"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is by Nate Woodman, founder of independent consulting firm Proof.
AdExchanger readers should be familiar with the term “weaponized privacy.” The idea explains the primary effect of Big Tech raising the walls of their gardens under the banner of privacy but with the intentional secondary effect of increasing revenue.
Long before privacy was the name of the game, Google and Facebook demonstrated that measurement is an arrow in their competitive quiver.
Historically, Google and Facebook used last-touch attribution (LTA) was the default system for reporting, payment and optimization. But in recent weeks, both Google and Facebook updated their measurement methodologies.
It is not a coincidence that both companies updated their attribution systems at the same time. And it’s notable that they chose markedly different approaches to replace LTA, Google opting for multitouch attribution (MTA) and Facebook its open-source marketing mix modeling solution (MMM).
Tilting the measurement playing field
Google held onto LTA measurement for more than 15 years despite its known flaws because the search engine often accrues the last click for a user who visits a site or online store.
Facebook also historically defaulted to the last click with a 30-day attribution window, or last view for a one-day window. Facebook cuffed independent app install ad networks like Millennial Media circa 2014 by forcing mobile advertisers to adopt its attribution methodology and SDK, just as Facebook launched their own app install ad network.
Why change methodologies now?
The major factor is Apple’s AppTrackingTransparency (ATT) policy reaching scale.
Each company could make up for the marginal loss in third-party cookie data from Safari and Firefox browsers. But Google and Facebook’s LTA methodology could no longer effectively track iOS users and conversion events, as enough Apple users opt out of tracking to cripple the overall attribution score.
Both companies have chosen new measurement methodologies that play to their strengths in the new media and privacy environment.
Independent ad tech is not the primary competitor guiding Google’s or Facebook’s decision-making (that would be Apple). The independent ad tech market isn’t big enough to merit the attention, to be frank. But the independents will be those most impacted by the changes.
Why did Google choose MTA and Facebook open-source MMM?
The answer is because, in each case, the new measurement methodology is advantageous given the current market dynamics and increased competition from Amazon and Apple.
Google and Facebook have defined their own views on where they see their competitive strengths, as revealed through internal communication documented by the multiple state attorneys general inquiries into collusion between the two companies. Google and Facebook effectively divided the digital ad market in two and agreed not to interfere with the other’s market dominance.
Google has market dominance in search, display advertising and instream online video. Facebook has market dominance in mobile ads and app-install channels. This was highlighted in the collusion case documentation, which revealed that Facebook agreed to reject header bidding (the independent ad tech initiative) in exchange for bidding preference on app-install inventory on Google’s exchange.
Google and Apple similarly co-existed peaceably, because Google went cheaper and open source with Android, while Apple took the premium smartphone market (plus a lucrative search licensing deal, with Google paying billions per year for iOS and Safari searches). Now Google and Amazon have direct channel overlaps on search and intent-based marketing, while Facebook and Apple square off for the app-install market.
How do the recent measurement changes reflect the competitive dynamics?
Google chose MTA as its default methodology because it can still attribute touch points along the user journey from owned-and-operated properties such as YouTube TV, YouTube, Google Search ands its display network. Any revenue loss from search-based last clicks can be picked up in other Google-owned channels.
In addition, the switch to MTA opens the door for advertisers to accept probabilistic attribution modeling and lays the path for Google to use modeled conversions as part of its attribution credit, thus reclaiming conversions it can no longer deterministically confirm due to ATT.
Facebook defaulted to MMM, a methodology that is less precise but ultimately more accurate to true marketing effectiveness measurement, because it can be verified by external experiments. The move, if adopted by advertisers, levels the measurement playing field with Apple’s data and measurement leverage over Facebook for app-install attribution.
The decision by Facebook is closer to the methodological truth; it is also strategically defensive.
Google has forged a new weapon with MTA, while Facebook has made a shield with MMM.
We can learn from the context and market dynamics that competitive companies will always make decisions that are in their best interest. Brands are accredited investors, and they should be aware of the pitfalls of who they let count and attribute the success of their marketing dollars. Buyer beware.