Data and Addressability | Part 1 of 3 | The Supply Chain of the Future
Author : Emily Yri, PubMatic, Data and Addressability subgroup, IAB SEA+India Programmatic Council
As programmatic becomes ever more ubiquitous it is not unreasonable to say that we’re heading towards a future where all advertising will become digital, and all digital advertising will be transacted programmatically. The news cycle of the past few months has reinforced this idea, with some of the world’s most premium content companies announcing plans for programmatic advertising to be a critical component of their growth strategy.
However, as we head towards that future, there are crucial dynamics at play in our industry. With the rapid expansion of the digital advertising ecosystem, we are seeing both accelerated innovation and increased fragmentation across the supply chain as new solutions continue to emerge. Partly in response to the latter, we’re also seeing M&A shaking up the market as the owners of media budgets consolidate spend onto fewer partners and organisations across the ecosystem look to maximise their relevance and value.
At the same time, our industry is attracting more scrutiny from privacy and antitrust regulators around the world, and we are staring down the barrel of third-party cookie deprecation on Chrome in 2024. If and when Google does deprecate cookies on Chrome, the world’s most popular browser will join the ranks of Safari and Firefox, and the historical building blocks of targeting advertising will no longer be available.
Alternative forms of identity
Publishers and media buyers alike are exploring alternative forms of identity, such as deterministic or authenticated data from logged in users. However these solutions lack scale, so it is very unlikely we will be facing an ecosystem of two halves - one in which users are logged in and targetable, and one in which they are not. As a result, players across the industry are coming together to offer media buyers independent, unbiased solutions to help them navigate these changes and maximise the value of their advertising strategies.
The supply chain of the future is transparent, efficient, effective, privacy-compliant, data rich, and environmentally sustainable. Innovative technology infrastructure is needed to power this future. There are three key themes that will characterise the supply chain of the future - consolidation, omnichannel addressability and sustainability.
Consolidation to fewer platforms
A consistent theme over the past couple of years has been that of consolidation. Publishers, advertisers, agencies, DSPs and online retailers are all consolidating their business relationships to fewer, larger platforms. They no longer want to manage hundreds of vendors in their digital advertising supply chain – but are instead focused on deepening their use of key technology partners to create more efficiencies within their business while generating superior outcomes.
On the buy-side of the ecosystem, consolidation is manifesting itself most obviously with Supply Path Optimisation (SPO). SPO sees agencies and advertisers pruning long-tail supply partners and consolidate spend on those that offer the most efficient paths to valuable inventory and offer the best return on investment (ROI). This is likely to continue - prior experience indicates that in times of economic stress, these entities lean into nimble, tech-driven partners that can increase their efficiency, help them save on operational costs, and enable new revenue streams.
Omnichannel addressability
Ever-changing privacy laws and technical changes by Apple and Google have shaken the industry. Google recently decided to push back their deprecation of third-party cookies to 2024, and while some media buyers may start to question the importance of using first-party data and alternative IDs when the timeline keeps changing, it’s important to remember that cookies have never worked on mobile app or CTV, so true omnichannel programmatic advertising has never been contingent on cookies alone.
An omnichannel approach gives buyers flexibility as consumer trends shift. It also instils resilience in the ecosystem, as we are not dependent on a single format or channel for growth.
Opportunities for programmatic
CTV, one of the fastest growing formats, has been getting a lot of attention in the market over the past couple of years, and rightly so. The rapid consumer behaviour shift towards streaming has unlocked tremendous opportunity for the market, yet the opportunity for programmatic online video, mobile app and web display ad spend remains huge.
As we move towards a post-cookie world, third-party data is increasingly becoming less sustainable and relevant. Instead, the value of data is shifting to the sell side of the ecosystem, which is at the nexus of the publisher and the consumer. This gives publishers a unique opportunity to both drive innovation and regain control over long-term revenue streams. By focusing on adaptability, value creation and choice, publishers can become better partners with brands, while ensuring user experience and privacy is respected.
Zero-Party Data
Advertisers, who also engage directly with their customers, should be putting zero-party data strategies into place. Zero-party data, where customers knowingly provide personal data in return for some type of value (such as loyalty programmes or offers), allows advertisers to offer existing customers more targeted, relevant advertising. Zero-party data can also help with customer acquisition when used to build look-alike audiences, and can be used for retargeting if a consumer is not converted straight away.
A Portfolio Approach
As media buyers look for solutions that allow them to connect with their target audiences across all channels and platforms on the open internet, a portfolio approach to addressability is required. Media buyers will need to leverage known identity, first- and second-party data, contextual signals, seller-defined audiences, and modelled audiences to achieve true addressability. And buyers are increasingly seeing the benefits of activating this data on the sell side, closer to the consumer, in terms of both scale and performance.
Sustainable infrastructure
As more ad dollars flow into the Open Internet, buyers and publishers are seeking efficient and sustainable advertising solutions. Advertisers and agencies are increasingly seeking responsible technology partners. Media placements have a carbon footprint and reducing a campaign’s carbon emissions is critical in creating a more sustainable ecosystem.
Today's consumers are well-informed and increasingly motivated by values and principles. In 2021 86% of consumers expected brands to take one or more actions beyond their product and business, including donating to good causes and addressing societal issues. Data shows that nearly two-thirds of consumers around the world now make purchase decisions based on companies' alignment with their beliefs.
This shift in consumer behaviour has caused brands to examine their sustainability efforts, and agencies have identified carbon emission measurement and optimisation as a strong value proposition they can offer to their brand clients.
Aligning supply chain values
Most companies in the digital supply chain do not operate independently but are intertwined with an ecosystem of partners, customers and vendors. As more companies align themselves with environmental values, they are beginning to scrutinise their partners and supply chains, putting necessary pressure on the broader industry to operate more sustainably.
Conclusion
As the owners and custodians of advertising dollars, agencies and brands are uniquely positioned to drive change across the industry through their supply path optimization decisions, by electing to work with companies that share their values and commitment to sustainability. As we head into 2023, against a backdrop of increasing macro-economic challenges, shrinking advertising budgets and resource crunches, building a privacy-centric, resilient and sustainable digital advertising supply chain has never been more important.
Read Part 2 Identity Resolution In A Cookieless World by Nisa Seah, Oracle Advertising and Suhail Ahmed, Dentsu Malaysia
Read Part 3 Attribution Modelling by Cyprus Jake Malinao, Teads
