Stuck in the sand(box)?

If there is a digital business equivalent in a chronicle of a death foretold then the demise of the third-party cookie must be up there among prime candidates. After all, the industry has had quite some time to prepare for this – Safari and Firefox may have served due warning a while ago but, with 64% market share, it is Google Chrome that has pushed the industry to become fully alert of the seismic change.

In this case, the sense of the ticking clock is the inverse of readiness: a recent IAB survey concludes that almost half of the industry is not fully prepared for this tectonic shift – it could be inertia or dearth of resources however, whatever the cause, the consequences are significant.

Should solutions be imposed?

Usually such industry-wide challenges are resolved either by industry wide initiatives or dominant players imposing their own solutions – and, given the level of fragmentation in the digital marketing sector, the latter course always seemed more probable. Enter Google’s “Privacy Sandbox” – and meet FLoC.

The origins of this –part regulation and growing privacy awareness, part technological innovation and business remodeling- are well known; and so are FLoC’s fundamentals: a browser-based segment creation method that will replace the third-party cookie as the central solution for serving advertising in the open web, targeted not to individual users but to interest-based cohorts. What is less certain is whether it will prove to be an effective tool – and how should publishers adapt or reshape their strategies.

Google FLoC will (probably) work

At this juncture, there is not much to be said about the former: despite question marks over its GDPR compliance (leading to a delay in its planned roll out in Europe) or the impact of the under discussion Digital Markets Act or even performance issues such accurate frequency capping and measurement, premium content providers would be well advised to operate under the assumption that, in one way or another, FLoC will emerge as a (large) part of the new post third party cookie era. Hence, the need for a coherent and effective strategic response is becoming rather pressing.

Resist the power of default vs temptation

In theory, publishers could accept the proposed new regime and stoically continue their revenue growth endeavor, by linking their own data to FLoC and thus cater for expected advertising demand. However, not only would this (again) limit their role in value creation along the supply path, it would compound a lingering sense (if not the harsh reality) of strategic dependence on an oligopoly’s leader. In the short term this might work; nevertheless, as these major disruption cycles do not occur too regularly, premium content providers would be missing a major opportunity – especially as they would not be capitalizing on the significant opportunity that lies on a trifecta of value sources and levers. These would be:

• First of all, their own first party data and, in particular, moving beyond cookies towards other identifiers (email addresses probably being the simplest that allow cross-site recognition) that will permit, with the user’s consent, not only gathering more accurate and richer information but also customizing or, indeed, personalizing the reader’s (cross device) experience thus solidifying loyalty and offering a platform to broaden the relationship – and, possibly, the revenue base.
• Secondly, publishers need to effectively address the issue of scale as fragmentation has long been a daunting challenge – and a strategic disadvantage. Thankfully, there are already a series of major initiatives across mature markets – yet the direction is clear, namely private marketplaces that not only trade in the most premium inventory but also offer unparalleled reach (by major news brands’ standards) as well as delivering on efficacy and transparency guarantees across a variety of quality parameters such as viewability, ad fraud, brand safety, ad clutter and, increasingly, user consent.
• Finally, publishers need to enhance content-driven context as a competitive advantage. This is admittedly a notable challenge as it relies on targeted investment and systematic effort in text mining, ideally through a publisher alliance based on a common content taxonomy and segment standardization. However, the potential RoI is certainly there, even if “context” can also refer to other elements such as time of day or device or, in a more sophisticated approach, sentiment analysis. Advertising effectiveness depends on the right message being shown to the right person at the right time – and, critically, at the right place.

Partnerships across the value chain

With the exception of a handful of very large publishers that have a distinct global footprint, very few premium content brands will be able to deliver on all this absolutely on their own – hence the need for partnerships. These can be within their own sector but, increasingly, they expand beyond – think Germany’s NetID (a single sign-on system encompassing media and clients/brands) or second party data deals with advertisers.

Equally importantly, think service and solution providers – and seek strategic partners with a proven publisher-friendly track record that have both the talent and the tools to enrich data insights, optimize yield and, through constant innovation, pre-emptively ensure that your tech stack is always aligned with evolving customer demand and the wider regulatory framework.

In short, partners that are well positioned for the multi-polar world of identity that is dynamically emerging – and that are working on multiple fronts to offer open web solutions, guaranteeing interoperability (active support of Prebid is one of them) and thus stability and growth. “From many, one”, the USA’s Founding Fathers wrote – in tomorrow’s digital ecosystem, the other way around should work too.

In Project Agora we help our partners respond smoothly to the changes and stay ahead of the competition. If you would like to learn more on our Publisher Monetization solutions, you can contact us today to speak with one of our experts.