It’s Time To Rewrite The Rules For A Sustainable Advertising Ecosystem

By Elizabeth Brennan, Head of Advertiser Strategy at Permutive

The digital advertising industry has been operating at the expense of user privacy for a long time. As an industry, we need to make some fundamental changes to redress the balance.

As data deprecates, it limits the ability for advertisers to identify their target audiences and measure campaigns. Every headline on privacy regulation and anti-tracking updates by browsers adds chaos to the ecosystem, and advertisers are worried.

Permutive recently ran a data deprecation study with Forrester Consulting, surveying more than 100 advertisers and 100 publishers in the UK and US. The research shows that 73% of advertisers are concerned about increasing privacy regulations and 70% are concerned that consumers will decline consent to use their data for marketing. This will disrupt business as usual for many advertisers and has led to a large amount of information being put into the market about the future of identity.

Identity-based advertising versus the end of identifiers in the bidstream

Identity, and how identity is used, are two different things. Identity is critical: it allows advertisers’ and publishers’ first-party data sets to be matched. What will change is where that matching will occur. Google recently announced is that it’s no longer safe to support matching in the bidstream — the transactional data that supports demand and supply-side platforms. This matching should be happening inside the publisher’s environment instead.

To continue to target, brands will need direct relationships with publishers to access their privacy-safe first-party data and action their own first-party data. While many have begun to use this data in marketing already, there’s work to be done.

The Forrester research shows that 41% of brand decision-makers still rely mostly or exclusively on third-party data for targeting. While this indicates that 59% of advertisers have adopted publishers’ first-party data to fuel their marketing strategies, it’s still in the early stages — 36% are still building their strategies and just 23% have created a formal strategy today.

To be privacy compliant, rebuild consumer trust, and set up for long-term success, advertisers need to look at their data strategy today and prepare strategies that will be sustainable after Google removes third-party cookies from Chrome by 2022. Advertisers should take the time they have left to collect first-party data while starting to form relationships with premium publishers who have their own first-party data.

A privacy-first era requires cohort-based buying

The digital advertising industry has to move away from 1-2-1 targeting while still achieving the same goals and without relying on tracking and identifying individual users. Therefore, the data used to plan and buy media will shift to cohorts — a relatively small group of users that share some common attributes or behaviours. To be even more specific, it will shift to Publisher Cohorts that are built using publisher first-party data.

This differs from Google’s Federated Learning of Cohorts (FLoCs). Google’s approach decouples publishers’ data and inventory so the publisher becomes or remains a transactional channel, similar to how third-party data works today. Publisher Cohorts ensure data and inventory are coupled, which is better for consumers as there are no data leaks. It also places users in more than one cohort. This is because publishers have a 1-2-1 relationship with their audience and can provide a more nuanced description of the user — without identifying them.

Advertisers also need to treat first-party data with the utmost respect and be exceptionally confident that the systems they put this information into can not be accessed by other parties. More importantly, they need to ensure that at no point between onboarding, insight building and activation data can leak out.

These cohorts are the only way for advertisers to activate first-party data without opening up to risk through the supply chain and working in Google’s ecosystem.

And finally, it’s critical that brands work with partners who can provide them with the ability to model, gain insights from their data and action against the new information. To do this, advertisers need to ensure that the partners they are working with have the ability to activate without that data leaving the platform that it’s being processed in.

The time to act is now

Advertisers: start exploring privacy-safe solutions and ways of working now. The time to test new approaches and build a tech stack is limited. It’s crucial that you enter 2022 with the confidence that your tools and strategies can support your business goals and rebuild trust with consumers.