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InContext / An inside look at the business of digital content

The shift towards context-based advertising

June 18, 2018 | By Sachin Kamdar, Co-Founder and CEO—Parse.ly @SachinKamdar

The 2016 election, Cambridge Analytica scandal, and GDPR represent a tidal shift in how the ad tech and digital media industry will monetize their audience moving forward. And it’s overdue. Demographic data doesn’t define a person’s identity. People define themselves by what matters to them, by their interests, hobbies, and values, and they show this in what they read about online.

As we talk about technology in the publishing industry, we should consider what kind of tech will move us towards monetization through context-based advertising. This protects data privacy, and has the potential to finally gain an advantage over the platforms where many digital advertising dollars have shifted.    

Consumer mistrust of platforms

When consumers found out that Russia played a role in the 2016 election via bots on Twitter, propaganda on Facebook, and even local events in the U.S., we were forced rethink the role social media played in our community. Were they purely a platform? If so, to what degree did they need to police the content and users? Further, if they had so much knowledge about their users, why couldn’t they prevent a malicious influence like Russia from infiltrating their platform?

The Cambridge Analytica scandal certainly didn’t help this cause, and weekly stories break about Facebook continuing to acknowledge privacy and data issues. This has planted the seed of doubt about whether these platforms and the underlying data could be trusted—not just by the general public, but by the marketers who provide the revenue stream for Facebook.

New privacy-conscious controls for consumers

GDPR was borne out of a general concern that consumers had a lack of control and transparency around their digital data—data that bore the monetary fruits of now enormous companies like Facebook, Google, and Twitter. That data also created the massive ad tech industry that developed complex methods to personalize and optimize ad targeting to the point where most experts in the industry still don’t quite know how the ecosystem works.

GDPR, in some ways, marks a boon for platforms and the end of an era for the ad tech industry. Any platform that collects its own massive amount of first party data (like Facebook, Google, Twitter), can relatively easily get the consent of the population. Ad tech, though, faces the burden of getting consent through 3rd parties, where the value of giving consent was not only unclear but potentially non-existent. The type of re-targeting and personalization that was prevalent before will start to change under GDPR as publisher-direct relationships with consumers become increasingly important.

Context-based advertising

So where does this all lead, in terms of current industry trends? There’s no lack of interest in moving from a programmatic model to more of a subscription-based model. But most of the innovation and investment in digital tech has been focused on ad-tech, data collection. We need to simply “do better” from an advertiser and consumer perspective given these trends.

From the advertiser side, the credibility of their 3rd party data is eroding with GDPR. There are some publishers that are large enough (or are building collectives) to create their own first party pools of data. However, none of them can reach the scale or targeting capabilities of companies like Facebook and Google. Marketers know this, and if they want the best targeting they’ll still go to the duopoly.

That said, because consumer privacy is becoming top of mind for more and more people, marketers are also worried about the experience around ad campaigns they run. They want to create an experience that doesn’t creep people out (for lack of a better term). Interest- or context-based advertising, as a result is coming back into favor for the privacy-conscious brands and marketers.

Targeting ads based on consumers’ interests or the context of what they’re reading instead of their personal data benefits everyone involved. Consumers maintain their privacy and build trust publishers. Publishers can then pass on this trust to brands who want their consumers to know that they care about their privacy. And, publishers who are armed with the right contextual data can still provide an advertising experience that’s targeted, but doesn’t violate consumers’ concerns.

Not only does data around interests protect anonymity, but it speaks to the core of who people are. Marketers who try to understand what matters to their audience through attention data—the topics and stories they pay attention to online—will have a leg-up on connecting that audience with content and products that they want.

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