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InContext / An inside look at the business of digital content

How media companies can protect addressability

February 27, 2023 | By Katie Millington, Head of North America Publisher Sales – Permutive@permutive

As we look toward the rest of 2023 and beyond, it’s clear that respect for consumer privacy will continue to greatly impact digital advertising as a whole. But this shift does not need to negatively impact publisher revenue.

Platforms blocking third-party tracking and new data privacy regulations give users the tools, awareness and the choice to protect their information by opting out of data sharing. With this, when we look at the open web as a whole, addressability has collapsed to 30%. But while big tech solutions continue to threaten to commoditize publishers, consumer privacy actually gives publishers an opportunity to reclaim data ownership.

Traditional adtech and legacy platforms aren’t equipped to solve this addressability crisis.  And without addressability, publishers aren’t able to effectively monetize their audience. The good news is that media companies have the power to identify and solve addressability issues. Here’s how publishers can check their own addressability, step-by-step.

Step one: cookie-blocked platforms

The first step in assessing overall addressability is to determine where your users are. In the U.S. alone, nearly half of all of users are browsing in Safari, Edge, Firefox, or other cookie-blocked browsers. Further, about half of all iOS users have opted into Apple’s App Tracking Transparency framework, which also impacts audience monetization in fast-growing environments such as streaming apps. When consumers use these platforms, publishers lose the ability to target these audiences with traditional programmatic advertising.

Ad impressions that don’t have a cookie or identifier attached can signal a problem for marketers. It might even cause them to pay less for these impressions or spend elsewhere. Publishers who don’t have the ability to retain audience addressability and become a data source that advertisers need will run the risk of losing budgets.

By starting with determining how much traffic originates from one of these environments, publishers can begin to understand what percentage of addressability is lost. If we take the U.S. national average and apply it here, a publisher would be left with approximately 55% audience addressability after step one.

Step two: user-disabled cookies in Chrome

Despite Google delaying third-party cookie deprecation in Chrome until 2024, 40% of Chrome users are already browsing in incognito windows or disabling tracking cookies on their own. In the U.S., more than half of users are browsing in Chrome.

Continuing with our example, the combination of audiences choosing cookie blocking-platforms and users opting out of tracking on Chrome means that only 30% of publisher audiences are addressable. Today, 70% of the internet is effectively invisible to adtech.

As user choice increasingly becomes the default, this number will continue to grow. Google’s prominent “reject all” cookies button in the Chrome consent banner is scheduled to be implemented in more countries, as directed by GDPR. In the U.S., lawmakers are mulling over the American Data Privacy and Protection Act (ADPPA), which would have all users opted-out by default. The result is a future where users will have to take minimal action, if any, to opt out of sharing their data for advertising purposes.

Step three: first-page-view targeting

The next step in determining total addressability is evaluating publishers’ ability to target users on the first page view. Passer-by traffic varies greatly by publisher, but it stands that publishers who can’t serve an ad on the first page view then lose the ability to monetize that bounced audience.

Adtech solutions that rely on cloud-based data processing are handicapped in their ability to target an ad on first page view. However, by processing data at or near the source, media companies are equipped to capture this crucial audience. To continue our example, if a bounce rate is 30%, a publisher’s total addressability is now only 21%.

Step four: data longevity

Finally, publishers need to assess their ability to store data against particular cohorts via unlimited lookback windows. The average cloud-based platform (e.g. traditional DMPs, CDPs) relies on cookie-based lookback windows. This means that publishers can only lookback 30 days on a particular cohort, inherently capping the scale of the audience.

A longer lookback window enables publishers to build cohorts for users over an extended period of time. By building user profiles over a longer period of time, publishers can create cohorts that are reflective of seasonality, for example back-to-school shopping. This allows publishers to provide advertisers with highly relevant audience segments that rely on specific time pegs.

Maximizing addressability

Media companies that build a direct-sold business built on the unique relationships and trust they have with their users will command advertiser media spend and be well-positioned to succeed in this new era of digital advertising.

As evidence of this, Penske Media Corporation was able to realize a 46% increase in revenue from first-party data in 2022. Further, their rich audience data insights were able to deliver advertisers a 5x increase in performance (CTR) in campaigns that only used only first-party data.

As we look toward a future of digital advertising where publishers have control and users have a choice, adtech built for marketers and based on third-party data will no longer be sufficient. Publishers who take action to maximize their addressability with first-party data are able to differentiate their data offerings, prove value to buyers via insights, win RFPs, and ultimately grow revenue.

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