Counterpoint: The Third-Party Ad Server Has A Big Future

megan-pagliuca“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 Megan Pagliuca, VP and GM for digital media at Merkle Inc. It was penned in response to Rob Griffin’s recent piece, “The Death of the Third-Party Ad Server.”  

Rob Griffin’s column on the future death of the ad server does not acknowledge that a targeting and measurement methodology dependent on a third-party cookie is fundamentally flawed.

With a better targeting and measurement methodology, the dynamics of the ecosystem will change, and the ad server will take on an even broader role. The ad servers, including Facebook’s Atlas and Google’s Doubleclick Campaign Manager (DCM), are driving the shift to tracking in a cross-device world using Facebook and Google logged in identity as the backbone.

To date, neither has been strong in either mobile or cross-device capabilities but, as they integrate identity, they have the potential to provide long-awaited salvation from inaccurate measurement that has prevented budgets from moving to mobile and digital overall.

Time spent in mobile has surpassed time spent in desktop, but since the third-party cookie is barely useful in tablet and mobile environments, reporting in attribution platforms, DMPs, DSPs and ad servers alike all massively undervalue the performance of those placements. The result of the defunct methodology is marketers are missing an enormous opportunity to reach consumers.  To Rob’s point, cross-device players like Tapad are innovating but there are three problems preventing cross-device ad tech startups from enabling budgets to move to mobile at scale.

First, cross-platform vendors are not integrated into marketers’ system of record for measurement, budget allocation and billing, also known as the ad server. Second, there has been no industry standardization for counting, or industry certification for cross-device players. Third, some of these firms happen to be ad networks trying to drive larger budgets. They really could be generating their cross-device reporting out of thin air and marketers and agencies wouldn’t know the difference. We have seen Medialets fill a critical measurement and attribution gap as the only MRC-accredited mobile ad server, providing an independent and objective source of truth for mobile, while we not so patiently wait for a solve for cross-device.

The same concern applies to the leading ad servers, Atlas and DCM, as they are owned by the leading media platforms, Google and Facebook. Ideally we would want an independent player, providing the source of truth for measurement, budget allocation and billing. The challenge is that only the large media players have the scale of logged-in identity that is required to solve the measurement problem deterministically.

To create competitive advantage and influence consumer behavior, marketers must be able to target and measure at an individual level across devices.  The large media platforms with logged-in identity data are in the best position to enable individual level cross-device measurement as well as get the industry past its dependency on the third-party cookie. They may not be independent and objective, but they are well-positioned to solve the problem.

Now let’s play this out. It’s a year from now and Google and Facebook are operating their ad servers off of IDs that are derived from logged-in identity, rather than off of third-party cookies. I would be surprised if Twitter didn’t offer a competitive solution, too. There will be a new level of transparency in measurement, and reports on discrepancies between people vs. cookies will open the eyes of marketers on how flawed the third-party cookie approach has been.

An ad server, powered by the identity data, remains the single source of truth for cross-device measurement, enabling major budget shifts from TV and direct mail to mobile, tablet and desktop, accurately reflecting consumers’ time spent.

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  1. Picking up from our conversation on Twitter (start here:, many of the issues surrounding the cookie’s end of life can be resolved by Apple, Google and Microsoft exposing their platforms’ in-app ad IDs (IDFA et al) to both the browser and across a user’s various devices. This way, for example, a user logged into their iPhone and iPad via their iTunes account could also be linked back to their desktop machine via that same iTunes account, and similarly across the Google & Microsoft stacks. The mechanisms for notice and control already exist for and are familiar to mobile app users, and the IDs themselves have limited durability that can easily be reset on demand.

    Anyone inside of Apple, Google, and/or Microsoft want to pick up this torch?

  2. Even if Google and FB try to solve the issue, only 18% of their users are logged in cross device at any given time. There will still be an attribution issue regardless. The Direct Response advertisers that you represent at Merkle will have to start looking at digital differently and adjusting their goals as consumption of media continues to shift towards cookie-less devices.

  3. John K, certainly marketers that have historically utilized direct response channels are excited about addressability in digital media. But as digital addressability is reaching mass scale the largest brand advertisers are actively investing in capability development and operating model change to bring the knowledge of their customers (and prospects) up into the top of the funnel. This increases advertising efficiency, lower funnel conversions and return on spend. It’s difficult to find a leading brand today that isn’t focused on increasing the addressability of their interaction with customers across all media and channel. A good example of this was the introduction of RLSA last year from Google, an early step to bridge the transition to addressable advertising, but still reliant on the 3rd party cookie. We should all expect a google version of Facebook’s people based targeting products soon in answer to Facebook capturing more of Google’s market share. While there has been greater measurement capability and accuracy in direct response marketing, digital addressability is increasing measurability of digital brand spend. And we believe all marketers would prefer to have transparency in the effectiveness of their spend. The movement in the market is revealing this trend. Top US brands are regularly able to connect with greater than 50% of their customers through logged in identities. And that will be closer to 100% before most are ready. Times are changing… And this change will only accelerate from here. Will Bordelon, Merkle, Inc.

  4. Brennan Hayden

    Megan, from my perspective your analysis hits on all salient points but one: what incentive do the logged-in environments have to share the data they collect in a way that enables transparency, reach and frequency measurement, sequential messaging, and all of the other benefits available in the third-party cookie world and also desired from cross-device? I mean, cross-device isn’t desired for it’s own sake, right? But rather to enable the marketer to know when they are communicating with the same individual across platforms. It would seem that cross-device, within a single publisher only, is not a huge deal. Interesting, yes; better than not having it, yes; but hardly a game changer for the cookie-less conundrum if the duplication removed with “cross-device-lite” is added back in – and then some – due to silos within Facebook, Twitter, Google, Foursquare, and the list goes on.

  5. Great analysis, Megan. It would really be nice to have an independant 3rd party ad server that could levrage some type of universal ID for cross-channel targeting. But I agree with Brennan: there’s not a ton of incentive for the big guys to share. Also, there’s not a lot of incentive for independents to innovate solely on ad serving, since the service has become commoditized and extremely low-margin.

    Great job.