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InContext / An inside look at the business of digital content

Advertising has an addressability problem; publishers can help 

August 21, 2023 | By Brittany Burnham, Customer Success Manager – Permutive @permutive

The combination of users choosing cookie-blocking browsers and opting out of tracking has led to 70% of the internet being invisible to adtech. The result is a vast addressability problem in the open marketplace (OMP), which has put publisher revenues and advertiser reach in freefall.

Innovative publishers address this head-on by building direct-sold businesses, finding privacy-forward solutions to monetize 100% of their audiences and building deeper and long-term relationships with advertisers. 

Addressing the entire web

The advertising industry is starting to realize that while the OMP completely changed the way media owners and advertisers collaborated, becoming the “path to least resistance” for both buyers and sellers, it is now creating more resistance. 

For publishers, it’s the adtech tax and data leakage that occurs in the OMP. In addition, it’s damaging to the user experience that premium publishers pride themselves on, as they cannot guarantee that their users get relevant ads.

Direct-sold offers both parties the best possible solution to OMP woes. Premium publishers have first-party data sets, which are built on authenticated, contextual, declared, and behavioral data, that can be leveraged by advertisers to reach the unreachable 70% of online audiences.

Premium publishers have strong relationships with their users that have been built on trust. This enables them to tell compelling stories about their audiences – through the first-party data they’ve collected from those users – and provide the insights that advertisers are looking for. Because of the source of the data, publishers are able to be transparent about how their audience segments have been built, and provide real evidence of how connecting with these audiences can help advertisers achieve their objectives.

 Identifying the opportunity

The need to return to more of a direct-sold approach has already been identified by some advertisers, with a growing trend beginning to flourish at the backend of 2022, when publishers saw a 25% drop in OMP revenue and a 37% increase in direct-sold audience revenue, growing to 55% in the first quarter of 2023.

This trend is none more evident than in the US (the largest programmatic market in the world) where there is a clear shift in focus from the OMP toward direct relationships. In fact, according to eMarketer, direct-sold ads will represent 75% of the total programmatic digital display ad market by 2024, with OMP only accounting for 8.5%.

Publishers, having realized that the industry’s direction of travel means that the OMP is largely ineffective, have been driving forward with adjustments to their strategies, particularly when it comes to the use of first-party data. Gumtree, for example, where the use of first-party data in direct deals has led to a 36% increase in click-through rates in the first quarter of the year.

Meanwhile, Trusted Media Brands (TMB) – which is home to titles including Reader’s Digest, FailArmy, The Pet Collective, and People Are Awesome – has reached a stage where the vast majority of its direct-sold campaigns (94%) are using first-party data.

Beneficial for all

Ultimately, the best way for publishers to maximize their revenues is to realize the addressability issue is a very real problem today and for publisher CROs and brands to recognize that the OMP can no longer deliver the effectiveness that it used to.

The answer to the OMP’s shortcomings, and the need for addressability, lies in direct-sold deals and the first-party data that publishers hold to power those deals. 

Direct deals open up audiences for advertisers, ensure transparency and control, and guarantee access to the premium inventory they can’t find in the OMP. It’s up to publishers to show advertisers the access and insights they can get into audiences that will provide them with the ability to accurately target users and achieve the outcomes they are looking for.

The direct-sold strategy means publishers can grow their revenues, users get to see only the ads that are most relevant to them, and advertisers get the most out of their budgets. 

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