Ad tech as we know it is changing fast. Yes, it took entire nations to be tricked into taking dubious decisions about their future thanks to creepily accurate Facebook ads to raise a red flag.
Up until then, we knеw something dangerous was happening with our sensitive footprints online, but we didn’t seem too concerned about it. Until surgically precise ad targeting elected presidents and prime ministers, and empowered political movements that are plain wrong.
Fortunately, what followed in terms of legislation and technological advancement restored some of our faith in the advertising industry and humanity in general.
Post-GDPR and pre-CCPA
Europe’s General Data Protection Regulation (GDPR) was the first attempt to reinstate some sense back in the data game and put a hold on private companies’ reckless misuse of personal information.
A year and a half years after its introduction very few companies have been fined or otherwise reprimanded, despite GDPR demanding fines starting at €20 million or 4% of global revenues, whichever is greater.
Almost all companies, however, changed their data policies. Things are getting even more interesting in 2020 - USA now has its California Consumer Privacy Act, shortly CCPA, or “The US GDPR” active from the first days of January.
The law will empower Internet users to regain control when it comes to how tech companies use their personal data and, similar to GDPR it will introduce large fines to non-complying agents.
It seems that companies have begun to realize the gravity of the situation and started reacting accordingly; even the giants:
- Twitter announced a new “privacy center” in December;
- Facebook revamped their Privacy Checkup Tool just before CES and earlier last year did some additional privacy changes to the platform - event attendees are for example no longer able to see who else besides their friends is visiting an event (sorry, stalkers);
- Google has published a Chrome extension that allows people to block Google Analytics from collecting data;
- Safari and Firefox killed third party cookie tracking and Chrome also introduced the option to switch it off, and so on.
GDPR, CCPA and the measures the companies took to react accordingly changed all aspects of data handling and use by companies, but perhaps the thing that was affected the most is how companies use data for advertising. Here are some of the major changes that we witnessed in 2019:
- Advertisers were forced to use less third-party data for targeting;
- Private marketplaces became hot again after programmatic advertisers shifted their spend from open exchanges to PMPs. The Financial Times reported that private deals rose from 5% to 70% of their programmatic ad revenue;
- Publishers started hiring data protection officers and shut off open exchanges;
- Consent management platforms (CMPs) thrived;
- Real-time bidding started losing its reputation as the most effective method for delivering acute audience targeting;
- Some marketing tech vendors ceased operation in Europe, worrying that they can get fined (with the introduction of CCPA they might need to rethink their data handling policy though).
2020 - The turning point?
This year our industry has a real opportunity to rebuild its foundations and regain trust. Moving away from third-party cookie tracking policies seems inevitable. It may also be the best thing to happen to digital advertising - it will force companies to rethink their models and start operating in a framework of user consent to deliver trust and addressable content online.
For now, two obvious and viable models for delivering relevant yet respectful ads have emerged.
Source: eMarketer
In 2019 some notable publishers turned to private marketplaces. PMPs are basically small ad networks in which advertisers and/or publishers get in by invite only. Advertising inventory is mostly exclusive and publishers themselves have control over what ads are being circulated to their audiences.
It is also them who take care of acquiring the consent of the audience. Advertisers, on the other hand, can be sure that their ads are broadcast to relevant audiences.
Usually, CPM is higher on PMPs, but advertisers have higher return on their ad spend from the premium inventory they are buying on relevant media for their audience.
For publishers, adopting private marketplaces means reducing chances for data leakage on open exchanges. For advertisers, PMPs also add a layer of confidence - they know that their ads will be shown to people who have given their consent. The popularity of private marketplaces has been rising steadily and eMarketer expects that in 2020 it will outgrow that of open exchanges.
However, PMPs will work well for bigger publishers with already proven names and audiences, but smaller publishers (and advertisers) need to find alternative solutions. Enter contextual advertising - the second much anticipated trend for 2020 and beyond.
Contextual advertising was there before the third party cookies (almost) killed it, but who’s laughing now - for the moment it again seems to be the best targeting option in a third-party-cookieless world.
Whereas behavioural advertising relies on data gathered for the user - what content did they consume before loading the page, what were their recent searches, where do they live, were they recently engaged (yes, this data is still available for targeting on Facebook), contextual depends on keywords and topics of the content the users are consuming.
Publishers are responsible for setting the right topics on their content and targeting is broader (while some people will argue - if you are generally interested in bikes and you read a website about bikes, most likely you’ll be clicking on bike ads, right?).
The most important benefit of contextual advertising, at least in terms of privacy, is that it doesn’t need much user data to be collected. It reduces the possibilities of data breaches and removes compliance headaches.
Downsides are that while contextual works on tags or keywords, both the processes of labeling content and choosing on what tags to bid are time consuming and can be messed up easily, but here come endless possibilities for new services and tools to streamline the process.
How we are doing contextual advertising at AdEx
We created AdEx Network because we realized that the ad tech industry has failed to offer truly transparent, fraud-proof and privacy-preserving ad networks. Every aspect of the design of our platform has been tailored with these three goals in mind.
A fundamental difference between AdEx and traditional ad networks is that we reduced the number of agents between advertisers and publishers to zero. That being said, in the contextual advertising environment of our network publishers are responsible for “tagging” their content as precisely as possible. When they set up their ad slots (the inventory they’ll offer ot advertisers), they can choose between predefined affinity, gender or location categories or “invent” custom tags on their slots:
When starting a campaign, advertisers can choose between the same 4 types of categories and narrow their targeting to achieve fine-tuned targeting.
How does this work for end users? When someone visits an AdEx publisher’s website, an anonymous advertising ID is created for this user and stored in their local storage. It will never leave it, unless deleted by the user. Whenever AdEx code loads on the website of a publisher, it checks if the visitor already has an identity and what contextual categories does this user match based on previous activity.
The system performs this check by “asking” the local storage - we don’t have this data on our servers. This being said, if a user decides to delete their browser’s cache, they will wipe out their AdEx identity too, so the next time they load a publisher’s webpage, AdEx won’t recognize them.
Mark Zuckerberg would probably say that’s inefficient, but we really believe that for now that’s the fair way to handle personal data without being creepy.
Our publishers and advertisers seem to agree with us - the AdEx Beta brought in outstanding feedback. Throughout the invite-only testing period AdEx was processing over 45 million impressions (i.e. payment transactions) per month, publishers received more than 110,000 DAI (~$110,000) in payments and some advertisers like NordVPN got 238%* ROI on the ads they ran on the network.
This month we decided to open the platform for everyone and invite all like-minded advertisers and publishers to register for free on the network and join others that already benefit from transparency, efficiency and reduced costs.
2020 can really be a turning point in digital advertising and it depends on all of us who believe in change.