To the clouds!
While that may sound like a superhero catchphrase, it was actually the de facto motto of martech and ad tech in 2023.
The deification of data clean rooms, the need for privacy compliance and this year’s generative AI explosion were just a few of the trends pushing businesses away from owning and maintaining their own servers and toward cloud-based tech infrastructure.
Data-driven advertising is right at the forefront of this revolution.
These were the key trends driving cloud-based ad tech adoption over the past year.
Snowflake’s chance in hell
Big Tech platforms not only have their own media and ad tech; they also have their own cloud businesses.
So what’s an independent cloud-based advertising vendor to do? Competing with the likes of Google and Amazon is no joke.
Frankly, this remains an open question.
The main challenger to the walled gardens is Snowflake.
Snowflake’s scale and penetration across industries is a huge advantage – and there’s a lot of room to grow. It only seriously began treating media and advertising as a category a few years ago, and it is primarily not a marketing service.
Yet Snowflake has carved out a unique position for itself. Although it competes with certain Amazon Web Services (AWS) and Google Cloud Platform (GCP) tools, it doesn’t replace those platforms wholesale. In fact, Snowflake is one of AWS’s biggest clients, and the same goes for GCP.
Snowflake is also a default partner for many ad tech and media businesses building up their cloud-based services.
For example, as privacy standards become more of a priority, Acxiom’s third-party data segments are a tougher and tougher sell. But data matching with privacy compliance is feasible in the cloud, since it can be accomplished without having to shift data across the supply chain and without exposing user-level info between parties.
This year, Acxiom launched a cloud-based data clean room model for its consumer data brokerage built on Snowflake.
Meanwhile, NCSolutions – formerly Nielsen Catalina, seller of shopper marketing data and another of the old guard of third-party data – launched a cloud-based product so marketers can take advantage of its store receipt data. NCSolutions uses Snowflake, LiveRamp and Habu.
And The Trade Desk and Narrative, a tech vendor that creates data marketplaces, jointly released a new data sales product so advertisers, publishers and other data providers can license one another’s data. This tool was – you guessed it – also built on Snowflake.
Give ‘interoperable’ a chance
But there are also reasons for optimism for cloud-based ad tech that don’t involve Snowflake.
In December 2022, both Google and Amazon launched their own third-party clean room services. In other words, they allow outside companies to set up a clean room without accessing Google’s or Amazon’s first-party data. Previously, an advertiser using Ads Data Hub, Google’s data clean room, could only use Google-owned ad tech and could never export campaign data, since that clean room incorporated Google’s first-party IDs.
Google is also feeling antitrust pressure to allow integrations with third-party services. A new clean room product called PAIR, created by the Google Display & Video 360 DSP, plugs into any SSP, not just Google’s, and it also uses LiveRamp, InfoSum and Habu – all independent, third-party providers – for ID matching.
The cloud for cloud’s sake
But despite independent contenders making some inroads over the past year, it’s the walled gardens that have retained the most power in the cloud market.
Google and Amazon are leveraging their portfolios to dominate ad buying, media selling and cloud infrastructure.
Although AWS and GCP offer third-party interoperability for their cloud-based ad tech, the main benefits and the sharpest tools in their toolkits are reserved for Amazon Advertising and Google Ads, respectively.
In early November, Amazon began trying out Amazon Audiences, a tool that packages segments for local SMBs and services – the every-businesses that form the backbone of Google and Facebook ad auctions.
These segments “are bonkers amazing,” Navah Hopkins, a pay-per-click advertising consultant and evangelist for PPC vendor Optmyzr, told AdExchanger. It should be noted, however, that they can only be used with Amazon Ads, since they rely on Amazon marketplace data to form audience targets.
AWS also launched its own identity resolution service – essentially making the point that any CDP or independent identity resolution service without its own unique services or proprietary data is, well, worth $0.
And while, on the one hand, Google PAIR is an example of third-party openness because any SSP can plug in, it’s also exclusive to the Google DSP.
The most important advantage for Google and Amazon ad tech when it comes to cloud-based data may not involve clean rooms at all, since machine learning and AI software starts with the clouds.
The AI boom
Artificial Intelligence.
AI-generated content, whether that be prompted text responses or realistic images, has clearly surpassed the trendline that bound former buzzy bubbles, like crypto and Web3. AI in general, and software-generated content in particular, will be instrumental to the future of online advertising.
Google Ads’ primary AI-controlled ad optimization product is Performance Max. (Dubbed PMax, it promises to outperform human media buyers.) So it’s no surprise that PMax campaigns are the first for which Google will use auto-generated creative.
Big brands are piloting generative AI tech to save time, analyze large data sets and automatically fill out product descriptions.
Colgate-Palmolive, for instance, is testing ChatGPT’s enterprise software to dynamically create copy for product description pages. And Rembrand, a startup working with large CPG brands, uses AI to auto-generate virtual product placement in social media videos.
Although, when marketers talk about AI content creation services, they often don’t explicitly mention the cloud, you can bet that there’s a cloud tech provider supporting them.
And, most likely, a hefty AWS or a Google Cloud bill.
