Community gardens: a guided tour of Yahoo’s vision for a cookieless future

The Drum spoke to Sigaloff as part of The Drum’s Data Deep Dive, to get a deeper understanding of how marketers can work with Yahoo to get a better grip on the ever-changing digital and data landscape.

Much has been said about the upcoming cookie deprecation. What has Yahoo done to limit this impact on your business? What about your clients’ business?

Yahoo is one of the founding companies of the internet, so we have in-depth knowledge of the digital landscape. We’re uniquely positioned to understand our partners as we enter this cookieless world. One of the reasons we feel we're well placed to solve this is because we've got millions of global direct consumers with a lot of first-party data.

I think it's important that we first understand the problem that we're looking to solve. The way I look at it is in the old world, if you visualize a pie chart, half of that pie chart that fueled identity was from cookies, and the other half was from device IDs. That was all the different advertising targeting solutions we had.

When you look at the current reality, it's probably more like 35% cookies, 35% device IDs, because around 30% of all impressions are now being blocked. Now, ads are being delivered to unknown users in browsers like Safari. So, when we think of the new world, just think of an empty pie chart. How do we start to piece together identity without cookies and device IDs?

Knowing all these changes were coming, Yahoo has been focused on building solutions ahead of time. We have taken a multi-pronged approach that's all about how we build back that identity picture in a cookieless world.

If you picture that empty pie chart, about 30% is being powered by Yahoo ConnectID. The premise of Yahoo ConnectID solves for when an ID is present, our identity graph brings together a huge amount of opt-in and compliant data signals from direct consumer relationships. The next section of the pie chart, our Next-Gen Solutions, makes up about 40%. Yahoo's Next-Gen Solutions solve for when there are no IDs available. The premise is like advanced contextual targeting, but it goes beyond content at scale, it's about leveraging the machine learning that we have to process real-time signals from over 200 billion cross-screen data signals each day from search, mail, content, and more. All of that can infer relevant audiences and characteristics, but most importantly, in a privacy-preserving manner.

After that, you've got data partnerships, which is about 15%. Who do we partner with to create a more holistic view? Examples of those are Near or Nielsen. Ultimately, a lot of those partners can help with things like measurement, e-commerce, or attribution, which is important.

Then you've got about 10% left, if my math is right, which leaves us with enhanced attribution. That's about improving measurements and click-throughs in a world where cookies are blocked with a click ID instead of a cookie or device ID. That helps with some of the challenges that Apple has put on iOS.

There's always going to be room for improvement and innovation and that's that last 5%.

How do these upcoming changes factor into Yahoo’s approach to data and privacy?

Through Yahoo ConnectID and Next-Gen Solutions, our products and our platforms have now been designed for greater transparency and accountability. The key aim is to create customer-first solutions, we want to make sure that we're giving our consumers and our marketers the choice and control that they need over their data and their privacy.

Yahoo ConnectID and our Next-Gen Solutions are seeing strong adoption. For example, Yahoo ConnectID has been integrated now by over 3000 different publishers, which is huge. There are over 200 advertisers and agencies that are directly activating first-party data through our identifiers. Yahoo ConnectID is also integrated within the Yahoo DSP, which is leveraged by all the advertisers that are on that platform. The Yahoo DSP has been delivering upwards of around 20% improvements to cost per conversion, which I think is powerful as well.

How will these changes impact decisions that marketers make around working with the walled gardens? Does this offer an opportunity for the open internet to reimagine digital advertising?

While walled gardens will continue to play a role for marketers in their media strategies, there are some inherent challenges. For example, the opaqueness of performance transparency and ad tech fees. At Yahoo, we have a different approach. At the heart of that is flexibility and collaboration, which flows across all our technology, our data, and our inventory.

Ultimately, the benefit for our partners is that they can leverage our data, or they can leverage their data. They can leverage our inventory and/or their inventory, or another publisher's inventory. Likewise, they can use our technology or plug their technology into our full-stack.

Rather than thinking of it as a walled garden, the richness of that ecosystem is what we call a community garden. What's great is it creates sustainable value for consumers and businesses.

I look at community gardens as a win-win-win. Why is it a win for advertisers? Because they can continue to effectively connect with their audiences in a cookieless world. It works for publishers because they can manage and monetize their audiences and continue to support their businesses with better advertising and consumer experiences. And, finally, it's great for consumers because they can still access and consume the content they love, but it's supported by advertising. Plus they see more relevant ads, so that heightens their overall experience. For me, that's a win-win-win.

This has been on the radar of most global businesses for some time, but what about smaller and more local brands, are they prepared for the impact this will have on their business?

In short, no. I think all businesses, big or small, are going to have to find these alternative identity solutions to maintain addressability for advertising. I think it's important that we acknowledge that a lot of those smaller businesses can be resource-constrained. They don't have the expertise in the management of first-party data. They might not be tech experts as well, which is completely understandable.

The good news is there are great solutions out there. My conversation, certainly, to a lot of these SMEs and customers has been to leverage our expertise, leverage our scale, leverage Yahoo's capability. Yahoo is an excellent alternative to those walled gardens as we provide greater flexibility and sustainability, that’s the core part of our community garden.

Small and medium-sized brands may not have the talent or bandwidth to deal with this challenge, how can they access the expertise or solutions that bigger brands have?

They must understand the problem - how are they using cookies and targeting? How big of a problem is it for them? What are the technologies or resources that they need access to? Then for us, it’s working out the best solutions that we have for them based on those questions.

With some of the deadlines on this issue being pushed back, we do have a bit more time, and this is good, but the fact is Yahoo is already up and running. We've built great solutions and case studies, so when we are finally hit with a cookieless world, we're well placed to deliver on all of that.

Do you have any examples of how this could work or how you have worked with a brand in APAC?

One that springs to mind is in Australia, we're seeing a sudden resurgence with finance advertising and are already working with two of the big four banks. Westpac is an example of one of them, which is leveraging our data solutions through the DSP to deliver improved results.

In South East Asia, we're working with a major health industry advertiser, and since adopting our ID solutions, their cost per acquisition rates have halved within the first 30 days and their click-through rates have also doubled.

What can we expect to see next from Yahoo?

We are bringing back the purple, which people love, and, I'm super excited about the future. The stars have aligned and it's a rare moment in time when we can unlock our full potential.

We've got a phenomenally talented team, great asset bases, and incredible business momentum. We've had four quarters of double-digit growth and we're on track for our fifth. We've also got these amazing iconic brands with a huge global reach, nearly 900 million monthly users. On top of that, we’ve got the aggregation of our buy-side and sell-side platforms into our omnichannel full-stack, which is very exciting.

Outside of our content and technology, we've got some amazing partnerships with companies like Apple, Microsoft, and Fox and that again gives us access to more inventory, more data, and greater scale. It is all about building that rich ecosystem, our community gardens, and creating sustainable value for our consumers and the businesses that we partner with.

One of the things that I'm super passionate about is having a positive impact on the world, society, and people. We have a massive corporate social responsibility program, and it doesn't just sit in a little box in HR, it's integrated and woven across the very fabric of our business. Whether through our journalism and how we shine a light on minority communities and share the stories that need to be told. Or from a data perspective through the ethical use of data. Climate protection is key for us too, we work with numerous charities and we're very focused on reducing our carbon footprint. We try to be human and helpful in everything we do not just internally with our people, but externally with our clients as well. We want to make sure that everything we are delivering creates a long, sustainable value exchange. The future feels bright and filled with purple.