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5 minute read
Introduction:
In an era where digital advertising is undergoing massive transformation, online publishers have become more intertwined with advertising technology than ever before. T In order to manage this new symbiosis publishers have to turn over more elements of their operation to their technology partners due to resources, the proliferation of more required/needed technology, and constraints and chasing margin. However, this approach is often accompanied by a growing convoluted opacity that cloaks the intricate mechanisms of this technology, its legal use of consumer data, and proper delivery of accurate information into key ad tech systems. As we steadily migrate to a future that's predominantly online, it's crucial to untangle these convolutions, especially when the stakes involve user privacy and data.
The Concern that Never Left: Understanding Advertising Technology and The Black Box:
Adtech acts as the backbone of today's digital media landscape. It's the engine behind the ads we see, driving personalized content by leveraging the wealth of user and content data available. From cookies to tracking pixels, the tools it employs offer a refined, audience-centric approach, enabling target ads with unprecedented precision.
To maintain this level of accuracy, the industry is migrating away from the use and abuse of third-party cookies and looking to rely on first-party data - renewing a reliance on the publisher’s data. As part of the migration, publishers are presented with the opportunity to reclaim their data assets and control data leakage - effectively regaining control of their company’s metaphorical “oil”. This is a very exciting time for the sell side as the opportunity is significant. However, many solutions force publishers to either expand their internal tech resources or allow vendors to trade data access for control. Be it targeting, audience development and enrichment, or attribution – the existing ad tech toolset is being re-architected by the publisher to accommodate these shifts and leverage this once-in-a-generation shift of power.
Unfortunately, the “right” ad tech stack is difficult to define. Yes, everyone basically uses GAM, and the addition of a fraud measurement tool is almost ubiquitous, but the new data playbook is in flux and increasing in complexity with each day. Depending upon how it is calculated, third-party data (3PD)tools make up between 35%~55% of all online advertising spend. Hence, the number of “solutions” to maintain targeting with the loss of the third-party cookie seems to grow exponentially every day. For instance, here are now 48 different ID solutions that have products approved by Prebid plus dozens of other proprietary IDs from SSPs and DSPs.
One of the great challenges to the conversion from 3PD to 1PD leaves publishers trying to determine which ID makes sense and provides the highest return on investment. This creates both testing fatigue and significant associated costs of managing the IDs, analysis, and outcomes, some vendors have emerged with their own ID solution, claiming to manage this process in exchange for a revenue share. However, just as we saw with the invasion of 3P cookies and tags on publishers' pages, these black-box solutions create a new risk. As we have seen over the last few months, companies proclaiming to manage this information were actually violating requirements and inappropriately favoring their own IDs over others, overriding established bidding requirements, or finally, illegally substituting data across browsers (bid stuffing).
However, this sophisticated interplay often operates as a 'black box' - a term originating from computing to describe systems where the internal workings are hidden. In the realm of ad tech, this term refers to a lack of transparency regarding how user data is processed, who it's shared with, how decisions regarding ad targeting and placement are made, and the legality of the processes in place. For online publishers, this opacity can lead to unexpected and potentially detrimental consequences. In the case of a black box solution, it is unclear what exactly the vendor is doing with the user or publisher data, whether it is being leveraged for uses outside of the publishers' media (data leakage), and if everything that is being done is privacy-compliant (think state and federal governance) and commercially compliant with the terms of other vendors.
Risks of Operating in the DarkPotential Legal Implications:
Given the global push towards data privacy with regulations like GDPR, CCPA and the bevy of state-level regulations percolating, ignorance about the operations of your ad tech could spell legal trouble and large financial liability. Non-compliance with privacy laws may result in hefty fines, sanctions, and legal action, transforming an opaque ad tech ecosystem into a legal minefield.
Brand Reputation and Trust:
Trust is the bedrock of consumer and advertiser relations. In the context of advertising technology, transparency can either foster this trust or destroy it. A black box ecosystem can lead to unauthorized data use or ill-timed, irrelevant ads, damaging your brand's reputation and straining consumer trust. For instance, what if a black-box vendor is artificially enriching bids from your portfolio of brands with inaccurate data and reselling them to buyers?
Getting Block-Listed by Demand Sources:
Unfortunately, tracking an understanding of who is bidding on a publisher’s inventory is already complex. Publishers get block-listed by DSPs and SSPs for perceived infractions, questionable traffic, bad “ads.txt” files, and many other reasons. However, in most cases, publishers are unaware of this until it is too late. Now, adding to this list of reasons is the mishandling of IDs. This issue will grow as more publishers adopt leveraging Universal IDs and their own first-party data.
Ineffective Targeting and Ad Placement:
The black box phenomenon also threatens ad effectiveness. With an understanding how your ad tech operates, it's easier to ensure that ads are appropriately targeted and placed. This can lead to ad misalignment, a poor user experience, and ultimately, reduced return on investment. This also creates a reliance on the reporting by the technology provider, since their actions are shrouded, thereby lacking the tools to measure the effectiveness of these tools. “We give you lift” without clearly saying how is the hallmark of many of these offerings.
Strategies for Mitigating Risks
Demanding Transparency:
It's time for publishers to assert their need for transparency, especially if they want to protect this new found value of their currency. Ask vendors tough questions about data usage, sharing policies, how their systems work with other systems, what specific data is passed and when, where the publisher data is going, and decision-making processes. Insist on clarity regarding who has access to data and the measures in place to secure it. Its a good rule of thumb, that if they can’t explain it so you can understand it, they are doing something suspect.
Data Governance and Partnerships:
Establishing robust data governance policies is paramount. These should include clear roles and responsibilities, compliance checkpoints, and defined processes for data handling. Building a solid partnership with your ad tech provider, grounded in open communication and shared values, is equally vital.
Exploring Alternatives:
Obviously, effectively managing user consent and respecting user privacy is paramount. If you lose the trust of your readers, you're dead. However, as publishers consider alternatives, two issues are paramount.
- ALWAYS know what is being done with your data. This shift from third-party data to first party data is a huge opportunity for publishers, but in their race to control expenses and technology stacks, most publishers will opt for the ad tech solution that promises them money without risk. This is a recipe for once again losing control of your data and becoming marginalized .
- Avoid locking yourself into one solution. There are literally dozens of different IDs emerging and more companies offering their path through the transition to first-party data. There is no clear winner yet. So, as long as the partners are transparent, maximize the value of your first-party data in a way that supports your long term viability - not the fortification of another vendor’s ID graph.
Conclusion:
Advertising technology, when shrouded in a black box, presents a labyrinth of risks for online publishers. However, through proactive steps toward transparency, a commitment to robust data governance, and an openness to explore alternative commercial models, these risks can be mitigated. Remember, while ad tech may be an essential tool in your arsenal to take back control of your first-party dat , it should be one that works for you, not one that leaves you operating in the dark and assuming risks you aren't aware of.