Privacy is rewriting the rules of adtech, causing seismic shifts to the way media is bought and sold.
Over the past 10 years, digital advertising has run on personal data and identifiers that connect consumers across domains. Today, tightening privacy regulation and heightened consumer awareness about how their data is being used has triggered global changes. We already see the effect. The third-party data that fuels digital advertising is continuing to disappear. And Snap’s shares dropped by 25% because of Apple’s App Tracking Transparency (ATT) feature in iOS 14.5, requiring consent from users to track them across apps and websites. It’s also reported that Snap, Facebook, Twitter and YouTube are set to lose nearly $10bn due to ATT.
As privacy disrupts the way digital advertising has operated for years, we’re seeing two seismic shifts in the ecosystem. Firstly, there is a transfer of power in digital advertising towards first-party data owners. Secondly, there’s a move to processing data on-device. Digital advertising increasingly requires privacy at its core. Therefore, first-party data owners will need the infrastructure to control, connect and scale their data while planning and buying campaigns.
The shift to first-party data and on-device
Data that was once accessible by ad-tech is now deprecating because of privacy. Control of this data has returned to its rightful first-party owners. This includes publishers, advertisers, and other businesses that have first-party data.
First-party data owners are able to build businesses from their data because they have a direct relationship with their users. Publishers such as Penske, Insider, Future plc, and others are launching successful first-party data platforms and packaging up their consented audiences for advertisers. For example, Future’s first party-data platform, Aperture, has increased the addressable inventory sold to advertisers by 150%. And Insider sees 19 out of its top 20 advertisers using its first-party data platform SAGA, at a 95% renewal rate.
Advertisers are also bringing their first-party data to publishers to match and model audiences and businesses like Instacart, Doordash, Uber, and Amazon see tremendous advertising opportunities because they have first-party data.
First-party data is made useful by on-device technology, but not at the expense of people’s privacy. This is because on-device makes it possible for data processing to happen in real-time. And user data stays on the user’s device instead of being sent to the cloud. It’s the direction of travel for the industry, moving adtech from an era that leaks data to a privacy-first era that protects it. In fact, other tech companies such as Apple, Facebook, and Google have and are re-architecting their technology for on-device processing.
Rebuilding for privacy
We believe that privacy is a force for good in advertising, and on-device is the future of digital advertising. However, we need to rebuild and provide first-party data owners with the necessary tools to scale.
For advertisers, the supply paths can be inefficient today because they need to build it publisher-by-publisher. Publishers also have no consistent way of making their data available to advertisers in a privacy-compliant and sustainable way. To seize the opportunities ahead of them, first-party data owners require a privacy-first infrastructure for digital advertising to be immune to any dramatic regulatory or browser-level changes,
This infrastructure will help publishers and advertisers to connect safely. It’s a way for personalized advertising to continue for first-party data owners, a place where digital advertising can continue to thrive — without the data leakage we see happening today.
Building on a privacy-first infrastructure is a long-term, sustainable strategy for publishers, advertisers and other first-party data owners. It will bring much-needed transparency, scale and privacy to digital advertising. It’s no longer the time for band-aid solutions to the impact of privacy on digital advertising. Any solution that isn’t grounded in privacy won’t stand up to oncoming regulatory, browser changes, and consumer scrutiny.
About the author
Joe Root is co-founder and CEO of Permutive. Following a BEng Computing at Imperial College and MSc Computer Sciences at Oxford, Joe started Permutive with his co-founder, Tim Spratt, joining Y Combinator in 2014.