Research / Insights on current and emerging industry topics
Publishers vs. walled gardens: Can your data tech compete?February 16, 2023 | By Chris Hogg, Chief Revenue Officer – Lotame @Lotame
Google’s deadline for deprecating third-party cookies has been looming on the horizon for the digital industry for a while now. But at this point in 2023, even with the continued delays by Google, it’s staring us in the face. According to the IAB, digital media has lost up to 60% of the signals that were accessible for targeting and measurement just a few years ago. And while publishers have always been more restricted in resources and spending than advertisers in general, publishers are feeling the heat. And we can see that in how they’re investing in their tech stacks.
The publisher community has long feared third-party cookie deprecation would lead to a bifurcation in the digital ad marketplace. On one side would be the walled gardens, with their large volumes of verified first-party data – not to mention advanced tech stacks. On the other would be the entirety of the open web, which would require collaboration and a scalable identity solution to hold its own.
Top priority in the publisher ad stack: making data work
In the latest installment of Lotame’s Beyond the Cookie report, our survey of publishers and marketers indicates that there really is a sense of urgency for open web media outlets to up their game. In the near future, 37% of marketers plan to increase spending in walled gardens, and 54% expect to reduce programmatic spend. Publishers know they need to onboard the right tools to compete – that is, to build audiences, and to analyze, enrich, and activate their data.
Fortunately, publishers are taking action. While strategizing about how to invest in their tech stacks, tools for managing and processing data top the list of priorities. In the next six to 12 months, our research finds that 35% of publishers will be looking to adopt a data management platform (DMP), 35% will be considering a customer data platform (CDP), and 32% will be exploring identity resolution tools. Not only that, but publishers cite DMPs and CDPs as the tools they would be least likely to retire from their tech stacks.
In the drive to process first-party data from as many sources as possible, CDPs have progressed through their hype stage and have demonstrated real value. Today, 44% of publishers and marketers alike use a CDP, and similarly, 45% say that they plan to build or buy technology to perform CDP functions in the coming year.
Don’t believe the hype. Believe the results
Unfortunately, the hype we heard around CDPs in 2022 admittedly created some confusion about their best use cases. A CDP shouldn’t necessarily be treated as a simple replacement for multiple other tools in the tech stack. For marketers, CDPs deliver value by helping improve customer experience. However, for publishers, it’s about experience and data consolidation.
To maximize their investment, publishers need to put CDPs to use collecting data from all possible online and offline sources. (As opposed to relying too heavily on, for example, data from logged-in known users, at the exclusion of other sources such as unknown users that can provide scale.) These use cases explain why publishers are investing in both CDP and DMP technology.
The rush to gain meaningful data insights that will attract advertiser spend has also driven a great amount of interest in clean rooms – despite reports that there’s still some lingering confusion about how they’re best implemented. At this point, 48% of publishers are using clean rooms. That means they’re more likely to use them than marketers (37% of whom are doing so).
A focus on balancing privacy and identity
Publishers remain concerned about the level of privacy provided by clean rooms. They’re also concerned about the reliability or actionability of the data – which they fear may be compromised by outdated emails or limited scale of authenticated IDs. Publishers do need to keep in mind that clean rooms are helpful in gaining more value from their data, by allowing participants to compare their data sets. But they’re not intended to effectively replace third-party cookies.
Publishers are also increasing their exploration of and investment in identity solutions. For a while, it may have seemed to some publishers that Google’s delays in deprecating third-party cookies put the task on a lower priority level. But interest in probabilistic solutions grew 50% YOY in 2022, while interest in contextual targeting and authenticated or email-based solutions both held steady over that same time period.
In 2023, digital ad spend is projected to continue rising, though not as rapidly as in 2021, when consumers’ digital behavior was also changing rapidly. Publishers are compelled to make wise, well-considered investments, to keep up with the industry’s evolution while keeping the business’s bottom line strong. Those who have been lagging need to step on the gas. It’s time to start testing and implementing the tech that suits their goals and advertiser partners, empowering the open web and putting their data to work to compete with the walled gardens.