Exploring with Rob Webster: There are a lot of articles right now on the demise of the cookie and surely everything has been said? As a matter of fact, I have yet to see anyone really state what everyone is going to do about it with any kind of clarity. Therefore, today I’m going to look at advertisers, the people that fund digital marketing for a window into the future. The easiest way to think about it is in layers of importance which we will go through, calling out implications as we see them. To that end we have;
- Foundation Layer AKA the GAFA Layer.
- The First Party and Customer Data Layer
- The Identity Graph Layer
- The ID Free Layer
How these four layers prosper and grow will be the cornerstone of all marketing from 2022 and over the next ten years. All of them will be enhanced through ever stronger AI and automation and there will be convergence between them. Yet their differences will remain. As it stands today, I think we can state that three of these layers are certain to prosper with the fourth flourishing, dominating or perhaps being regulated away.
Foundation Layer AKA The GAFA Layer!
Whilst it is not ideal, the dominance that Google, Amazon, Facebook and Apple have ,it is a reality. They take over 70% of digital ad spend and most advertisers need to deal with that first. Indeed, for many advertisers, particularly small and medium sized (SMEs), fixing the core is all they will do at least for the next 18 months as they simply do not have the bandwidth of talent or cash and thus increasing GAFAs share of spend. Apple with its iOS search ads is now a very definite part of this and its planned new ad products will only solidify its place at the top table of advertising.
Paid search, shopping and paid social are the most important direct response channels for most advertisers (again particularly SMEs). By ensuring that advertiser’s core channels are still able to operate efficiently advertisers protect themselves from most problems on the web. There are a number of actions that need to be taken here, from tweaking your tracking settings to upgrading your analytics and consent practices. One thing strangely unremarked on in the press is the historic upgrade of Google Analytics to GA 4, a platform much better suited to the new marketing ecosystem than GA classic. Indeed it is likely that GA 4 will replace the adserver as the source of truth for advertisers. For many that means GA but for some, it will also mean enterprise Customer Data Platforms (see the third section).
- Impact 1- Many advertisers, particularly SMEs, will consolidate to only running with GAFA. GAFA activity, particularly Facebook, will be impacted by the changes but much less than the rest of the industry.
- Impact 2- GAFA will again increase market share of advertising again in the short to medium term.
- Impact 3- Display spending on independent ad tech will be most impacted and decline sharpely for the SME sector. Less retargeting volume and attribution visibility will bite hardest.
- Impact 4- There will be a need from the service industry to improve GAFA installations with clients. Notably in Analytics with GA 4 replacing GA Classic and server side firing for Facebook.
First-Party and Customer Data Layer
The next layer of solutions is around customers and first-party data. First-party data is so important in the ‘privacy-first era’ because it’s the only real way for brands to gain consent for one to one marketing conversations. Some of this data will be existing customers and the rest will be users who have opted into customer marketing but are not yet customers. Getting this right means having a very strong customer relationship management setup and data control (explaining the popularity of customer data platforms) as well as tight control of consent. Getting this right requires expertise and technology that many smaller advertisers either will not have or will choose not to engage in. However, whilst B2B and D2C companies have a smaller overall spend, they have strategic importance and a legacy in lead generation and CRM that will enable those that are progressive to thrive. It will be fascinating to see how consumer brands lacking in first-party data respond. Indeed the need to grow first-party lists may signal a boom time for lead generation efforts.
For advertisers to be able to operate well in this first-party ecosystem it will provide huge advantages as this data and consent combination will not only allow for great customer marketing (and increased lifetime value) but also to power lookalike targeting and attribution. Strong first-party data allows advertisers and publishers to close the loop on targeting and attribution and it’s an area progressive publishers with first-party data are pushing hard.
Advertisers with strong customer data will be able to collaborate well with publishers and data companies that have similar strong first-party data. This will very much include GAFA but also premium connected TV, print and vertical focussed publishers (for vertical publishers think car comparison in the auto space, games reviews in gaming, travel search and content). Allowing this collaboration between different brands’ data is where the customer data platforms and data clean rooms can continue their rapid rise particularly with enterprise and B2B clients. Much of this will take place server to server out of the purview of the browser (interference) and educating customers and gaining consent will be a key part of ensuring the future of different technologies and techniques for future success. It is likely that this space will be dominated by technology geared for enterprise brands, though a big opportunity exists for those able to support progressive smaller companies.
The strategic advantage of authenticated users will drive more and more publishers to become private ecosystems (otherwise known as walled gardens). Much of the pipes and plumbing will still come from open RTB yet with the data kept very privately, leading to a new archetype for independent ad tech. Connected TV publishers, large publishing groups and vertical publishers will join the second tier walled gardens like Snap, Twitter and Tik Tok in a new bulwark against GAFA. This layer won’t all be about direct response either but it will suit the benefits of the publishers involved and in many cases be very brand focussed or as we will discuss below lead gen.
These systems though are not easy to use and require collaboration between marketing and technology. The first-party layer needs for each advertiser to be careful design, implementation and acquire the skills to make the most of it holistically in marketing activity. The strategic importance here and relative lack of available skills will drive the use of new breed service companies who can help advertisers compete in this new ecosystem. Joining up data for seamless planning, targeting and attribution as well as a new operational paradigm are waiting to be designed.
- Impact 5- Advertisers with a strong first-party setup will be able to run customer, lookalikes and attribution activity to a high degree running better marketing than ever before. Advertisers who are not able to build and operate a strong first-party setup will struggle to compete in the privacy-first era.
- Impact 6- The importance of customer data will result in more premium publishers effectively becoming walled gardens. These new ecosystems will join the already successful likes of Snap, Twitter and TikTok to form the biggest bulwark against GAFA.
- Impact 7- The gap in customer data will increase the advantage of large advertisers over small (the same will happen with publishers) which had been in decline in previous eras. The gap in customer data will also shape B2B, D2C and consumer strategy giving an advantage to those who build a strong marketing data framework.
- Impact 8- The need for first-party data and consent will drive a resurgence in lead generation activity. Advertisers (and publishers) will want more consented users in their databases and a lead gen approach for many will be the way forward.
- Impact 9- The huge advantages here will drive the success of CRM, CDP and clean room companies. This data collaboration of first-party ecosystems is materially different from the identity graph layer below (though in some cases connected).
- Impact 10- The strategic importance of the first-party layer combined with its complexity will drive the new breed of support companies where technical skills combined with marketing nous are crucial. The opportunities are enormous but advertisers and publishers will need support to realise them.
Identity Graph Layer…
