Walled Gardens Aren’t Incentivized to Make Open Web Advertising Effective

By Dave Hills, CEO and co-founder, Advanced Contextual

Google has finally begun deprecating third-party cookies, and a debate is raging over how effective its Privacy Sandbox solutions are. The Trade Desk CEO Jeff Green recently wrote an essay calling the Sandbox “not innovative,” while others argue that “The identity problem is not Google’s problem to solve.” This week, the IAB launched a massive new salvo on the matter, saying that most digital advertising use cases will be upended by Google’s privacy moves.

Regardless of Google’s moves or those of any other walled garden in the post-cookie world, one thing is certain: the walled gardens have no motivation to support or better ads on the open web. In fact, quite the opposite: Google and Meta are always pushing their broad match and automated products as replacements to advertising alternatives.

So, the real question is what the future of open web advertising looks like.

Privacy Changes Strengthen the Position of Walled Gardens

Privacy changes need to be understood in relation to the past year’s rapid development of artificial intelligence. Because the death of the third-party cookie doesn’t herald the arrival of a 1:1 replacement that will reinvent open web advertising.

It gestures toward further displacement of the open web, where advertising is poised to get less efficient as a result of the cookie’s demise, in favor of Google and Meta, which will use AI to transform themselves into advertising easy buttons.

This shift is already happening, as those familiar with digital advertising will recognize. For example, when Meta announced earlier this month that it was retiring “detailed targeting options” due to privacy concerns, it pointed advertisers toward “broad targeting,” which, in its own words, “essentially means that you’re mostly relying on our delivery system to find the desired audience to show your ad to.”

Meta and Google have been moving in the direction of black-box, done-for-you advertising products for years, illustrated by the growing popularity of Advantage+ and Performance Max campaigns. AI will only further stack the deck in Meta and Google’s favor. And on the surface, advertisers will be enticed, as the giants are offering higher performance with less work on the advertiser’s end.

But the trade-offs are not so simple.

The Digital Ad Industry Won’t Accept a Black Box

The problem with the AI-driven, black-box future of digital advertising that the walled gardens would own even more completely than they already do is that it’s not in the best interest of the other parties in digital advertising.

Independent publishers would suffer. Agencies would lose their role as media planning and buying became completely automated. And brands, especially big brands, would lose transparency into whom they’re targeting and where their ads are running.

As a result, the future of advertising can’t be a black box, and though walled gardens will have a huge role to play, advertising won’t take place entirely within their confines.

The Future of Digital Advertising

The future of digital advertising will play out across both walled gardens and the open web. And wherever it takes place, it will need to be easy for advertisers, contextual (because purely behavioral targeting will no longer be possible at scale), and granular (because precision will be non-negotiable from every solution in an AI-led industry).

For a look at where Google has room for improvement, consider its Topics product. At present, the topics are no more granular than the cookie-cutter IAB taxonomy. This is an imprecise approach to post-cookie advertising. It will lead to errors and brand safety issues such as hospitality ads running on articles about the movement of refugees, which are not actually about travel (which brands want to target) but violence (which they most certainly do not).

Google and Meta aren’t incentivized to deliver transparent and highly accurate open web ad targeting products. So, as others have argued, the rest of the industry can’t wait on the giants to save us. We need to establish our own understanding of the standards for post-cookie advertising — both to create our own solutions and hold the tech platforms to those standards. As far as post-cookie digital advertising staples go, efficiency, contextual relevance, and granularity would be a good place to start.