jobs and as a path to competitive advantage.
1 IAB Canada. Moving Towards Cookie Independence, January, 2022.
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