Judging from the experience of several different businesses, data tracking technologies and Adtech are not particularly profitable; except forAdtech companies, actually. Here is how the system works.
Adtech businesses want everybody to believe the technology they provide may magically generate higher earnings for their customers. The last ten years have shown that only Adtech enterprises themselves have been making money out of them, though. Publishers and marketers, on the contrary, have lost more than they should have (Marketers And Publishers Are Making More Money By Using Less Adtech). Is it true? How can it be so? Let’s try to understand it!
Do you earn more with or without cookies?
Let’s take Nederlandse Publieke Omroep (NPO), “the BBC of the Netherlands”, as an example; they have got rid of all their users’ traces by simply getting rid of cookies. And their revenues, instead of decreasing, have significantly increased. Visitors are no longer required to give their consent to data processing and the user experience offered has consequently improved. By eliminating the data collection process, last January and February, NPO recorded an increase in their advertising revenues against last year data by 62% and 79% respectively.
The fact is just a little share of the overall investment made by marketers goes to publishers: the rest ends up in the pockets of Adtech businesses. On the other hand, data tracking is not only useful to establish the right targeting and ADV strategies but also to analyze and thus improve digital products. Still, there is no evidence a possible drop of the users refusing cookie policies, and without a CMP (Consent Management Platform ) there are no figures to be evaluated concerning a possible opt-out.
ADV supply chain
In May 2020 the ISBA (Incorporated Society of British Advertisers) published a survey revealing that half the money invested by marketers ended up in the pockets of some kind of intermediary along the digital ADV supply chain instead of the publishers’. Basically, we are talking about a sort of 50% tax.
The same research also introduced the concept of a mysterious 155 delta, whose money has simply “disappeared”. The need to track the supply chain supporting the broadcasting of ADVs and its costs has been a well known hot potato for quite long to the point that the market has been pushing the sector to adopt the blockchain. In a cookieless logic the techstack will change. Thus, we will find ourselves in a different scenario featuring walled gardens VS 1st party (and possibly 1st party consortii). So, as a result of a shorter supply chain, costs will be easier to identify.
Digital advertising budgets are being cut
Over the years, several important marketers have significantly cut down on their digital advertising budget without any relevant effects on their companies results. P&G has taken 200 million dollars away from their digital budget and has recorded no consequent changes. Chase has reduced their coverage from 400.000 websites to 5.000 without any damages. Last but not least, Uber has cancelled most budget originally devoted to the advertising of the installation of their payment app but people have continued to install it as before.
With reference to these cuts, however, we must say that P&G, which invests mainly into the mass distribution system, is not a purely digital business. Such reductions date back to 2018, regarded mainly Google and Youtube, and were due to transparency and control issues.
Uber, instead, initially spent several million dollars to promote their product, and then reduced the related budget once they had become popular and “top of mind” among consumers, and in a market without too many competitors, a similar investment was no longer needed (World’s Biggest Advertiser Cut $200M of Its Digital Ad Spend Last Year).
In conclusion, a lot of attention goes to data and data tracking systems operated by third parties which will be affected by cookieless policies stating from next year. We are definitely going to monitor trends such as the Contextual Targeting (another comeback) which may extend also to Programmatic advertising.
Of course, promoting the use of first party data may increase the value of the type of targeting you are offering and may help shortening the supply chain. 1st party data will open new scenarios in which the audience ‘premiumness’ should pay back more than targeting. The future will tell.
Investing in the Adtech may really bring about money losses? Tweet @agostinellialdo
If you liked this post, you may also like Fintech: China is trying to stop the big players of digital payment. Here is why
