“The Sell Sider” is a column written by the sell side of the digital media community.
Today’s column is by Paul Bannister, co-founder and executive vice president at CafeMedia.
As we all know, “cookies are crumbling” – third-party cookies specifically. But the crumbling goes far beyond cookies and into other ways of tracking users, including fingerprinting, link decoration, localStorage and other technologies.
So far this has been driven by Safari ITP and the EU’s General Data Protection Regulation (GDPR), but as GDPR enforcement progresses, the California Consumer Privacy Act and other US-centric laws come into effect and other browsers follow in Safari’s footsteps, these methods will be completely shut down as useful tools for targeting advertising online.
In many cases, the loss of these technologies will deprive publishers and marketers of features such as user targeting, frequency capping, attribution tracking and even basic web analytics. There are some innovations, or old ideas made new, being positioned to solve for these issues, including contextual targeting, logged-in users, IP-based targeting and Apple’s Privacy Preserving Ad Click Attribution – and much more is needed.
That said, that next batch of products doesn’t come close to matching the capabilities of the way things are done today.
The early effects of these changes are already being felt through declining traffic and revenues for publishers and ecommerce sites alike. For publishers in particular, CPMs have been cut significantly for Safari browsers, decreasing the overall value of that audience. These issues cut across programmatic and direct deals due to the extremely limited targeting capabilities and the lack of any frequency capping or attribution metrics.
So if the current ecosystem can’t outlast the onslaught against user tracking, and there’s no clear path to a strong, privacy-centric ecosystem, what could the open web look like three to four years from now?
It’s fairly grim.
One of the most positive changes over the last few years has been in the battle against bad ads. All of these scourges – bloated ads, low-quality ads, fake ads, highly-intrusive ads or true malvertising – have declined in prominence. This is the result of a combination of better diligence on the part of publishers and ad tech partners, improved technology and greater bid density on the programmatic side. Many publishers have also become pickier about the sorts of ads they run, and trade groups like the Coalition for Better Ads have started enforcing some basic levels of ad quality.
The higher-quality brand and direct response advertisers who require tools like user targeting, frequency capping and attribution analysis (which is nearly all advertisers these days) won’t be able to buy against much of the open web. This will lead to fewer deals for publishers and less programmatic demand.
This decline in marketer budgets on the open web will have two direct outcomes for publishers: less demand for their ad inventory and, by extension, lower revenue. With many publisher business models already under strain, will yet another hit to their bottom line cause more publishers to run more questionable ad formats? It’s easy to see a world in which many publishers start running more invasive yet higher-paying ad formats to keep operations running.
The decline in bid density will also make it easier for bad actors to purchase true malvertising. The forced-redirect, popup ads are much more prevalent in low value environments, particularly Safari, and greater user tracking protections will make it easier for these types of ads to proliferate, even with greater diligence. This decline in bid density will also make it easier for the low-quality “belly fat” and other unsavory ads to make a resurgence.
Where will the money go?
Through all of this, marketers will still spend a growing share of their dollars online. With the targeting options limited on the open web, they will direct an even greater share of their budgets to the walled gardens. The triopoly and a few other large companies will grow bigger and take more of the growth in the industry, as they will be barely affected by the browser changes.
While the regulations and browser changes that are coming into place are primarily being directed at user privacy, they will have the perverse effect of pushing even more personal data and revenue toward some companies that are arguably the greatest violators of user privacy. Certainly they’ll be slapped with fines and will clean up their acts, but they will end up even more dominant in the industry than before.
Even if somehow regulators do put a dent in the platforms, the money will flow to a small number of mega media companies. The open web will be controlled by the same five or six companies that control television, and today’s flourishing and diverse digital environment with tens of thousands of unique creators will be a thing of the past.
All of these changes will be gradual, and there are many smart people developing innovative new ideas to push forward. This grim world doesn’t have to come to pass, but all of us must focus on making changes to our own companies and the ecosystem to build the next set of technologies that will enable a thriving open web.