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Advertising | Supporter Spotlight

Why adtech loves fragmentation–and why publishers shouldn’t 

The advertising landscape is fracturing due to third-party signal loss, causing targeting scarcity for publishers and advertisers. Half of users have “disappeared” from digital advertising by using browsers and devices that limit tracking and preserve privacy. 

While Chrome supports cookies, 40% of users modify privacy settings or browse incognito to block ad tracking. We’ve seen this reflected in our publishers’ audiences, where 70% of the internet is now invisible to adtech, leaving only 30% addressability. Chrome’s ‘reject all’ buttons in Europe and the proposed American Privacy Rights Act of 2024, or APRA, will further reduce data visibility and increase the signal loss we see today.

As businesses seek ways to address signal loss, solutions flood the market that are short-term workarounds that lack interoperability. The result is a fragmented, chaotic adtech ecosystem.  

Publishers have not experienced signal loss because they have first-party signals. This means publishers can append signals to 100% of impressions, whether an ID for users that authenticate or a cohort based on known attributes and behaviors collected on the user. The challenge for publishers is to build signals that the buy side will want to buy. This requires navigating fragmentation and having the tools to connect data and collaborate with the ecosystem on their signals.

Connecting disparate data

According to a recent AdMonster’s Publisher Pulse survey, monetizing audience data is seen as a significant opportunity for growth for 50% of publishers, and 33% plan to leverage audience data to create new revenue streams.

Consolidating their data asset is critical for publishers as it offers an opportunity to leverage  a lot more dimensions to build the audiences that advertisers want to buy. Publishers can augment the first-party signals they collect across their digital properties with additional attributes such as demographic, preference, and intent data. However, today’s fragmented data ecosystem makes it challenging to harness the full potential of this information. Data often sits in silos across different environments, different teams and consolidation requires data engineers, complex workflows, and significant time investment. 

Greater connectivity creates seamless, integrated systems that efficiently combine all data assets. This empowers publishers to activate their data without the burden of engineering-heavy processes.

Greater connectivity not only simplifies data management but also enhances its effectiveness. By consolidating various data sources, publishers can build a richer, more comprehensive profile of their audiences, allowing for better targeting and more personalized advertising experiences. This, in turn, creates new revenue opportunities and strengthens relationships with advertisers.

Collaboration reimagined

The challenges don’t end with data consolidation. Retargeting, once a cornerstone of performance marketing, is losing its effectiveness as signal loss impacts the scalability of traditional tactics. Advertisers are now struggling to achieve scale and performance, with all buyers competing for the same shrinking 30% of the internet’s inventory. This lack of scale and poor performance leaves many legacy retargeting strategies falling flat.

Data collaboration holds the potential to solve these challenges, but the current state of the Data Clean Room (DCR) space presents two significant hurdles:

1. Fragmentation and operational complexity

The DCR space is highly fragmented, making data collaboration cumbersome and resource-intensive. Moving data between systems requires complex operations, lengthy data processing agreements (DPAs), and heavy legal and operational overhead. This complexity not only delays campaign execution but also reduces return on ad spend (ROAS). Advertisers and publishers are left with inefficient processes that yield minimal performance gains.

2. The wrong signal to activate against

For companies that manage to navigate these hurdles, the results often don’t justify the effort if the signal that is activated is a matched record. Match rates between data sets are typically low. However a seed of matched records is a great asset to help a publisher identify which of their signals might have the highest propensity to hit advertiser KPIs or the highest affinity towards the brand.

The industry must move towards streamlined connectivity and more efficient data collaboration to overcome these challenges. By creating unified environments where data can flow seamlessly between publishers, advertisers, and platforms, we can reduce the operational burden. This would allow for more effective use of first-party data, greater scale in retargeting efforts, and better performance across the board.

Embrace collaboration & connectivity 

This reimagined approach to data collaboration and connectivity allows publishers to unlock the full potential of their data, creating better consumer experiences, more opportunities for growth, and a stronger, more transparent ecosystem where data works for everyone.

Featured Post | Policy

The cracks in Google’s adtech façade are starting to show

Behind the scenes, Google is flailing – despite its predictably tight control over industry narratives. 

The underlying shockwaves stem from an increasingly widespread understanding of Google’s dominant role over the entire adtech supply chain. Those who have sought to unpack and explain the complexities of the company’s hold on the industry can thank a senior Google employee for providing this apt analogy in discovery: They described Google’s role in adtech as “if Goldman or Citibank owned the New York Stock Exchange.” Now that’s something a jurist can understand. 

The escalation of enforcement 

In the last sixty days, Google has floated three different test balloons in an attempt to head off the intensifying scrutiny: 

  1. The Wall Street Journal reported Google has offered to split off part of its adtech business in an effort to head off the Department of Justice’s filing of a landmark lawsuit – expected this month according to a Bloomberg report. The only problem: Google’s offer was to split the adtech business and put it under a different part of parent Alphabet. To extend the previous analogy, placing the NYSE in a different division of Goldman Sachs would not solve the inherent issue. Hard pass.  
     
  2. Google announced a new feature with the innocuous title of “Confirming Gross Revenue.” They’ve pitched it to advertisers and publishers – and little doubt to enforcers, too – as providing transparency in a “privacy-safe way” as to the money flow in the advertising supply chain. The problem with it is that Google will avoid having to provide insights into auctions, transactional flow, or any real detail as to how Google’s decisions determine revenues across the market. Google’s press announcement crows that “Display & Video 360 is onboard as an early tester.” That sort of says it all, since Google owns DV360.  
     
  3. Google once again delayed its deprecation of third-party cookies, something that they’ve been dragging their feet on for nearly three years. From the very beginning, Google has used misleading Google-authored research of the Google-dominated supply and data system to suggest their delays are only due to their interests in not harming publishers. What is true is that a wrong move by Google (hello Floc, hello Topics) can very well continue the ongoing harm to premium publishers by treating every website as an interchangeable commodity. If there’s any chance that a move will hurt Google’s ad business, it won’t happen. 

Litigation, legislation, and learning 

So why all the flailing? To illuminate what’s going on underneath the surface, let’s take a roll call. Fifteen U.S. states, the U.S. Department of Justice, the E.U. Competition Commission, the U.K. Competition and Markets Authority … Netherlands … France … well, suffice it to say that the list is long (and growing) for investigations, lawsuits, and enforcement action underway – all of which are probing Google’s advertising tech business(es).  

The E.U. has been particularly active by fining Google more than $8 billion across three decisions. It also recently passed its new landmark gatekeeper law, the Digital Markets Act, and is ramping up enforcement of its landmark privacy law, the GDPR, by pressing Google-friendly Irish regulators. 

Importantly, enforcers and litigators are studying and learning from each other across issues of competition and data privacy worldwide. And they’re keeping especially close eyes on the Texas-led lawsuit which now counts 15 bipartisan state attorneys general as plaintiffs along with countless private plaintiffs. They certainly won’t have overlooked Google losing much of its arguments last week in attempting to dismiss this case. This blow came at the hands of a SDNY Court which very much seems to understand Google’s business. And that’s a huge problem for Google. 

Full court press 

Although “Jedi Blue” received the most press attention, due to the allegations of Google colluding with Facebook, there are a range of other very serious allegations which the Court has now given the green light for further discovery and trial. And, significantly, they are readily explainable to a jury. Two foremost allegations are the tying of Google’s adtech services and the manipulation of its auctions.  

What if I told you Google required the use of its ad server in order to receive the benefits of Google’s market-leading ad exchange and the fast-growing advertising demand dollars flowing through it?  Some might call this “tying,” which – if proven – is illegal.  Note that Google had about 50% of the ad server market when it acquired DoubleClick (DFP). It has since steadily increased that stake to claim nearly 99% of large publishers. Please allow me to quote the Court:  

 “The States plausibly allege that Google used its monopoly power in AdX to actually coerce publishers into licensing a separate and distinct product, Google’s DFP ad server, and that Google’s actions had anticompetitive effects in both markets, affecting a substantial amount of interstate commerce.” 

Or what if I told you Google had paid its publisher clients based on the third-highest price in an auction while collecting on the second-highest price with the determination it would re-route the variance into more advertising demand for its own services?  Some might call this, “market manipulation,” which – if proven – may well have been an illegal way to protect its monopoly. As the Court again summarized Google’s project “Bell”:  

“In other words, Bell penalized publishers who did not grant AdX preferential access by paying them based upon the third-place bid rather than a second-place bid, while using the difference to increase the bids made to publishers who allowed preferential access.” 

In fact, the only count which was dismissed in the lawsuit is the infamous “Jedi Blue” allegation. Despite Google anchoring its press spin on this win, it’s this single dismissal – one that befuddled many legal experts watching the case. I wager this one will resurface again as the E.U. and U.K. have already announced their own investigations. Also, the “Jedi Blue” allegations are included in a private lawsuit against Facebook that has already been given the green light in the northern district of California. Each of these efforts builds on the others and the subsequent learnings can only aid the U.S. Department of Justice in its work.  

Antitrust is in the air 

It was rightly said nearly three years ago that antitrust enforcement will take significant time. The wheels of justice do indeed turn slowly. Attempting to propose solutions before the investigations and allegations landed would be premature, but Google’s efforts to settle these cases shows they are nervous. And Google’s efforts to manipulate the outcome may be the most transparent thing about its business.  

The reality is many of the charges against Google have now been found plausible and will proceed into deeper discovery just as many other regulators and legislatures attempt to curb its power. Make no mistake, Google is stumbling in a way we’ve never seen in its two decades. Of course, the company will look to proactively lay out solutions for all of us. But we all see through this. No one should settle for anything less than a return to competition and the rebalancing of bargaining power that comes with it. 

Perspectives

Should publishers ditch native ad content promotion for good?

The internet is filled with tricks and tactics to reach your target audience.

There’s the e-newsletter blast, the banner campaign, the native ad widgets. There’s Facebook and Instagram and Twitter. These methods are constantly changing and requiring publishers to adapt to new rules and regulations, but one thing remains constant: if you want to reach your audience, you’re going to have to pay. Given that paid promotion is a part of most content programs these days, it’s vital that publishers are getting the best bang for their buck – or else their margins will suffer.

In recent years, platforms have cracked down on organic traffic, forcing publishers to adjust their spend accordingly in order to drive traffic to their sites. It’s also changed how we sell products like content. You can no longer put an article or video on your page and sit back as the views roll in. Instead, campaigns need a dedicated (and usually significant) amplification budget to deliver the results the client expects.

Considering this, it’s important to ensure that you’re getting the most bang for your promotion buck. Otherwise, you’ll end up breaking even — or worse — on something that should be a significant revenue stream for your business.

Two of the most common tactics are Facebook and native ad network promotion. Each has its pros and cons (scale, price, engagement), which we’ve explored in the last five years at Pressboard. But after more than 3,000 stories, we’ve stopped using native entirely and have shifted our whole client content promotion budget to Facebook. Here’s why.

The Native Ad Problem

Native ad networks have been praised for their ability to deliver a nondisruptive ad experience to viewers. In fact, research from the Native Advertising Institute suggests that readers prefer them over pre-roll video ads and banner advertisements, probably because they blend into the page more seamlessly.

And while they do succeed in sending traffic to a site, native ad networks face one major challenge: quality.

In order to outcompete other native networks and provide advertisers with adequate scale and inventory, many native networks have had to expand their reach beyond premium sites. As a result, quality of traffic has naturally given way in favor of quantity. The readers on these sites are often less qualified, which means they’re less likely to click on and engage with your stories.

At this kind of scale, native ad tactics also inevitably encounter brand safety issues. We’ve all seen those cringe-worthy headlines popping up in “Stories You Might Like” panels; it’s even worse if your sponsored content is sitting next to one of them.

Why Should Publishers Care?

Not all native ad networks are created equal. There are networks with built-in quality control measures, like minimum time spent, that ensure the audience they reach is, well, actually human. They can also lead to massive revenue if done thoughtfully.

But at the end of the day, there are better ways to deliver the results your clients want to see.

Content is different than banner ads or other kinds of advertising. While a banner needs 0.5 seconds to communicate its message, content needs audiences to engage with it to be effective. That connection is incredibly powerful: branded content leads to 59% greater recall than other digital ads. Beyond this, advertisers need to show that their investment in content is making an impact, and their clients are increasingly concerned about engagement rather than clicks. Therefore, it’s vital that the people who click on your ad intend to read and scroll through your content.

In a recent study, we compared how two traffic sources — Facebook newsfeed and native ad networks — compare when it comes to engagement and click-through rate.

The data came from over 1 million unique reads promoted through Facebook or native ad networks and tracked using Pressboard’s platform. We analyzed engagement metrics including time spent, scroll depth, and click-through rate on links in the article to determine which tactic was most successful. The results?

The Facebook Solution

After reviewing the results, Facebook is the clear winner when it comes to both engagement and conversion. Readers spend an entire minute engaging with content when they reach it from a Facebook ad. That’s almost two times higher than traffic coming from a native ad network. They also convert at double the rate of what we’d expect from a reader who reached the content after clicking on a native ad.

Even when we considered cost, Facebook outperformed native ad networks. Sure, native drove cheaper clicks and impressions, but that advantage changed when we looked at verified reads. Fewer clicks on native ads reached the content we were trying to promote, whereas the Facebook audience was more likely to reach our content. As a result, each actual read that came through Facebook cost $0.34, while reads earned through native ad networks cost $0.59.

Anyone that invests in content promotion knows the importance of every dollar. And while clients aren’t concerned about the publisher’s bottom line, they are invested in the performance of their content. Finding a platform that delivers strong conversions and engagement and at relatively affordable cost is a win-win. Until something inevitably changes in the AdTech space, we think we’ve found it.

Perspectives

The FBI, subpoenas, and digital advertising: Rebates and transparency under investigation

It’s difficult for any piece of news to rise above the cacophony of our current political discourse. So give yourself a pass if you missed this recent advertising industry coverage that involved the FBI and subpoenas. According to the Wall Street Journal, the FBI has issued subpoenas Havas for issues related to rebates and transparency.

Industry publications rushed to provide their take on the news:

Even for a relatively high profile industry category like advertising — which is second only to Hollywood for its number of awards shows and overall narcissism — this kind of news serves as high drama. And the stakes are high, particularly given whispers of sex worker allegations and the Cambridge Analytica mess.

Contrary To The Adage, All PR Is Not Good PR

The current attacks on U.S. intelligence agencies notwithstanding, FBI investigations are generally regarded as credible. (Why else would they allocate scarce resources to them?). And when asked by Congress to report in on its activities, the FBI unsurprisingly points to successful investigations as proof of their worth, using words like “takedown,” “scheme,” and “rampant.”

Needless to say, these kind of investigations create buzz that’s bad for business. This kind of FBI attention from is catnip for industry watchers and general business press alike. This only increases the likelihood of the significant collateral damage, regardless of the investigation’s outcome.

Agencies Scramble To Find New Ways To Make Money

The rebate and transparency issue was outed years ago, and there’s been sort of a slow burn since to address these problems. Along the way, agency executives have slogged through difficult conversations with their peers (and clients) at brands to address questions and explain remedies.

The larger issue is that, even buried in the financials, rebates serve(d) as a profit stream for agencies — an industry that generates income at approximately an average rate of 13%. For comparative purposes, Omnicom generated $2 billion in net income up against $15 billion in sales (13%), while Bristol-Myers Squibb reported $5B in profits on $20B in sales (25%), and Goldman Sachs yielded $11B in earnings on $32B in revenues (34%). By this measure, the agency business is not a particularly attractive category.

That’s not to suggest that potential fraud in advertising is unworthy of examination. Far from it. The U.S. advertising industry topped $200B last year, so just a small percentage of that equates to huge dollars. However, it is nowhere near as profitable as sectors such as financial services or software, where profit margins are 3X compared to advertising.

Systematic and Lingering Implications

The challenges associated with rebates and transparency are grouped, fairly or not, with viewability and fraud (almost exclusively related to digital). These topics have received a good bit of attention in the advertising industry as a whole in recent years, though they’ve not dominated conversations. Of course, there are plenty of other things driving change in the business, from social media and video to influencer marketing and virtual reality, which have been far more interesting for everyone involved.

That’s all about to change, unless the FBI investigation reveals no wrongdoing and the effort is quietly shut down. Not many industry veterans think this is likely, however. In fact, many are preparing for the worst case scenario. An official FBI report, which would most certainly include indictments for most or all of the big agencies, could put the entire industry on its heels for years. And that makes this topic worthy of close attention by industry executives in advertising, publishing, and adtech.

About The Author

Tim Bourgeois (@ECoastCatalyst) is a principal at East Coast Catalyst, a Boston-based digital marketing audit company.

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