COVID-19 Update

How The Loss Of Data Interoperability Will Impact Advertising

  • Written by Nancy Marzouk, MediaWallah
  • Published in Demanding Views

1nanceThe promise of the open web starts with data interoperability — and third-party data has traditionally served as the key to digital advertising. No matter what website a brand advertises on, they know third-party cookies can track and manage engagement data across the web and enable targeting, attribution management and real-time campaign optimization.

From the early days of the internet, the premise of ad servers was to allow various platforms to deliver ads and set third-party cookies while maintaining control of reach, targeting and ad spend. Later, ad exchanges helped provide scale along with targeting efficiencies with interoperability, allowing the targeting to work.

With the phase out of third-party cookies, many companies are turning to first-party data and other ID-driven solutions that do not have interoperability. That spells big trouble for targeting, measurement and scale on the open web.

The Loss Of Interoperability Hurts Advertisers & Publishers

Many advertisers don’t realize how the loss of interoperability will impact their business. The reason why a brand can have 20, 30 or 40 publishers on a media plan is because of the interoperability. Without interoperability, targeting across the web isn’t doable, having an aggregate view is challenging and forget about measurement.

Absent that interoperability, advertisers should expect their plan to shrink to five or six content publishers, with more media spend heading to walled gardens, the only places that will provide both scale and targeting. Advanced contextual advertising can replace some of the lost third-party cookie-based targeting on the open web, but will never account for all of it.

While it’s a tragedy for walled gardens to further overtake publishers, it’s also a bad deal for advertisers. By definition, walled gardens are the antithesis of data interoperability. Advertisers flock to them largely because they command scale, which they balanced out with insights from the interoperable open web — but without that component, brands have little insight into their own audience.

Up until now, advertisers have been able to live in these two realities at once, but third-party data deprecation is threatening that balance. 

The “Measurement Blackout” Is Just The Beginning

What the industry shouldn’t settle for is a lack of choice, innovation or, ultimately, government regulation of the industry after it becomes clear that the walled gardens have sucked the life out of the open web. Nobody wants that.

The Interactive Ad Bureau (IAB) recently warned of a “measurement blackout.” From the tepid response, it’s clear that brands don’t really understand what’s at stake. In addition to an inability to measure campaigns, audience insights will dramatically decline, the breadth of content will shrink, targeting will only be possible in small doses and walled gardens will command an ever-increasing presence. 

There are several steps brands can take to adapt to these changes. Now is the time to get serious about collecting first-party data and refine technology stacks accordingly. It’s not enough to have signed a contract for a CDP or a data clean room — brands need to test these systems with partners and make changes to their processes and policies to ensure efficiency and effectiveness. 

Second, advertisers need to push harder against the walled gardens on attribution. Too often, platforms like Facebook, Amazon or Google are overly opaque or outright inaccurate in their reporting, and that’s unacceptable. If brands are giving so much away to the walled gardens, they need to get hard data to prove it’s worthwhile and justify their spending. Brands should push the walled gardens to provide attribution data to allow for measurement without compromising the need to be opaque.

And third, brands must be more active with groups like the IAB to create interoperability standards that can support the open web. We all need to work together to focus on a first-party data open framework that allows for consented data to be shared securely and to provide standards that allow for data sharing across the ecosystem.

Fight For The Open Web

The free flow of interoperable data was critical to the massive innovation of the early internet to the benefit of users, advertisers and startups alike. Data interoperability allowed companies like Google and Facebook to go from garage startups to global enterprises and it’s what makes it possible for small publishers to capture advertising demand and grow. It’s what we must preserve if we want to see new digital media startups have their own chance to emerge and succeed in the future.

Nancy Marzouk is the Founder and CEO of MediaWallah. She founded MediaWallah in 2013 to help develop groundbreaking identity-by-design solutions. Prior to MediaWallah, Marzouk was CRO at TagMan (acquired by Ensighten) overseeing sales, marketing, product implementation, client management, and business development. Prior to TagMan, her positions included VP of US Sales at IgnitionOne, VP of Sales at x+1, Sr, Director of Strategic Development and Partnerships at DRIVEpm and Sr. Director of Ask Jeeve.