Facebook and Google have dominated the digital advertising space for over a decade, with their combined share of UK digital ad spend forecast to reach 70% by 2021. Yet the secret to their success isn’t actually a secret at all. It lies quite clearly in their extensive addressable audiences, which advertisers can target at a people-based level.
Bands of addressability
Most online publishers can also achieve a limited degree of addressability through third-party IDs, such as cookies, which act as a proxy for identity and enabling tracking and targeting capabilities. When a cookie is dropped on a user’s browser it can be used to associate certain attributes with that user – perhaps what they are interested in based on the content they are reading – even if it doesn’t specifically identify who they personally are.
But cookies are ineffective and unreliable as a source of identity. For instance, if one individual accesses a news website on their work laptop over lunch, and then checks it again on their smartphone on the way home, they will be treated as two separate users with two distinct IDs, resulting in a disjointed view of the user, and consequentially receive inconsistent and irrelevant advertising experiences. Privacy and consent problems associated with third-party cookies have led to restrictions in their use on the digital platforms and tougher measures from regulators. As a result, the already limited addressability publishers could achieve is set to disappear.
Facebook and Google, on the other hand, enjoy a far greater level of addressability based largely on declared identity from users: they need to register to use Facebook, for instance, and then log in each time they use a new device, meaning they are always able to be recognised by Facebook as the same person. Registration information such as name, email address and location can be associated with online ID data, effectively bringing together the offline and online worlds and resulting in a synchronised understanding of the individual that can be used for more precise content delivery and targeted advertising. Advertisers can also use programs such as Facebook’s Custom Audiences or Google’s Customer Match to find overlap with their own first-party CRM data and reach their customers in these ‘walled garden’ environments.
A journey from unknown to known
The addressable landscape needs to mature from third-party IDs to declared data and develop a more complete understanding of the consumer. The entire advertising industry is on a journey from unknown to known audiences, trying to build a more holistic view of the consumer and provide better services to them.
Some media owners are further along the path than others, especially where they have put content behind a sign-up wall from the start. Broadcasters are well on their way, with most providing catch-up and streaming services via apps that users need to log into. Equally, music streaming services such as Spotify require users to register, enabling large addressable audiences to be reached through audio advertising.
Online publishers also need to make this journey from unknown to known, both to protect the revenues they already receive from third-party, ID-driven digital advertising, and to grow revenues in the future. We estimate there are around 50,000 buyers currently involved in programmatic advertising using cookies, whereas there are around five million advertisers using Facebook Custom Audiences, so there is an enormous opportunity for publishers to tap into once they enter the known and addressable world.
Most publishers are only just setting out on the path to known audiences. They may be considering implementing paywall or registration layers to encourage users to declare their identity, so they have log-in details with which to associate behaviour and demographic attributes. Convincing users to log in will be a challenge for all and many are already using access to exclusive content, the ability to comment on articles, or delivery of specialised services to incentivise registrations. But it will take time for publishers to reach a point where they have known and addressable audiences of a great enough scale to compete with the walled gardens for ad spend.
In the interim some publishers are working together to form co-operatives, while others are partnering with brands to find overlap between their audiences and offer small scale but high value advertising opportunities. These constructive alliances all require an element of first-party data integration, which inevitably raises complications whether publishers are sharing data with their brand partners or their traditional competitors. Alliances can be improved upon with direct publisher-advertiser relationships, which allow for a nimble and flexible approach to data collaboration. Combined with privacy-by-design data management techniques, both parties can be safe in the knowledge fast and efficient connectivity won’t ever come with the risk of a data breach.
Facebook and Google may have duopolised the digital advertising industry for the past 10 years, but we’re in a new decade now and it’s all to play for. By learning an addressability lesson from the walled gardens and building larger, known audiences that can be targeted by advertisers using their first-party data, publishers can be a truly viable alternative. Working in close collaboration with other media companies, ad tech providers and brand partners will be crucial for any publishers wanting to stake their claim in the new era of digital advertising.
About: InfoSum powers trusted collaboration in the data economy by delivering technology that focuses on a single vision for the future of data connectivity – data should never be shared. Through InfoSum’s pioneering Unified Data Platform, multiple first-party data sources can be safely and securely connected for analysis, segmentation and activation, without moving raw data between parties.