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Quantum Brief

MAdtech Point: Decoupling of technology from data and inventory, the AdTech End Game

Conventionally, advertising technology has grown so far by bundling data and inventory with technology, where the cost of technology is recovered or subsidised.

By  Gowthaman RagothamanOct 24, 2023 10:50 AM
MAdtech Point: Decoupling of technology from data and inventory, the AdTech End Game
Since the purchase data is rich in granularity, it significantly increases these sites ability to use their own digital properties to sell advertising to brands, much like a media property would. These sites are now becoming a very valuable resource in a brands’ marketing mix as this helps to engage consumers efficiently. (Representative Image: Markus Spiske via Unsplash)

Google is on track to proceed with their planned removal of third-party cookies in the second half of 2024. The Privacy Sandbox proposals for the Web which will phase out these trackers are in various stages of the development process. Google committed to design, develop and implement these proposals, largely taking into account, specific criteria agreed with UK’s Competition and Markets Authority (CMA) with a commitment that these proposals will apply in the same way to Google’s advertising products as to products from other companies.

Origin trials give you to facilitate this Google gave access to a new or experimental feature, in the form of Origin Trials (OTs) with a set of Privacy Enhancing Technologies (PETs). This is in order to build functionality, and try out for a limited time before the feature is made available to everyone. All the OTs are now concluded and starting 1st October, 2023. Google started providing Chrome-facilitated testing modes that allow sites to preview how site behaviour and functionality works without third-party cookies, for a year. So we are now getting into the last lap.

Only sites, that have access to their customer’s purchase data have utilised this time to do something with it. Media properties or for that matter most of the brands or advertisers have not done much during this time to be part of the OTs and are largely ill-equipped to participate in the testing.

Since the purchase data is rich in granularity, it significantly increases these sites ability to use their own digital properties to sell advertising to brands, much like a media property would. These sites are now becoming a very valuable resource in a brands’ marketing mix as this helps to engage consumers efficiently.

In my view, retailers and direct to consumer brands are the only two sectors that are ready for the deprecation of cookies. Media properties and brands are still struggling to collaborate with different partners for better consumer insights apart from trying to build their own customer data.

In the meantime, retailers are now busy building their own media network to capitalise on this opportunity with third party advertising as an alternate/additional revenue streams. Forrester, McKinsey, eMarketer and GroupM all now project these retail media networks (RMNs) as the third big wave in digital advertising following search and social. With the growing popularity of online shopping for consumers, these RMNs offers their digital channels as useful opportunities to help brands reach and engage shoppers. But this is largely a large retailer phenomenon as they can afford to invest in building their own media network. Small and medium retailers are sub scale either due to geographical limitation or smaller purchase baskets for large scale collaboration and they are not able to afford to build their own media network.

RMNs helps marketers potentially reach more relevant consumers by providing superior audience and shopping insights that can help make their “lower funnel” marketing activities effective. Private labels in the form of direct to consumer brands are still focussing on consumer engagement and not third party advertising as an alternate/additional revenue streams. Direct to consumer brands are now slowly beginning to look at building their own media network, by collaborating with their partners that compliments their products or services. It offers huge opportunities for marketers to make the “upper funnel” marketing activities effective as well. Essentially the spotlight is now on building their end to end media network.

Building an end to end media network today has largely remained with a few big tech companies with deep pockets to invest and plan for returns over a longer period of time. Conventionally, advertising technology has grown so far by bundling data and inventory with technology, where the cost of technology is recovered or subsidised. Google committed to CMA that their privacy sandbox proposals will apply in the same way to their advertising products as to products from other companies.

One would expect the same to apply to all the retailers and direct to consumer. And that means, that, when the privacy sandbox is concluded and released, a very significant “forking” in the advertising industry would have set in motion i.e.., the decoupling of technology from data and inventory, setting the stage for a “privacy by design” advertising technology.

Such a “forking” event will bring technology mainstream into the advertising business and huge opportunity for advertising agencies to rewire themselves and build a totally new business model.

Gowthaman Ragothaman is a 30-year media, advertising and marketing professional and CEO of Aqilliz, a blockchain solutions company for the marketing industry.

First Published on Oct 23, 2023 9:03 AM
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