Articles by: "Joseph Lospalluto, EVP Americas – Smart AdServer"

CTV’s peril: Could shared data strengthen platforms and programmers?

August 24, 2021 Joseph Lospalluto, EVP Americas – Smart AdServer

In Greek mythology, Odysseus faced many harrowing close calls, traveling to Hades and back just to find his way home. For many involved in the evolution of ConnectedTV, it has felt very much like a 10-year journey to get to the juncture where the promise of the platform finally meets the commercial needs of the market.

Much like Homer’s Odyssey, there always seems to be one last challenge to face before reaching friendly shores. As video investment continues to surge into CTV, the competing challenges between programmers and CTV platforms are coming into sharp relief. The solution may lie in mutually shared data so that platform and programmer can harness the rising tide of OTT viewership on CTV devices and the revenues that come with it.

Big picture problems

For digital publishers, CTV will mean presenting their content on the big screen for the first time. This represents a big leap into the living room on platforms they don’t really control. Even an owned-and-operated OTT app must adhere to the specific requirements of the CTV platform where it resides. And that often means building multiple variations of the app just to conform to the needs of the platform. Even with native video players for environments like AndroidTV, the specific advertising parameters a publisher must comply with to succeed on a CTV platform vary wildly.

Traditional broadcast and cable networks approach ConnectedTV with a set of assumptions from the legacy world of television. Unfortunately, these do not always translate well into CTV. First, they have windowing restrictions around licensed content that can produce an uneven experience between their linear broadcast, cable VOD, and CTV offerings. Second, without an accepted currency equivalent to Nielsen ratings for CTV viewership, they are missing out on the opportunity to bind all TV viewing of their content into a single, sellable, audience. (Nielsen One – a potential solution – is slated to debut in Q4 2022.)

Add into this the fact that ConnectedTV device platforms are becoming owners of advertising inventory across all of the programmers on their platform, and the situation becomes even more complex for everyone. In the past, a TV network would surrender two minutes per programming hour to their MVPD distribution partner, or roughly 12.5% of total inventory. This was mitigated by the terms of a carriage agreement that permitted the distributor to only sell local ads for insertion into their physical distribution footprint. Today, a CTV platform has rights to 40% of a programmers’ inventory and no restrictions around to whom it can sell.

Transition and targeting

Web publishers had to master new techniques and methods to benefit from the consumer transition to mobile screens. Now these same web publishers that have built strong advertising supported video businesses will need to recalibrate their workflows to ensure that CTV publishing is worthwhile. Ultimately, their ability to represent the full scale and dimension of their audience, across owned and third-party platforms, will have a profound impact on their success.

The value of a programmer’s CTV advertising inventory, despite residing within the same content network and delivery platform, is influenced dramatically by the audience targeting data that each party, owner, and distributor, is able to provide. When a network sells this CTV inventory directly or even programmatically, they can apply a limited amount of first party data to the placement given the lack of unique identifiers provided by the CTV platform. The network falls back on presenting its CTV audience as an extension of its broadcast audience. That is, unfortunately, an imprecise and potentially loss-making approach.

Connected competition

The CTV platform is not so constrained. While publishers may not have the option to sell these networks by name, their aggregation of so many CTV impressions allows them to compete directly with the programmers for the same advertising budgets. And because of the additional first party data they have about the consumer: viewing habits, zip code, and even TV size, they can very often out compete the networks for the same campaign commitments.

So here we have the Scylla and Charybdis of CTV advertising. On the one hand a national brand advertiser can approach multiple networks for their CTV campaigns and craft a schedule that will guarantee distribution and spot delivery. They can be very specific around selected programming and category exclusivity if they so desire.

On the other hand, going to one or several CTV platforms for the same campaign will allow a buyer to define a desired target audience profile to reach. However, they will have limited control around the content adjacency and context of their placements. And the reporting and reconciliation of campaigns is also different in degree and detail, forcing the advertiser to now undertake an analytical effort to assess ROAS from each source.

The route to revenue

Scylla, the six-headed monster in Homer’s The Odyssey ate sailors that passed close enough to be claimed. She sat on one side of the Straits of Messina. Charybdis, a violent whirlpool that would devour entire ships, was at the far shore. Sailing too close to one or the other ensured an unenviable end. Buying impressions from only programmers or only from CTV platforms will leave advertising brands at a disadvantage precisely at the time when CTV can command the enormous share shift of video investment coming from a declining traditional TV audience.

The stakes aren’t quite life and death for CTV advertising. However, it’s worth recognizing that this state of affairs will continue to constrict the growth of the business unless additional progress can be made to harmonize network-sold and platform-sold CTV impressions.

It is incumbent on the industry to coalesce around a shared data set that both platforms and programmers can provide to advertisers programmatically such that they can evaluate and purchase these avails with the same confidence that they used to purchase television. The rising tide of OTT viewership on CTV platforms, on both linear FAST channels and AVOD, suggests that rallying around a common baseline for CTV inventory stands to benefit both the content rights owners and distribution platforms equally, when each will finally have a stake in one another’s success.

Advertising | Innovation | Perspectives

Mitigating risk in the age of big tech

May 19, 2021 Joseph Lospalluto, EVP Americas – Smart AdServer

We have all purchased some sort of insurance to protect against the risk of an accident or a total loss. We often do this with little consideration because we all want to be able to sleep soundly at night. Yet few of us think about applying the concept of insurance to the tech that is mission-critical to a company’s revenue. As the dominant big tech players expand the control they have through their browser and ad tech ecosystems, publishers are rapidly losing flexibility. This means the time is now for media owners to think about what their “insurance policy” should cover.

In my last post, I mentioned there would be a lot of uncertainty when operating within multiple sandboxes (aka monopolistic platforms). Frequent rule changes and regulations imposed by the big tech platforms challenge media owners’ core business. And, as publishers must operate their sites or apps to survive, it is important to explore alternatives.

This new dynamic means publishers will need to change strategies to navigate and extract the most value for themselves. The key to success is remembering that each sandbox, privacy rule, etc, is but one element of that sprawling big tech ecosystem. And the ecosystem itself is where publishers should heighten their focus.

Is your tech stack creating risk?

The technical stack is the beating heart of any media organization’s revenue production. While it is a necessity, if left as the sole engine for driving a majority of your revenue, it creates the biggest dependency and single point of failure for any media owner. Why? Simply because the big tech platforms control the browser, the buy-side tech, the sell-side tech, and the identity tech… Talk about being a superpower. They own the whole ecosystem. And this has created an imbalance of control. This intentionally manufactured dependency allows big tech to generate vital revenue streams for their benefit first. It also poses a significant risk of revenue loss for publishers.

Operationally, it is possible to switch tech providers, but the stack isn’t easily replaced. I’m not advocating an outright replacement, as that is not the answer for most publishers. A singular tech stack may have worked in the past. However, it’s no longer tenable to depend solely upon a single company acting as judge, jury, and executioner. Publishers must be ready and willing to mitigate risk through diversification. A singular stack will no longer offer rules to monetize all types of traffic.

Protecting against loss

If the future means navigating a world dominated by the big players, the best way to protect your interests is to understand how to work with multiple providers. To start, one should use the main tech stack to extract the most value from what that stack will deliver. For most publishers, GAM serves as the main stack and requires publisher data to feed it. As long as consumers provide consent, revenue should remain intact. However, with the rise of consumer privacy regulations, we will see an ever-growing pool of users who won’t provide consent.

Without consent and data, a secondary tech stack can complement a publisher’s monetization efforts. Additional value can be unlocked through options for targeting non-consented traffic. In instances of no consent, these impressions can be paired with semantic contextual targeting to help ensure ad delivery. Additionally, this helps protect against potential revenue loss.

Insurance policy: a second stack

A secondary stack may also provide rules that complement the rules of the main stack. For example, content classified with an R rating that gets excluded from one platform can be monetized by engaging another tech provider. The same can be true for niche advertising categories, such as cannabis. As more states legalize cannabis, depending solely on a provider that limits access to sensitive categories can have a large impact on revenue. Diversifying the stack also offers better monetization options for different ad formats and can provide access to different regions.
So, while it may seem counterintuitive to operational efficiency, leveraging the respective strengths of multiple tech providers can result in greater efficiency and decreases your dependency on a single platform. Understanding what each offers can help you tailor a solution that best protects your interests and insures you against potential risk.

Advertising | Perspectives | Revenue

Building your sandcastle in the privacy sandbox

March 9, 2021 Joseph Lospalluto, EVP Americas – Smart AdServer

Last year we warned about the imminent approach of a new consent economy, born out of privacy regulations, that would completely reshape the ad tech ecosystem publishers have used to develop their monetization strategies. To no surprise, it has arrived with consent and first-party data as the new currency. The consumer now has a seat at the table and the ecosystem is experiencing a total rebuild of itself as we speak.

Now that the consumer has a louder voice, and with regulation forcing the issue, the major tech titans are at war with one another to emerge as the frontrunner in establishing privacy enablement. Each one is making attempts to change the game by leveraging their technology to align with the calls for privacy from regulators and consumers alike. Certainly, these concerns are legitimate. However, the outsized influence they have in the space allows them to take a favorable position. In particular, they can corral everyone in their ecosystems into their new privacy sandboxes.

Apple’s sandbox

Applying Apple’s rules within their ecosystem isn’t new. They were making moves around privacy long before the other tech giants. Publishers felt the loss in monetization when Apple began blocking third-party cookies in Safari. With Apple’s eyes now aimed squarely on the Identifier for Advertisers (IDFA) and strict adherence to the terms of use around it, publishers must adapt to yet another rule change and monetization threat. By controlling a large percentage of a premium market, Apple has the power to make rules everyone will be forced to follow.

If DSPs believe IDFA is the only and best buying signal, publishers and suppliers will need to prepare to support it to comply with advertiser demand and ensure inventory is eligible for DSPs to bid on. Yes, publishers can still monetize without the IDFA signal. But if a buyer wants to transact utilizing IDFA vs. a publisher’s own first-party data signal, what choice does a publisher really have?

Google’s sandbox

Google, on the other hand, seemed to hope to ride out the waves of conversation around privacy and didn’t eliminate third-party cookies right away. When it became clear the issue was gaining traction and that regulation loomed, they introduced their own sandbox. Through the introduction of the Federated Learning of Cohorts (FLoC), Google is essentially proposing privacy policy that ends up favoring their ecosystem more than it already has given their existing ad tech stack dominance around the globe.

With Chrome currently accounting for 46% of browser share and Android accounting for 40% of the mobile operating system market share in the U.S., publishers will find themselves forced to play along yet again to a rule change that they had little influence in formulating. As of this writing, Google will be the one defining the FLoC cohorts (their version of IDFA) and allowing publishers the opportunity to feed their data into the respective cohorts. Peculiarly, they will be the only player able to do cross-site tracking and attribution, leaving publishers with little influence on garnering their fair share.

As a result of these big tech players calling the shots and the rest of the industry trying to figure out how to play in this new world, other players have also begun building sandboxes. For example, The Trade Desk is working with independent industry organization Prebid.org to introduce a Unified ID 2.0 and Magnite introducing a PARROT proposal. Globally, there are many other ID initiatives also in development as the entire industry tries to figure out how to thrive in these new sandboxes.

Build your sandcastle

As with any change made by big tech, it is in the best interests of publishers to adopt an agnostic view in attempting to evolve strategies for each respective sandbox. Regardless of which sandbox you’re playing in, you must build and fortify your own sandcastle.

The first step in doing so is to remember that big tech needs the publisher in this equation. Why? Because the publisher is the one collecting user consent and in control of the first-party data, which are the key components of trade in this consent economy. This is why it’s critical to defend data at all costs and only use it as leverage for garnering a fair share of the transaction with advertisers.

Creativity rules

With third-party cookies dead and gone, advertisers will still seek to trade around audience and context. With publisher first-party data the most critical and stable component to monetization, developing strategies for understanding and monetizing audiences in a cookieless world remains a priority.

Publishers will need to leverage new offerings to provide advertiser options in scenarios of consented and non-consented traffic. For example, non-consented traffic can be supplemented by semantic data points or other valuable, non-identifiers. Industry inflection provides an opportunity for publishers and advertisers to come together to discuss how to best reach and speak to the consumer via varying deal types or placements.

Despite the flux around the ecosystem’s evolution, there’s no time to waste in beginning to build your castle to ensure you’re getting your fair share. By remaining engaged and being protective of your data and your partners, you can begin to lay a foundation for establishing your place in the sandbox. As the topic depends on the outcome of future decisions, it’s important to stay informed on its evolution and to ensure your castle is strong enough to withstand any future headwinds.

Perspectives

How to survive in the consent economy

December 7, 2020 Joseph Lospalluto, EVP Americas – Smart AdServer

Our previous article outlining the birth of the consent economy warned that the initial waves of privacy regulation in the U.S. are growing stronger. The recent news that California voters passed Proposition 24 proves the point. It also elevates conversation around what the future may hold in terms of national regulation, especially given California’s large influence on the tech industry.

Proposition 24 is better known as the California Privacy Rights Act (CPRA) and builds upon the existing California Consumer Privacy Act (CCPA) passed in 2018. CCPA left room for interpretation, particularly around whether selling targeted ads qualified as selling California residents’ personal information. The CPRA goes one step further in expanding the rights of California’s citizens through new consent definitions among other things.

While the CPRA won’t be enforceable until 2023, it could severely impact publisher revenue. The added uncertainty around any federal or additional state regulations coming out prior to the deadline makes immediate action a smart choice. If stricter federal regulation rolls out, it will be important to have set the groundwork that will give yourself a head start.

Anticipating what’s to come

The European privacy regulation landscape offers parallels, that can and should be drawn from, as we face a similar trajectory.

The existing CCPA borrows heavily from the “right to be forgotten” principle enshrined in the European Union’s General Data Protection Regulation (GDPR). To make it easier for publishers to process first-party user data and to obtain consent in compliance with the rules laid down by GDPR, the IAB Europe created the Transparency & Consent Framework (TCF).

As the shortcomings of TCF v 1.0 became apparent, TCF v 2.0 was introduced to clarify and strengthen the regulatory framework. This dialing up of control measures is exactly what we’re seeing play out in California with the passage of CPRA as an addendum to the CCPA.

The CCPA limited “selling” data. However, the CPRA is closer in nature to the relationship between the GDPR and TCF by now including restrictions on sharing of personal information as well. Publishers will be required to allow citizens to opt-out and the CPRA. It requires that all third parties with whom a data owner may have sold or shared information be notified as well.

This new regulation also establishes an enforcement arm. This would be the first agency dedicated to privacy rights enforcement in the U.S. The five-person board will appoint a Chief Privacy Auditor in a structure similar in nature to the GDPR’s European Data Protection Board. In this latest version, California will now have the authority to levy larger fines, which has already occurred with GDPR violations.

The lessons learned from GDPR and CCPA can help anticipate the future. There’s no doubt that publishers are entering challenging territory with these regulatory demands and the concerns around ad blocking further compounding the path to protecting and growing revenue. Publishers should only be fearful if they are unprepared in their strategy for how to monetize both a consented and non-consented user.

Revenue diversification in the consent economy

The time is now to challenge old belief systems. With the passage and evolution of new regulations, one must begin taking the first steps in the inevitable long-term journey towards revenue diversification. The reality of garnering 100% consent has shown itself to be elusive, if not impossible. In European markets, depending on the country, we have seen anywhere from 50-80% consent adoption. With outcomes like this, having a proper plan in place will enable you to monetize both consented and non-consented traffic, starting with how your ad server is configured and building the initial infrastructure.

When a user provides consent, most of your current monetization partners and policies will be fine and won’t require additional changes. When user consent isn’t provided, a shift in tactics is required. You’ll need to work with partners that will still have the ability to serve ads when user consent is not present. And keep in mind that you should always beware any provider who requires access to your user data to do this. In these situations, contextual targeting and semantic targeting can serve as effective and compliant alternatives.

Even when ad supported situations are off the table, other options exist. A subscription-based limited- or ad free experience, as we’ve seen publishers like Business Insider and The New York Times create, offers additional revenue streams while still staying true to the essence of your brand.

Another option is to consider ecommerce as it aligns with your brand and brand experience. Publishers like BuzzFeed, Hearst, and Meredith have taken this route through online stores, licensing agreements, and product development. These additional revenue streams increase the long-term value of your audience while still providing value.

Welcome to the new frontier

This new frontier can be intimidating. However, publishers who successfully diversify revenue streams will be positioned best for long-term sustainability. With the user now occupying a seat at the table, the consent economy can also be seen as an opportunity for publishers.

Respecting the wishes of the user always pays in garnering trust and attention. This balance between respecting data privacy and delivering on expectations for personalized interactions, not only protects existing revenue, but could also lead to revenue growth through new audiences. Taking the first step now sets you on the path to positioning yourself well for survival in this new consent economy.

Perspectives

Everyone’s talking about ID, but it’s consent that really matters

October 7, 2020 Joseph Lospalluto, EVP Americas – Smart AdServer

After years of intense adtech ecosystem development, we’re moving towards a more mature and controlled market, driven in part by rising concern around the use of personal data. From the privacy laws of Germany and France in the 1970s through to the IAB’s Transparency and Consent Framework (TCF) and GDPR in the EU, the scope of these regulations has grown along with the increasing levels of concern.

Europe has led the way in implementing privacy regulations in the past. However, citizens everywhere want greater transparency, choice, and control over how their data is used. The waves of privacy are now crashing upon all shores. None of us can continue to operate with our heads buried in the sand. In the US, the floodgates have opened with the implementation of CCPA in California and the upcoming vote to expand it.

In a 2019 Pew Research Center study, 79% of U.S. adults expressed concern around how companies use the data collected about them. Given that 57% also reported following privacy news very closely, it’s safe to say it won’t be long before the other 49 states follow California’s lead. The key to adapting quickly to current and future regulations without negatively impacting revenue lies in setting a solid foundation based upon respectfully addressing citizen privacy demands.

The birth of the consent economy

With the introduction of each new set of regulations, it’s clear that we’re shifting towards a new era of consent. As third-party cookies disappear, consent will be required to counterbalance the loss of user ID to continue to target effectively. While most of the industry conversation has been focused on ID alternatives, the real value lies in consent and the power that it carries.

Average publisher revenue is estimated to decline by 52% without access to third-party cookies and expenditures on data management solutions increased by 9.8% last year. However, advertising depends on the delicate balance between the interests of the publisher, the advertiser and the citizen. This new economy aims to maintain the balance of the scales by establishing consent with data as the new currency.

To prevent revenue losses, strengthening relationships with your audiences by integrating privacy into your core operations is key. This, combined with regulation, serves as a catalyst for change. Standard consent permissions clear up confusion and maintain data integrity. Building an informed and fully-consented audience isn’t just the right thing to do, it helps increase the value of your audience.

How publishers regain control

With the current lack of global industry-wide standards, navigating this stormy sea of tangled regulations can be a challenge. The need to add resources to manage compliance can be a pain point, but it’s clearly important to protect revenue. Choosing the best tech partner can help remove some of this burden from your internal teams and allow for better balance between business needs and regulatory compliance.

Consider the following questions:

Privacy and consent needs to be at the core of your monetization strategy. Is it currently?
What consent management platform and framework are you using/adopting?
Is your platform set up to handle the regions where your traffic originates?
Are you ready to handle consent from all environments: display, in-app, video, CTV?

Define your data processing and data privacy practices
What are the practices you and your partners employ?
What is your provider doing with the data it collects on your assets?
Does that conform to your strategy and plan and do you trust they have your best interests at heart?

A publisher’s first party data coupled with consent is their ultimate leverage point. You should protect it at all costs. Adtech companies’ interests must align with the publisher’s. Adtech should be your partner – not your competitor.

How will you and your adtech provider manage opt out traffic? In the consent economy you will not receive 100% opt-in.
Will your adserver be able to serve non-personalized ads when users have opted-out of sharing their data?
How can semantic and contextual targeting help you develop valuable audience segments?
Under GDPR you are legally responsible for managing consent choices. Are you clear on the policies and procedures of your adtech partners?
Can you ensure control over how your audience data and consent is processed throughout every single one of your tech partner platforms? Or, will you be forced to share data at your own risk?

Get this part wrong risks fines, which have gone into the billions of dollars.

We are all aware global consumer consent regulations will continue to be adopted/adapted around the world. Being anchored from the start will help you chart the best course through the tides of this new consent economy for the short, medium, and long-term.

Perspectives | Revenue

Will we make the same mistake with CTV as we did with the web?

August 25, 2020 Joseph Lospalluto, EVP Americas – Smart AdServer

It’s a familiar scenario. One of the big ad tech players announces a change and we are all left to interpret what exactly it means. The only certainty is that it will take some effort to understand the full picture, the driving force behind it, and a plan of action.

As the big players quickly and quietly expanded their walled garden ecosystems, many publishers found themselves left without a key. We all know these big players own most of the market share and also dominate most of the growth as well. By the end of 2020, it’s predicted that nearly 70% of US digital ad dollars will be spent with Amazon, Facebook or Google.

However, publishers do have options for regaining control, especially when it comes to new growth areas like connected TV (CTV). Even before Covid-19 drove consumers to CTV and streaming in record numbers, 2019 saw a 330% rise in programmatic OTT/CTV ad transactions with CTV market advertising spend in the US valued at $6.94B last year. As you begin to build out your CTV strategy, it’s important to learn from the lessons of the past to avoid making the same mistakes.

Own your audience relationships

Distribution and tech partnerships often begin with great promise. When Apple introduced their Newsstand offering, it was positioned as a lucrative way to expand subscriber reach on iOS devices. Once Apple announced they would only allow single issue sales and began acting as an intermediary by keeping the subscriber data collected on their platform, the need for a business model more balanced with publisher needs became evident.

Nothing is more important than your audience and the ability to maintain control over the close audience relationships you cultivate. Effectively identifying these loyal audience segments and estimating user lifetime value is the foundation of a successful strategy. If you’re not working with an independent tech provider, it’s important to consider the potential implications and potential risks of partnering with a competitor or potential competitor and what impact that might have on your audience relationships.

Control and leverage your data

Your data is a key asset in your private garden. Controlling who gets in and what goes out is especially important as GDPR, TCF, and CCPA come into full effect. These changes have immediate impact on your revenue, but also secondary costs from the business model adjustments needed when third-party cookies are disabled.

Niche targeting, personalization, and frequency capping all depend on transparency and insights derived from data. Controlling and fully understanding your data makes it possible to hone your monetization strategy and create innovative opportunities for advertisers. When others have control over your data, it becomes more challenging.

For example, concerns have been raised around Google’s proposed TURTLEDOVE solution and its less frequent reporting structure. This poses a big challenge around leveraging data to fully optimize and capture revenue. As publisher first-party data becomes increasingly valuable and offers more monetization opportunities, it’s important to consider whether your provider is data neutral or more interested in harvesting your data.

Control your infrastructure

Make sure you are the one in charge of all the tech decisions in your private garden. In a technologically nuanced space like CTV look for partners that provide the expertise and infrastructure needed to ensure data protections, but also allow you to maintain control. Be wary of partnering with players who are also competing for your audience’s attention. And ensure that you will have enough flexibility in customization and business rules.

When Google first acquired DoubleClick back in 2008, they promised it would offer publishers more tools, enhanced productivity and additional revenue while freeing up resources to allow publishers to focus more on building and maintaining a web presence. In reality, it was one of the first deals that helped Google establish dominance and affect changes in customization and control that continue to ripple through the entire industry. Again, be very careful with who you let into your private garden.

Diversify your revenue

The end of third-party cookies means short-term revenue losses are likely. Many publishers have already begun exploring ways to diversify their revenue streams. Meredith is a great example of strategically embracing data management and ownership. The launch of their Data Studio and e-commerce sites connected back to their brands has helped optimize revenue streams.

Engaging loyal audience segments through registrations and subscriptions is another strategy that many of you have begun to embrace. Build upon existing successes like The New York Times has done with the introduction of their stand alone NY Times Crosswords and NY Times Cooking offerings. This is another avenue for strengthening audience relationships while building more robust first-party data.

This industry shift towards CTV offers another consideration for diversification. It also provides a prime opportunity to take back control and build your own private garden. Learn from the past in order to make careful choices around who you partner with and how you protect your investments from the start. This will give you the key to your own private garden and bring success in expanding into new growth areas.