What can publishers expect from post-pandemic, cookie-less adtech?
Thousands in media are being laid off as the lockdown and resulting global economic downturn freezes marketing budgets. As we approach the second anniversary of the GDPR, publishers are facing the unenviable challenge of squeezing more value from digital advertising while also waving goodbye to the attribution, tracking and data once afforded by the third-party cookie.
What will replace the third party cookie? And how will it affect publishers?
Miles Pritchard, managing partner of data management solutions at OMD EMEA, Ben Hancock, global head of programmatic trading, CNN International and David Goddard, chair of IAB Europe Programmatic Trading Committee and an exec at DoubleVerify explained to The Drum how publishers can get more out of their programmatic set-up, after making contributions to an IAB Europe post-cookie guide on the very same subject.
It comes at a dire time for ad-supported media.
BuzzFeed, which recently turned on the programmatic taps again, implemented staff cuts along with Vox, Vice, Quartz, The Economist, Reach, News UK and countless regional and local titles. You'd run out of patience before reaching the bottom of a list of adversely affected titles.
What’s clear is that a solution is needed to better serve publishers.
The state of play
A World Federation of Advertisers (WFA) study said 89% of large multinational companies have deferred marketing campaigns this month. Half are freezing spend for six months.
Reduced demand means reduced revenue, which equals lost jobs and lost media titles. The pandemic lull has forced The Washington Post’s commercial team to deprioritize selling ads. Meanwhile, the New York Times suffered a huge 55% ad shortfall last month (not just programmatic). It has been buoyed by its strong subscriptions business, thankfully.
Last month, as publishers grappled with an immediate existential need to extract more value from the digital advertising ecosystem, a loaded gun fell into their laps courtesy of Isba and PwC. An extensive two-year study found that one-third of adtech supply chain costs were “unattributable” or in other words, lost. Publishers always suspected such loses but now have a free pass to start rummaging about this couch for loose change. After all, the report claims they only receive 51% of ad spend on their inventory.
Inefficiencies also exist. These can, apparently, can be negated with more vigilance (easy), paired with a profound understanding of a seemingly intentionally convoluted space (not so easy). For example, keyword blocking has been demonetising coronavirus coverage (that is, the most important news story of our times), costing publishers tens of millions of pounds. Most were unaware this was even a problem and many have since moved to address it.
While brand safety and suitability debates rage around premium media, outright fraud continues. CNBC’s Meg Graham set up a spoof news site on Wordpress which automatically scraped content from top publishers, gained ad accreditation, and started serving ads from top US brands. This form of fraud, says Cheq, will suck $1.3bn of revenue from advertisers this year. Its wider effect is to increase supply and lower prices on legitimate inventory.
Meanwhile, thanks to GDPR and privacy advocates, a cornerstone of programmatic is being phased out to protect consumers from invasive tracking around the web. What replaces the third party cookie? Its absence could benefit publishers that enjoy large, engaged audiences. But the shape of the successor system will depend on who manages to build it. Google appears to be in the driving seat.
It‘s worth noting that the recent market downturn was not unexpected. Data recently published by the Association of Online Publishers (AOP) and Deloitte showed that digital ad revenues were in sharp decline even before the pandemic. Revenues fell to £131.1m in Q4 2019, a 6.2% fall in comparison to Q4 2018. Publishers were drawing more income from subscriptions and sponsorship, but few were closing the deficit.
Richard Reeves, managing director of the AOP, warned that there are “challenging times ahead for the UK publishing industry.“ He worried that 2019’s revenue diversification efforts will be stymied by the lockdown.
Solutions – for some
OMD’s Pritchard believes that one of the unintended consequences of GDPR, coupled with the loss of the third party cookie, is that subscription walls and paid-for-media will become the only viable long-term solutions for the media, at least those at the top of the food chain.
Smaller titles will “fall by the wayside”, particularly local media.
Pritchard said: “This is detrimental to the concept of the internet as a free information and knowledge sharing platform and to free and diverse media for the bulk of the population. It takes news from the hands of the masses and makes it a luxury for the classes.”
To combat this, alliances, partnerships and shared solutions will be vital. Pritchard‘s still not sure whether “this takes the form of an ID consortium, a renewed focus on mobile, a statistical ID that persists from supply-side to buy-side, or a return to offline identifiers.” What‘s clear is they need to join the dots and come to market with some scale.
“I have faith in the ingenuity and the flexibility of many on the supply-side to adopt new practices and be commercially successful. Smaller publishers and media outlets have demonstrated far better agility in execution, in respects to data-driven advertising, than their larger cousins.”
CNN’s Hancock admits there is no clear winner in sight to replace the third party cookie, and warns not to expect a like-for-like replacement, but that’s not the worst news. “It will likely to push ad spend toward premium publishers, as campaigns that target huge chunks of the web become harder to measure and attribute.” That trend is only set to accelerate upon the introduction of the CCPA in 2021.
Deadline closing in
The New York Times just this week announced that it is moving to only offer first-party ad solutions. It has the scale and trust to attract spend direct, though few other titles have the resources required to do the same. Still, this could be an indicator of a more general movement; what‘s clear is that publishers will need closer relationships with advertisers going forward.
This requires deep investment in data management tools, and the staff capable of running them (itself a shallow pool). And the nous to bet on what the dominant solution will be.
Pritchard added: “Consider the 24-month reprieve provided by Google Chrome, to enable the market to test multiple solutions and to make steps to ensure data-driven strategies from future adjustments to the ID ecosystem as much as is possible.”
Hancock is also resigned to the fact we’ll probably end up with multiple solutions plugged into “already creaking ad tech stacks”. “It would be in everyone’s interests if we could reach consensus on one (or as few as possible), but the market will ultimately decide.”
In many respects, the word ‘content‘ may have a lot to answer for, as The Drum columnist Sam Scott has attested to in the past. Under this umbrella term, a deeply compelling journalistic investigation into corruption carries the same weight as an ad-loaded slideshow detailing 'what child actors look like now', likely populated with stolen images and Wikipedia text – regardless of the relative added value to society of the former.
Maybe, context, not content, will be king again. IAB‘s Goddard wonders if we really need to follow people around the web to know their interests. “Rather than showing you a Nike ad because you were shopping for shoes two hours ago, you’ll get a Nike ad because you’re reading about the Olympics, or training for a marathon.
“In some ways, contextual targeting is a return to traditional online ad campaign targeting strategies, where reaching a consumer meant showing up on the right article or piece of content.“
Buying context rather than audiences may be one solution, although the data-driven and machine learning tools required to achieve this may just represent another rabbit hole to get lost in.
“New technologies like AI and semantic science are required to ensure ads run on the right website and the right page, targeting the right audience. In a way, it’s very similar to brand suitability and brand safety targeting.“
Perhaps context, plus a brand‘s first-party data, paired data sourced from whatever shared IDs become favoured, will do the job. Goddard said: “Using these data elements – placement, brand, and shared - would also allow for better optimisation as well as measurement of campaigns/placements against marketing program KPIs and provide a clearer measure of real business outcomes.“
Speaking with his IAB hat on, he noted that the industry must enrich the user experience, and make it easier for publishers to a have a “better understanding of the value of inventory, and the opportunity to optimise campaigns and better performance.“ For publishers, this means getting the best partners in place, and in some respects, cutting out middlemen that are not adding value.
Goddard questioned what “value“ even stands for in the context of adtech. But he's got some answers on that. “Do partners provide the insights needed to optimise demand paths and monetise yield across inventory? Do the insights provided help drive better decision making? Do the insights educate and influence how a publisher operates and engages with brands and their agencies? And do the insights help with editorial direction and the development of content consumers want?“
Speaking of the content consumers want, CNN‘s Hancock nodded to the ISBA report, noting that of the 40,524 sites included in the study, only 19% qualified as “premium sites”.
Could you name 1,000 premium sites, never mind 40,000 legitimate ones? Publishers have long known they need to differentiate themselves from the mire.
Hancock said: “It’s a huge ask for premium publishers to demonstrate the value of quality brand, content and audience in such a crowded market.” Going forward, he advised them to “prioritise more premium brand-led metrics. Focus on where you can add value through first-party data or content. Both of these will be more valuable with the demise of the cookie in direct relationships with buyers.”
If your appetite for discussion about the future of the web, a few weeks ago, The Drum gathered some of the industry’s biggest brains to crack on with a solution to the crisis during our Digital Transformation Festival.
And on top of that, Damon Reeve, chief executive of The Ozone Project, a publisher alliance gaining real momentum in the UK, wrote an op-ed offering a smidgeon of hope: “This first-of-its-kind collaborative study [from ISBA] has already laid great foundations for building a better future for digital advertising.”