Tracking and profiling remain standard practices and big business for ad-tech firms in digital advertising, though publishers don’t see much of the money. A new report, Sustainable without surveillance, from the Irish Council for Civil Liberties (ICCL), reviews the practices of tracking-based advertising and its impact on the digital ecosystem.
The report, written by Dr. Johnny Ryan, highlights how tracking-based advertising diverts data and revenue from publishers to ad tech intermediaries, notably Facebook and Google. In addition, Dr. Ryan shares results from European publishers when they turn off tracking-based advertising.
The report outlines how real-time bidding (RTB) and auction-based environments allow thousands of companies to receive profile data about a person from a single ad. Tracking-based advertising diverts data and revenue from publishers to ad tech and, as a result, turns publishers’ audiences into commodities. Advertisers can now buy a premium publisher’s audience cheaply on low-value sites.
The research also recounts how tracking-based ads make ad fraud easier and how they trick advertisers and ad networks into paying them. Early estimates of ad fraud by HUMAN (formally White Ops) found Russian cybercriminals used Methbot to extract $3 to $5 million in video ad revenue from premium publishers. Methbots created fake pages on which they run real ads from actual advertisers. The bots simulated human activity (i.e., cursor movements and clicks) to mimic human action to make it appear as if a human impression occurred. HUMAN identified over 250,000 URLs that Methbots generated across more than 6,000 publishers.
Dr. Ryan also cites the 2016 Guardian study that used tracking-based ads to buy sales inventory in their newspaper. A detailed analysis of this media transaction found that for every ad dollar spent programmatically on the Guardian, they received only 30 cents. Intermediary technology firms executing tracking-based advertising received the remaining 70 cents. Each ad tech firm taking part in the transaction collects a fee, often hidden.
Publishers profitable without tracking-based advertising
The report presents evidence from European publishers that have profitable advertising businesses that do not rely on tracking-based advertising.
When Dutch publishers NPO Group replaced tracking-based ads with contextual-based ads, their advertising revenue increased 149%. Revenue continued to grow even with Covid-19’s significant impact on advertising spending.
The Norwegian news publishing group earned an average of 391% more over 12 months for contextual ads than tracking-based ads for websites it operates.
Further, TV2, a primary Norwegian news website, earned a 210% higher average price for contextual targeting than competing tracking-based ad targeting.
Time for change
It’s time for publishers to rethink their involvement in tracking-based advertising. With little potential for substantive yield, publishers must calculate the risk of data leakage and fraud. Supporting Dr. Ryan’s analysis is the U.S. based report, Online Tracking and Publishers’ Revenues: An Empirical, from lead researcher Alessandro Acquisti. It found that tracking-based advertising earns publishers only 4% more revenue than context-based advertising. It is clear that data tracking underpins the digital media economy and there are far more profitable, and less problematic, solutions.
The cannabis industry is currently the fifth largest and fastest-growing consumer industry in the U.S. More than 200 million Americans – about 70% of the population – now live in states with legalized medical or recreational cannabis use. However, despite medical and recreational use likely being the two things that most readily come to mind when mentioning cannabis, the industry encompasses so much more. Expanding legal access has resulted in record levels of investment capital pouring into the industry. And all this investment leads to product growth. The first half of 2021 alone saw $7.9 billion invested in cannabis deals according to New Frontier Data.
Consumer perceptions around cannabis are shifting. These days, it is found in everything from beauty products to machinery lubricants. In addition, larger brands are beginning to experiment by incorporating CBD and hemp into their products. Recently, PepsiCo in Germany made their first foray into the category with the launch of their Rockstar Energy+Hemp beverage (which does not contain any THC). Some additional examples include Unilever subsidiary brand Schmidt’s Naturals, which sells a line of hemp-oil deodorants and Colgate-Palmolive’s recent acquisition of Hello Products, which offers a CBD oral care collection.
As more mainstream brands test the waters, it’s likely that shifts in advertising spend will follow. In fact, advertising spend is already growing in the category. In 2019, Kantar reported cannabis advertisers spent $370 million on digital display ads. That’s an increase from $238 million the previous year. Brands and marketers are eager to expand their advertising presence beyond just the endemic sites. However, they are struggling to find platforms and partners willing to help them spend their budgets.
Lost in the weeds
Because cannabis advertising is still new and quite complex, it’s understandable to feel a bit confused by it all. The rapidly evolving regulatory landscape can pose potential risk, especially as each state has established their own set of laws and regulations. Ensuring an ad is run only in the state it was created for is often the first and largest concern when it comes to accepting cannabis ads. Add in the challenges of age gating and privacy compliance and things get tricky fast.
Running cannabis advertising on your sites may also present some reputational risk. It’s important to realistically consider the potential impact the decision may have on your brand. There’s always a chance that running these types of ads may deter other brands from working with you. Certainly, there’s still a lot of consumer education needed around cannabis, CBD, and hemp before the messaging becomes truly mainstream. This will take time. But soon enough, any digital publisher not accepting cannabis advertising will be in the minority.
Preparing as a publisher
If you’re not quite ready to accept cannabis advertising, begin by researching and building relationships with advertisers in the meantime. In this fast-growing market, it will be beneficial to stay informed on the latest category innovation and regulation. This way you will be able to more quickly and effectively craft a strategy that supports your revenue goals when the time is right for you to enter the category.
For those who wish to begin accepting cannabis advertising, identifying the right tech partner is an important first step. A provider who understands the nuances of the space and is willing to work with you is critical to navigating the sea of state laws which vary widely. The right programmatic partner can help you easily and confidently ensure that you meet compliance standards. They will also provide access to a unique stream of demand in order to get your share of revenue in this rapidly-growing market.
With the amount of marketing dollars at stake in cannabis, there’s no time to lose to make sure you’re prepared to embrace the revenue opportunity when it’s right for you.
The discussion and debate about measurement in online advertising is rife at the moment. However, one thing is clear: For too long viewability has been used to paint an incomplete picture of ad impact.
We’ve known for a while that viewability is an imperfect metric. And, while standards have improved, the next step in online measurement for brands has been overdue. Media agencies have been working on this problem for a while. They rightly seek to build more sophisticated models in order to spend their clients’ ad dollars within environments that are truly delivering value.
Though some studies have been done, dentsu international has just released one of the most comprehensive to date. Their Attention Economy research is the product of a three year study involving multiple media partners. The goal is to truly understand the drivers of attention and create a real metric for advertisers to use going forward.
What delivers attention
Critically, the study demonstrated that attention is three times better at predicting outcomes than viewability. They uncovered four key factors that deliver attention:
1. User choice
Forced ads gain more raw attention vs. ads that are easily ignored. However, when a consumer voluntarily views an ad, it results in a significant impact on brand lift metrics, whether they viewed for 2s or 20s. Formats that earned attention yield better, and much quicker, outcomes than outcomes than forced formats.
2. Creative
The importance of creativity on ad effectiveness has been well documented. However, it was important to measure its impact within their Attention Economy framework. The study showed that ads optimized for the Teads platform gained a 49% boost in attention vs the original. This is a result of optimizing TV ads for a mobile experience. These grab attention from the start through use of techniques such as contrast, addition of text, animation, or bold colors.
3. Relevance
The dentsu study showed that placing ads within relevant context for the reader gives an uplift of Attentive Seconds Per 1,000 of 13%. Recently, IAS conducted a study with Neuroinsights in the U.S. that demonstrated 23% more detailed memory and 27% more global memory for ads that were aligned with the contextual content, compared with those that were not. We have also observed superior branding impact for ads that are contextually aligned.
4. Time in view
Finally, viewability on its own isn’t enough. However, time in view has been confirmed as an important factor for attention by the study. Both video and display ads quantifiably benefit from quality, viewable time.
Good news
All of the above is fantastic news for publishers. The study clearly shows that premium publishers drive high engagement of users with quality content. and that induces a slow scroll speed. When this is tied in with in-article, outstream video ad formats, it delivers an average of 12.2s of time in view (even higher than instream) and twice the amount of attention compared to social media.
Ever since viewability became a priority, publishers have suffered. They’ve also been forced to include ad formats that provide sub-standard user experiences, purely because media buyers are focused on it as a metric. But the quantification of attention can shift this balance. Ad buyers will increasingly be able to focus on media plans that are based on attention and deliver clear business outcomes.
This will bring back to the center stage not the importance of the quality of the content. It also aligns ads within the context that they’ve been placed.
There are many factors of digital media that are changing for the better. Advertisers, agencies and media owners are all embracing an online ecosystem that’s free from third party cookies. They are aware of its impact on both society and the environment and focused on the quality of ad experiences, rather than the quantity. Attention can be a cornerstone of this new landscape, where a range of brand metrics can be more clearly attributed to certain campaigns.
This is where premium publishers can excel, showcasing greater value to brands than ever before and securing a greater portion of online ad revenue that is currently held in silicon valley. This can be done whilst simultaneously creating even greater trust with their engaged readership and therefore helping develop a truly sustainable media ecosystem.
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.
The classics are so well-known they’ve become punchlines: acai berry treatments, one simple trick to get rid of belly fat, get rich working from home. Newer scam ad verticals like bitcoin and crypto schemes, home solar energy savings, and nutritional supplements for diabetes sufferers are slamming consumers on every corner of the Internet.
And yet scam and deceptive advertising is simply accepted as an ugly part of digital media and advertising. And it’s only getting uglier. Since the beginning of 2021, The Media Trust has detected a 50% increase in scam campaigns hitting publisher properties. Still, too many AdTech companies and publishers look the other way as the scams roll through the programmatic pipes, hoping their audiences have the good sense not to be bamboozled.
The Media Trust detected unique scam campaigns ramping upwards throughout 2021 with a major spike in July.
Unfortunately, there have been virtually no consequences for sites running scam ads. There’s the occasional massive fine, like when the Federal Trade Commission came down hard on Clickbooth for its acai berry barrage. However, for the most part, scammers advertise with impunity and AdTech and publishers become their accomplices.
However, consequences may be coming—and the fallout may be dire—judging by the developing online regulatory situation in the UK and increasing attention elsewhere.
The scope of online safety measures
British Prime Minister Boris Johnson has promised to present the Online Safety Billbefore Christmas. The bill would require publishers, social networks, and many communication/messaging apps to deter, remove, and mitigate the spread of Illegal and harmful content—particularly when aimed at children. The bill threatens fines as high as £18 million or 10% of global revenue, and possible criminal sanctions.
Beyond content that sexually exploits children (which must be reported to law enforcement), the harmful content in question includes malicious trolling and racist abuse—with the added goal of “protect[ing] democracy,” presumably through stemming online disinformation. The UK Office of Communications (Ofcom) will enforce the proposed law, which will also give the regulatory agency the ability to completely block access to a site or platform.
However, advocates like famed British personal finance advisor Martin Lewis think the bill doesn’t go far enough. That’s because it’s laser-focused on user-generated content and doesn’t regulate online advertising—most notably scams. Lewis, whose likeness is often exploited in scam ads pushing bitcoin schemes, has been on a crusade against online scam ads for years, including forcing Facebook to settle for £3 million over a 2018 lawsuit regarding more than 1,000 scam ads featuring his appearance.
Drowning in scam ads
The data backs up Lewis’ claim that the “The UK is facing an epidemic of scam adverts.” In 2020, 410,000 cases of fraud reported to the UK police represented a 31% jump from the year prior, according to consumer group Which?, with £2.3 billion fleeced. Including anxiety and psychological damage, Which? puts the actual total suffered by UK consumers at £9 billion.
And the greatest frustration among consumers and public advocacy groups is the lack of recourse and sense that scammers act with impunity—aided by AdTech and digital media. In another Which? report, 34% of consumers said a scam they reported to Google was not taken down, while 26% said the same of Facebook.
In 2020, The National Cyber Security Centre removed more than 730,000 websites hosting scam advertising landing pages featuring the likenesses of Lewis, Richard Branson, and other celebrities. Despite that effort, The Media Trust has seen a 22% increase in these types of scam (aka “Fizzcore”) content throughout 2021 that use similar landing pages.
Fizzcore attacks, which typically feature celebrities and hawk bitcoin scams, have grown 22% over 2021 despite crackdowns.
Fizzcore is more nefarious than other scams because it employs cloaking to hide malicious creative and/or landing pages from creative audits and other detection techniques. The vast majority of these have been pushing bitcoin investment scams, often with the same Lewis and Branson content.
Personal finance advisor Martin Lewis and billionaire philanthropist Richard Branson are common faces in scam ads directed at UK citizens.
Even if online scam advertising fails to make the final Online Safety Bill, a reckoning for scam ads could come in other forms. The UK’s Department for Digital, Media, Culture and Sport (DMCS) is developing the Online Advertising Programme (OAP), a framework that enables regulators to address potential consumer harms from digital advertising, including scam ads.
And just to pile on, UK. Home Secretary Priti Patel announced a relaunched Joint Fraud Taskforce on Oct. 21. Addressing the significant rise in scams during the peak of the coronavirus pandemic, the taskforce will focus on addressing scams and fraud through private-public partnerships and refurbishing of government reporting tools.
Fallout beyond the British Isles
The ramifications of all this regulatory (buildup) ought to make the industry anxious. The Online Safety Bill would put heavy new burdens on publishers and social media in moderating user content in the UK, but the inclusion of scam ads might directly affect revenue. In the absolute worst-case scenario, publishers would need to vet all specific advertisers running on their sites as well as be familiar with all creative to avoid liability. That could mean many risk-averse publishers shut off programmatic advertising.
Scam advertisers are notoriously hard to pinpoint. They use any and every buying platform available, and then tools like cloaking in code to hide their malicious motives. When it comes to rooting out scam campaigns, the proof isn’t completely in the ad code. While creative and domain patterns can be identified and blocklisted, finding scammers also requires investigation into the elusive end-advertisers, their motives, and their histories. It’s not impossible, but it requires dedicated teams always on the pursuit.
Beyond stopping scammers cold at the source, the next best way to stem proliferation of scam ads is to bring culpability to publishers and their AdTech partners. However, publishers are the low-hanging fruit. The website was where the consumer was attacked, so they’ll always be the prime regulatory target.
Despite the intense pressure in the U,K., regulators in other countries are also most definitely paying attention and looking for a potential roadmap. In the U.S., reform of Section 230 of the Communications Decency Act—which shields online media companies from legal liability regarding user-generated content—appeals to both major political parties. Really, what politician would say no to the easy win of protecting consumers from online scams? According to the Federal Trade Commission, consumers lost $3.3 billion to fraud in 2020, up from $1.8 billion in 2019—and that’s only the 2.2 million reports filed.
Self-regulation to the rescue?
The IAB UK is conversing with the DMCS on the OAP, but ultimately the trade group believes industry self-regulation is the answer. While self-regulation on the data privacy front became a mockery of itself, self-regulation of scam ads doesn’t need to meet the same fate. First off, trade groups like the IAB need to establish stronger ad quality guidelines that offer standards for handling malvertising, scam, and other harmful ads.
In addition—or short of that—publishers need to take control of their own destinies regarding scam ads. Every ad quality provider should be identifying scam ads and enabling publishers to block them. Slapping down redirects simply isn’t enough for a bad-ad-blocker—a publisher serving scam ads is violating the trust of its audience and leaving consumers vulnerable.
Not only is blocking the scam ads the right thing for publishers to do, it is a way to get ahead of—or perhaps helping avoid—a regulatory onslaught that will have catastrophic revenue consequences. Failing to mitigate will come back to haunt the industry.
Google takes somewhere between 22% and 42% of all the money flowing through its ad system, according to the unredacted version of the Southern District of New York federal case, Texas v Google, which was unsealed last week. While we knew or suspected many of the revelations, surprising new details were uncovered including internal communications that expose just how big their ambitions are the and tactics they take. The case and the supporting evidence present a chilling and calculated effort by Google to squash all competition. There is much to unpack in the newly released documents, but I’ll focus on three aspects that jumped out to me.
Google fees
It has always been unclear how much Google charges when it is involved with an ad. However, the recent evidence shows that they charge on all sides of the transaction — and they charge a lot. The suit lays out the scope of Google’s ad business: “Google operates the largest electronic trading market in existence.” In fact, it appears that 75% of all ad impressions in the United States were served by Google’s Ad Manager. In Google’s words, “more daily transactions are made on AdX than on the NYSE and NASDAQ combined.” Eleven billion online ad spaces each day.
At the same time, Google owns the largest buy-side and sell-side advertising platforms. As one senior Google employee admitted, “(t)he analogy would be if Goldman or Citibank owned the NYSE.” More accurately, the analogy would be if Goldman or Citibank were a monopoly financial broker and owned the NYSE, which was a monopoly exchange.
And, because of this dominant position on all sides of the market, Google can charge monopoly rents. Most ad exchanges charge a take rate of four to five percent of ad spend. Google takes 22 to 42 percent. And, on top of that, Google charges another 10% if a publisher wants to divert inventory outside of Google’s system.
Oh, and that’s just on the sell side. The suit lays out similar predatory fees and anticompetitive practices on the buy side as well.
Header bidding, an existential threat
When “header bidding” came along, it offered publishers the ability to make their ad inventory available to multiple ad exchanges simultaneously, fostering competition and innovation. Publishers hoped it would give them greater flexibility to monetize their ad inventory and increased leverage to negotiate better deal terms – something that would have resembled a healthy marketplace. Apparently, the very notion of header bidding hit hard at Google’s core.
As noted in the evidence, Google identified header bidding as an “existential threat.” In the unsealed complaint, we see that one of Google’s most senior executives declared eliminating the threat his top priority, which merited an “all-hands on deck approach” for the leadership team.
Then, in a stunning play to protect its dominance, Google struck a covert deal with Facebook. At the time, Facebook was actively considering getting into the header bidding space, which would have put them on a direct path of competition with Google. However, both companies recognized that they had more to gain by fixing the market for themselves than by competing openly.
The unsealed evidence reveals that a senior Facebook executive understood why Google wanted the deal: “They want to kill header bidding.” That’s a clear quid pro quo around an alleged violation of Section 1 of the Sherman Act. This could translate into criminal charges, depending on how the courts see this evidence.
Google also promised that Facebook would win a certain percentage of auctions in open bidding, Google’s alternative to header bidding. In return, Facebook promised a minimum spend and bidding frequency. They also capped the number of line-items that publishers could use, which severely hindered publishers’ ability to use header bidding. Google likely figured that it would pressure publishers to use open bidding instead.
Finally, after pushback from Facebook, Google agreed to remove the ability for publishers to set a floor price for their inventory. In Google’s ad marketplace, which was already stacked against publishers, this tilted the playing field even further in favor of Google and Facebook.
AMP, the offer publishers could not refuse
Google created a new format for content creators called Accelerated Mobile Pages (AMP), which was pitched as a way to improve the consumer experience on mobile. Not coincidentally, Google announced that it would start giving priority to AMP pages in search results, which gave the Google-led project a path to fast adoption. Essentially, Google made an offer that no publisher could refuse: Use AMP or lose the ability to be found via the dominant search engine.
Despite Google’s claims, there are multiple benefits for Google’s business baked into AMP, as well as downsides for publishers:
It’s a Google domain so Google can collect even more data as a first party about a publisher’s audience;
Custom ad formats don’t work on AMP, nor does header bidding, so publishers make less money (40% less according to Google);
It’s another platform that requires resources to manage; and
The unredacted documents show that Google also inserted an artificial one-second delay into non-AMP pages in order to give AMP “a nice competitive boost.”
The takeaway
All this new evidence shines a bright light on a pattern of behavior by Google to close off competition at every turn. Suffice to say that the harm to publishers has been dramatic. Google’s goal was not to build better products or services. And it certainly wasn’t trying to improve the overall health of the advertising ecosystem.
In these unredacted transcripts, we see the details of Google’s anticompetitive strategy articulated in Google executives’ own words. Their goal was to choke out competition: by killing off a new technology that would have improved the health of digital advertising; by cutting a deal with Facebook to rig the market; and by forcing publishers to use AMP.
I expect this case will only get more attention going forward. We are likely to see additional private suits filed as competitors realize they were conned by Google (and Facebook). I suspect we will see additional states join this lawsuit or file similar suits as it is clear that consumers were harmed by a dysfunctional market.
Finally, many speculate that the Department of Justice could add its considerable weight to this fight as soon as Jonathan Kanter is confirmed as the head of the antitrust division. Given the scope and impact of this case, we welcome any and all help to fight one of the most brazen examples of anticompetitive behavior in recent memory.
Dean Kamen, the brilliant engineer who invented both the Segway and iBOT once said that every innovation eventually becomes a double-edged sword. Initial positive outcomes will inevitably need to be weighed against future negative unintended consequences… the internal combustion engine, social media, Open RTB – for starters.
Our industry continues to pivot away from vendors who have contributed to unintended consequences (fraud, loss of publisher control, etc.). However there is an enormous risk to unilaterally severing ties with all your 3rd parties in a mad rush toward SPO nirvana. The culling of the herd needs to be done. However, it must be carried out with precision lest we cut off our noses to spite our faces.
Len Ostroff, SVP at Critero, had this to say about the programmatic supply chain in a recent article in AdMonsters:
Publishers are working with far more SSPs than they were in the past and we have seen a rise in duplicate bid requests, leading to an increase in infrastructure costs and multiple bids for a single impression. While there is typically value in seeing a few bid requests per impression, there is a point of diminishing returns which can cause a degradation in value and a drop in yield while also increasing fees and costs.
So, what are you going to do about it?
This legitimate observation about our ad industry’s Achilles heel has led to calls for Supply Path Optimization (SPO). Let’s face it: There are obviously too many cooks in the kitchen. Reduce or eliminate 3rd party vendors, say some industry leaders. Moreover, publishers don’t want to see nearly 50% of each programmatic advertising dollar slip through the cracks into the hands of redundant intermediaries. Nor should they allow themselves to be victimized by fraudulent activity.
Don’t throw every baby out with the bathwater
The fact is that SPO is not a zero-sum game. Certainly, there are bad actors whose main goal is to siphon off another point or two from your bottom line without adding value. However, there are also great 3rd parties whose entire focus is to increase income, and improve reader engagement, ad viewability, and UX for their partners.
Most of us remember when Marc Pritchard of P&G famously called for “the death of the crappy media supply chain,” at the 2017 IAB ALM. However, I don’t believe that his intention was for anyone to amputate value-added partners to eradicate the cancer that had developed in the ecosystem of our industry.
Rushing to judgement leads to errors that can be avoided with deeper due diligence. Ask your 3rd parties to articulate specifically what they contribute to your business goals, and most importantly to your income. Require that they provide you with data that supports their contribution. Consult with industry experts and ask your peers about their experiences working with partners and vendors. Look to industry award nominees from the various highly valued trade publishers whose evaluations are objective and authoritative.
It is incumbent upon all of us in the industry to seek higher ground and work with the best. With apologies to our friend Terry Kawaja, the LUMAScape does give some insight into the problem we have created for ourselves. Too much is just too much…and not of a good thing:
I’ve written about the “tyranny of choice” here before. There are simply too many players in the ad tech ecosystem. That’s part of the problem publishers face. My suggestion is to K.I.S.S. Identify those vendors who are not adding tangible value, then say bye, bye. Your ad ops and dev teams will thank you. So will your CFO, shareholders, and maybe even Dean Kamen himself.
There are telltale signs that digital publishers haven’t embraced a user-first approach to monetization. Frequently, these unwelcome surprises come in the form of bad ads. There’s a subtle, yet crucial safety issue at play – that of the end user, and to publishers.
Bad ads have become more tangible in recent years. They range from offensive and unpleasant imagery to off-brand messaging. Unfortunately, they have a raft of negative effects. These include user churn, widespread user complaints, and a serious dent in monetization.
In 2021, 76% of publishers reported ad quality challenges affected user experience. Sixty-six percent of publishers reported that ad quality issues impacted their revenue, underscoring how vital it is to adopt a user-first approach.
User experience expectations are changing, and working practices must keep up. Considering fundamental recent shifts in user sensitivity and expectations, we can’t expect outdated approaches to remain effective.
The brand suitability question
With 35% of publishers experiencing worsening ad quality challenges, the pressure is on for publishers to consistently deliver on-brand experiences. In the last 12 months, the definition of brand safety has evolved. These days, the focus is on the distinction between brand safety and brand suitability. It’s no longer enough for publishers to wonder, “Is this creative acceptable for a premium publisher?” The question now must be, “Is this acceptable for my audience, my message, and the content on this page?” That is the philosophy behind a user-first approach.
Poor ad quality threatens the publisher-audience relationship. However, nearly half of all publishers say they lack the tools to control the ads that appear across their digital properties. Misleading links in ads are the primary type of low-quality ad publishers are seeing – 48% of publishers say they’ve seen such ads. Almost as many (44%) of publishers report witnessing fake news in ad content, 28% reporting links to sites with security threats (malvertising), 31% reporting violent content, and 27% reporting explicit or offensive content.
Publishers are brands too
To cultivate strong relationships with their audiences, publishers must deliver engaging, relevant advertising that works for their brand. And every ad counts towards retaining user loyalty, engagement, and ultimately, monetization.
Publishers require custom controls to maintain their standards and values because there is no universal guide for what counts as a “good” or “bad” ad. In fact, publishers are demanding customization, with 47% reporting they need “more control and transparency” from their ad quality tools.
Real-time protection against off-brand ads is essential to maintaining a positive user experience. Realtime ad quality protection enables publishers to avoid advertising that is inappropriate for their brand’s unique sensitivities and values but may be fully appropriate for another brand. Today, advertising must be alignedwith a publisher’s brand based on its sentiment, tone, and messaging.
A dynamic need
It is nearly impossible for a publisher to regain a user’s trust once the user has seen an ad that contradicts the publisher’s tone or looks suspicious, or especially if the user clicks through to a deceptive ad and lands on a scam website. In the world of brand suitability, it’s often “one strike and you’re out.”
While an overall approach to brand suitability, trending topics, and news or event cycles is a must, continual diligence is needed. A user-first approach requires that publishers roll up their sleeves and assess suitability on the ground to ensure their audience’s experience remains on-brand. In short, brand suitability is not static.
Publishers don’t have to start from scratch. Real-time ad quality tools that provide granularity exist to eliminate the heavy lifting. Setting content parameters and reviewing ads on a site is not merely a maintenance task for ad ops. It’s a vital component of a publisher’s business strategy.
The way forward
Publishers have devoted time and resources to assure brand-safe environments for advertisers. Now, publishers must remember to devote the same attention to brand suitability for their own brand and users. Going forward, a user-first approach requires publishers to align page content and ad content, and consider them holistically. That control requires full visibility into all ad content on each page, as well as granular customization for their unique audiences.
Boosting ad quality translates into revenue upside and enables a brand to stand out. When a user-first approach informs ad quality decisions, the benefits are felt by publishers and users alike.
The problem of data leakage is one often not well known or understood by publishers. Therefore, addressing data leakage is rarely prioritized. This particularly true if the pressure to monetize their inventory is high and resource is limited. But what does data leakage mean? And are there ways publishers can protect their data from leaking? It’s crucial that publishers learn more about this problem and about the solutions available that help prevent it.
Data leakage typically occurs when a brand, agency, or ad tech company collects data about a website’s audience and subsequently uses that data without the initial publisher’s permission. The core concern with data leakage is that it causes a publisher’s ad inventory to depreciate in value. If bad actors collect data about a publisher’s users, they can use this information to target these users elsewhere — potentially on cheaper inventory. In other words, programmatic spend is diverted from the original publisher. This results in a reduction in demand and, therefore, a lower yield.
Data leakage can happen transparently with the publisher’s knowledge or consent. For example, a company might request that a publisher install code on their page that allows data to be gathered about their users in exchange for something else such as a minimum spend commitment. In some cases, this might be considered a commercially worthwhile proposition providing the appropriate regulations are complied with.
More frequently, however, data leakage does not happen transparently. In the context of programmatic, this usually occurs when publishers choose to work with numerous technology partners in an effort to maximize revenue and yield. There frequently a correlation between the number of partners a publisher chooses to work with and the risk of data leakage.
How data leakage happens
There are a few ways data leakage can happen:
Open RTB bid requests
Data leakage can occur when Supply Side Platforms send bid requests to Demand Side Platforms via using the OpenRTB protocol. This contains a wealth of information about the user, the content they are consuming, the device they are using, their cookie id, where they are located to mention a few. (See the Site, App, User, Publisher, Content Objects). Much of this is information integral to the programmatic auction process. However, it could be used to profile users and target them elsewhere. How much this actually happens is unclear. It may even occur unintentionally by machine learning, bidding algorithms.
Cookie syncing or tracking pixels
Data leakage can also happen when a third party gets access to a publisher’s page either via cookie syncing or a tracking pixel. A pixel is an invisible piece of code that marketers or ad tech platforms use to track users, apply campaign strategies such as frequency capping and monitor performance. Pixels can also collect information about a publisher’s audience. Unfortunately, that can be used to enable the targeting of those users elsewhere.
Today, the vast majority of players in the programmatic digital supply chain are reliant on third-party cookies for user identification and for campaign targeting, optimization, measurement, and attribution. Cookie synchronization is a process that is required to communicate user identity between platforms.
The problem of data leakage arises when platforms that publishers work with give other platforms that have no direct relationship with the publisher access to the page to cookie their users. That platform is then able to build user profiles, which allows them to reach that audience elsewhere without having to buy any media on the original publisher.
How to ensure your data is protected
One way to prevent data leakage is for advertisers, agencies, ad tech companies and publishers to have legal contracts that stipulate who owns what data and how other parties can use it. You might be protected contractually. But how do you monitor and enforce these contractual obligations in practice?
Publishers can also leverage tools that track which platforms are dropping unnecessary pixels or bringing unwanted data collectors. These tools can be used to undertake periodic audits to identify where data leakage is happening. Alongside, publishers should implement policies and practices to qualify, monitor and deal with bad actors.
How to balance the risk and rewards
It is important that publishers find the balance between a closed, safe environment and a risky but sustainable monetization strategy.
With the impending “cookie apocalypse,” publishers are already opting to work with identity providers that are not reliant on third-party cookies to ensure they maintain a healthy programmatic revenue stream and protect themselves from data leakage. Next-generation identity solutions provide a foundation for user identification, which is fundamental to campaign targeting, optimization, measurement and attribution. They also offer new safer mechanisms and tools that limit the amount of data leakage.
When choosing a provider, check that they have built mechanisms that will only assign your users an identifier if they have consent to do so and only share those identifiers with the platforms you have authorized. Finding the right identity provider today can help you prevent data leakage, respect consumer preferences and local privacy regulations while facilitating sustainable monetization.
The post-cookie world is facing a measurement problem. There is plenty of talk surrounding FLoCs, Unified IDs, first-party data, contextual advertising and more. However, there is not enough conversation about how the worthiness of these solutions will be understood by buyers and sellers.
There will likely be no silver bullet replacement for third-party cookies for some time, so teams need the ability to analyze the effectiveness of new technology and data sets. This is particularly true for publishers, who will suddenly be attempting to meet new advertiser KPIs based on a much broader range of data types and technologies.
More data, more discrepancies
Publishers have typically been in a reactive position relative to advertiser expectations. But what happens when those expectations evolve due to the industry-wide push to replicate the performance of behavioral targeting through various post-cookie solutions? Complexity will increase, and with it, there is the potential for increased friction. This will inevitably impact publisher revenues.
Discrepancy management was historically limited to the differences in first-party and third-party campaign pacing. But as new data is used and advertiser KPIs change to incorporate different technologies for the same campaigns, discrepancies will become more of a three-dimensional problem.
Cookie-based targeting is an example of where this could get more complicated. Third-party cookies made it very simple for a sports brand to serve ads to an audience of soccer fans in the 18-36 age range. Without access to third-party cookies, advertisers will want a way to analyze the audience data that determined the age group and interests, or the context of the page, or a number of other potential factors in order to understand whether the ad was served to the right audience. This makes campaign analysis and compensation inevitably more complicated.
Another example can be found in the case of contextual segmentation and semantic differences in classification. An alcoholic drink recipe that one advertiser may consider as “cooking” may also be classified as “alcohol ” with a different advertiser. Since publishers work with many partners, they need the ability to recognize and normalize these nuanced differences that can have a large impact on campaign discrepancies. In short, the new world we’re entering is even more fragmented, and existing publisher workflows must adapt.
The need for measurement alignment
In a soon-to-be-released survey conducted by DoubleVerify, 47% of publishers cited measurement standards as one of the biggest challenges with relying on first-party and contextual data. The same will likely be true for advertisers, as more complex data sets will be closely tied to KPIs. This highlights the need for neutral measurement that improves collaboration and reduces friction between buyers and sellers.
Even within individual solutions such as FLoCs or Unified IDs, there have been delays and setbacks that highlight the complexity of these issues. The industry will need different types of data to fill the gap left by third-party cookies. Ensuring this data is trusted, verifiable and actionable will be a key challenge for the industry.
Ensuring post-cookie success with holistic data strategies
The looming industry changes will make it more important for publishers to address instances of data silos and manual reporting that slow down decision making and reduce transparency. This can be made possible with a holistic data strategy and tech stack that can manage the rising complexity. Publishers focusing on aggregating their data and optimizing workflows can better position themselves to be proactive and take control of how targeting and measurement impacts their business.
In this age of experimentation where new variables lead to more complicated deals, it’s even more important for publishers to invest in tools that will facilitate the ingestion of a variety of both first- and third-party metrics holistically. Successful campaigns must account for making first-party audience data actionable for advertisers while considering key media quality metrics and any third-party data that buyers rely on. Many industry stakeholders expect first-party data to be key, but this is only the case if the data is able to be used to effectively replace third-party targeting.
What you need for a holistic data strategy
Holistic data strategies will help manage complexity in discrepancy management and ad targeting, but what does this look like in practice? To help publishers get into a holistic mindset when it comes to data and workflows, they should ask themselves the following questions:
Which data sources does your organization rely on now? How is it collected and aggregated?
Which data is valued by your top advertising partners? How will this change in the future due to cookie deprecation?
Does the organization have a system to connect these resources in a meaningful way?
What teams stand to benefit from data that they don’t collect themselves?
Once publishers decide to move forward with a holistic approach, they must determine whether they will build a technology solution in-house or purchase one that can adapt as the industry evolves. One key point to consider moving forward is the potential for automated, algorithmic optimization based on the intersection of these data sets. For publishers, it’s important to think about the long-term implications of this choice, as workflows and tech stacks are often difficult to transition out of once they are established.
No one can fully predict what’s coming next for post-cookie targeting and how those results will trickle down to publishers. What publishers can prepare for is the fact that complexity will only increase from here. With that in mind, it’s vital for media companies to prepare by evaluating their tech stack and data foundation in order to aggregate and analyze more complex data sets.
People working in CTV advertising often toss around phrases like “the living room of the future” and “the connected consumer.” TV technology today is pretty darn impressive and its easy to be optimistic. With content like choose-your-own adventure programming and sophisticated hardware, today’s TV tech puts the “home theaters” of even a decade ago to shame.
However, there’s also a central dilemma: The tension between wanting to innovate and wanting to play it safe in order to avoid annoying or alienating consumers. How high-tech is too high-tech for certain audiences? There are a number of emerging technologies designed to enhance the viewing experience that advertisers could leverage. However, just because they can doesn’t mean they should.
For brands, designing a campaign for unproven territory can mean designing a campaign that doesn’t work because it fails to resonate with consumers. On the other hand, if you pass up the chance to be first-to-market, someone else will get there instead. The trick is to find the just-right spot in between.
Luckily, there are some lessons to be found in some of the past few decades of innovation in the living room. As with ad overload, history can teach us a few things about marketing on CTV.
Watch for consumer adoption
First, track consumer adoption. Just because a technology exists doesn’t mean that consumers are using it. That might be because it’s too expensive, too difficult to use, or just not useful. Consumer uptake is what really matters, especially with an emerging medium. And the reality is that plenty of TV technologies promoted by mainstream consumer electronics retailers encounter lukewarm reception from buyers.
Remember curved TVs, which were hyped up back in 2013? It turns out that you can’t replicate an IMAX experience in your living room, no matter how high your ceilings are. Meanwhile, take a look at voice control, something that may have seemed like a science fiction technology not long ago. You can thank the marketing behind Amazon’s Alexa and Apple’s Siri for convincing consumers that voice control is both useful and user-friendly. As a result, we’ve found that voice-controlled ads really do engage users.
Consumers crave convenience
Second, never forget that consumers crave convenience. Integrating new tech into your advertising often isn’t worth it if it makes the brand experience more complicated for the consumer. This is particularly important when translating digital campaigns from desktop and mobile to the lean-back CTV environment.
There’s perhaps no better cautionary tale here than 3D TV. Watching some entertainment in 3D – sports, for example – seemed thrilling at first. But needing to wear specialized glasses for the experience, in addition to the added cost of 3D TVs, posed a barrier to entry that consumers weren’t willing to surmount. Then ESPN backtracked on a plan to put live sports into 3D, which eliminated the one incentive many consumers had to adopt the new tech – a more immersive sports experience.
There’s an exception to this, though. You can offset added complexity with a value exchange. If you’re going to make an ad experience more complicated, be upfront with what consumers will get in return. That might be fewer commercials for the rest of the episode they’re watching. It might be discount that they can capture with their mobile phones straight off their TV screen (or both).
Prepare to adapt to change
And finally, be ready to adapt to change. Things change fast – hardware, software and consumer habits. Five-year plans for a new medium may need to be altered in a matter of weeks.
In addition, keep an eye on market signals even if you consider them to be externalities. Some media executives and technologists were singularly focused in the mid-2000s on the HD-DVD vs. Blu-ray race to supplant the standard DVD. However, that might have distracted them from the fact that before either could “win,” streaming media became the choice of consumers worldwide. Millions of dollars were invested in technologies that were obsolete before they even hit the market.
“We’ve screwed up in the past but we won’t do it again” is a common mindset that’s been in the ad industry for decades. Typically – spoiler alert – we do screw up again. But even as we look to the future, having an eye on the past can never hurt to help avoid a few missteps.
Streaming TV may have killed cable － but where do we go from here? After the pandemic-induced streaming boom, consumers are cancelling subscriptions at record rates. As viewers grapple with rising prices and an explosion of subscription services, OTT players should embrace the potential of ad-supported streaming in order to survive an increasingly competitive market.
OTT on the up
The OTT (over-the-top delivery of TV and film via the internet) industry is booming. In 2017, approximately a third of U.S. adults cited streaming services as their main means of consuming television. Double that for people aged 18-29. During the pandemic, streaming television has continued to display incredible growth. In 2020, screen time overall was up almost a third on the previous year. Viewers watched streaming services, such as Netflix, Amazon Prime Video, and Disney+, for one hour and 11 minutes per day. Also, 12 million people joined a service they had never used previously. Three million of those viewers had never previously subscribed to any TV streaming service at all.
A changing paradigm
The mass adoption of streamed OTT services coincides with a fundamental change in the television business model. While television has traditionally been funded largely by advertising, most streaming TV platforms have instead opted for a subscription-only model. For traditional TV providers transitioning to streaming, this choice is understandable, given the abundance of legacy technologies that cannot easily be switched towards an advertising-based SVoD. New players like Netflix, by contrast, have made a strategic decision not to offer an ad-supported subscription.
OTT overload
The subscription model appears to be working well enough for Netflix, the undisputed market leader. The problem lies in the explosion of alternative streaming platforms. In 2020, the average viewer was subscribed to nearly eight streaming services, compared to six in 2019.
Netflix raised the prices of their memberships in 2020 and may well do so again. The result is that the monthly cost for consumers of streaming tv is increasing, as both the prices and number of services go up. There is an inevitable tipping point where paying multiple subscriptions becomes too expensive for the viewer and they will choose to let some go. Many have already crossed that threshold: 36% of Americans plan to cancel streaming subscription services in the next 12 months. And the most common reason – by far – is the price of service.
Ad-supported gains ground
Although subscription dominates, ad-supported streaming services have seen substantial growth during the pandemic. Research by Deloitte found price to be a key factor in consumer streaming decisions. Most consumers (65%) want cheaper ad-supported streaming options (up from 62% pre-Covid). And, of those who did, more than 50% preferred ad-only streaming. Sixty three percent of respondents in a PwC survey said they would be willing to sit through more ads if it meant cheaper subscriptions. Providers offering ad-supported streaming now include The Roku Channel, IMDb TV, Discovery plus, CBS, and Hulu, to name a few.
Sell smarter ads
Part of the appeal of the subscription-only model lies in its apparent simplicity. For established television providers, transitioning their advertising model from cable to digital presents many technical challenges. For those providers who have embraced ad-supported, a combination of white-glove and programmatic ad sales are the norm.
However, a new approach is also gaining popularity: self-serve advertising platforms. Inspired by the walled gardens of Facebook and Google, self-serve ad platforms allow OTT providers to sell their ad inventory through a branded, automated marketplace. This allows them to tap into the massive SME ad spend that currently drives digital ad growth. SMEs increasingly favour self-serve solutions, and for OTT brands with their own platforms, less value is lost in the infamously murky “black box” programmatic supply chain.
Roku, for instance, sells home screen banner ads, Roku screensaver ads, and video ads via their self-serve platform Roku Ad Manager. Ad Manager is designed to be a smarter, simpler, and more cost-effective way of managing channel promotional campaigns within the Roku ecosystem. It is just one of an increasing number of self-serve platforms popping up among OTT brands.
The other important aspect of ad-supported streaming is that it’s not simply a return to the dark days of regular, irritating ad breaks (as still found on linear TV). OTT providers that adopt ad-supported models are innovating the user ad experience to make it more effective and less obnoxious. Hulu, for instance, runs pause ads. This non-disruptive, non-intrusive user-initiated ad experience appears only when viewer presses pause when watching content. That’s a far cry from the ad breaks of old, and an indicator that ad format innovation is an essential part of the new streaming experience.
Ad-supported is inevitable
As OTT prices and the number of platforms continue to rise, consumers are increasingly looking for flexible, low-cost alternatives to meet their streaming needs. For OTT providers, offering only subscription models means that they price themselves out of the market for cost-conscious cord cutters.
We are not likely to return to the days of constant ad breaks and linear TV. Rather, the future lies in the flexible middle ground where consumers can pick and choose from a selection of price models: subscription, ad-supported, or a hybrid of both. OTT providers need to embrace ad-supported streaming － the sooner, the better.
About the author
Johan Liljelund is the Executive Vice President at DanAds based in Sweden. Johan is an entrepreneur with more than 20 years of experience in developing technology towards the media industry and a pioneer in the digital advertising industry enabling publishers to streamline and efficient their internal processes on a global market.
