The Race to Own Data Addressability Is Its Own “Game of Thrones”
Over the next three to five years, you can expect to see an already dynamic industry become more dramatic as many companies vie to be crowned “king” in the digital world of consumer addressability.
Online advertising has become a business built on data, and data needs to be connected to a consumer’s digital address in order to be activated. Data activation is already a complex business — one that exists because data warehousing didn’t effectively connect the data to the point of use or activation. Data warehousing was a box where data went for the purposes of analytics. Data activation is about getting that data out so marketers can directly put it to use.
The biggest barrier to data activation is fragmentation. Fragmentation starts because there are so many different places where data can be ingested. The first task in data activation is to integrate these inputs. Once that data is unified the marketer will discover how noisy that data can be. The next step in activating data is to create signal from the noise. Marketers must identify what’s important and organize it in a fashion where the data can be acted on. Once you have refined the data, the third step is to tackle the problem of fragmented outputs.
On average, any marketer may have 18 different execution channels for data output (think of all the different execution partners in display, video, mobile, site optimization, search, social, email, etc). These different output channels often run on different consumer address spaces (think first-party cookies, third-party cookies, emails, social handles and real-world addresses). This is the primary reason consumer data has not been put to use effectively on behalf of the marketer.
The book “Nothing Like It in the World” chronicles the unprecedented feat of engineering that created the trans-continental railroad in the U.S. The American economy expanded rapidly because we invested in one connected railway system that spanned the whole country. The race to interconnect the world of consumer data and consumer addressability is no less an engineering feet with great consequences for the victors.
As if that weren’t enough, we now have to prepare for a post-third-party cookie world. In a world where third-party cookies are removed, your cookie address spaces are disconnected. This means Internet advertising will go one of three ways — 1) it can become a mass of untargeted message delivery, 2) it can shift to a “freemium” model where users are forced to pay for content, or 3) we end up with multiple methodologies for data collection and the need for marketers to establish a “key” that can coordinate across all of these disparate methodologies. Of all of these scenarios, the third one is the most likely. There are too many jobs and too much money at risk for either of the first two scenarios to come to pass. Additionally, this is the area of the business where the strongest entities are at work, making their claims to be king.
The reason for all these disparate methodologies is there are a number of groups with channel-status who control where the data is collected. These are who would be king. The first are (appropriately enough) first-party data entities. Companies ranging from Amazon, Facebook, Google, Apple and every large publisher with a website would still be able to use first-party cookies to collect information about their users and integrate their findings into their own domains. This data, applied to marketers, provides a starting point for targeted message and content delivery. These first parties can also operate third-party ad networks acting under the privilege of a first party domain. So companies that are both consumer brands and also B2B ad platforms could inadvertently become members of an elite oligopoly in the online cookie-based advertising world.
The second layer of data collection in a fragmented world comes at the browser level where a browser can establish an ID on a user and aggregate information around behavior at the browser level. This industry-wide addressability is powerful and is the reason third-party cookies delivered by browsers work so well today.
In a world without third-party cookies, browsers could become a source of identification, providing a more controlled alternative to the third-party cookie.
At a different level, you need to consider the mobile carriers that deliver traffic and data across the ecosystem. We focus on mobile carriers because we are very close to the inflection point where mobile data creation will exceed online data creation. Because of the carriers’ privileged positions, they might inject addresses into mobile traffic. This would allow them to create a service that balances the need for targeting while also providing privacy controls. This mobile anonymous address can be completely orthogonal to the IDs provided by the first parties mentioned above.
That means the dominance of one party in one layer doesn’t always preclude another player from gaining dominance at another layer. When the plot thickens, you can be sure that players in one layer will attempt to build moats that constrain players in a level above or below them. Think of what happened when Ethiopia asserted its desire to dam the Nile and constrain Egypt’s access to water. Similar events will unfold in our space.
And at an entirely different level we have the “exchanges/ad-servers” in advertising and the DMP platforms who enable buyers and sellers to aggregate audience across multiple domains. These players could establish a means of recognizing and providing addresses for users who enter into their platform across entities. In the case of the ad servers their privileged position comes from the fact that some browsers treat them like first-party domains because of the fact that an ad click redirects to the ad server domain on the way to the advertiser’s page. That allows the ad server to create a first-party domain on a clicker.
Later, when the browser interacts with that ad-serving domain they still consider the ad server to be a first party even if it is currently in a third-party context. This is useful, because the ad-server’s domain maintains the only key that is useable in an RTB call (assuming the ad server and RTB are on the same domain). DMPs, on the other hand, have a different level of access. We won’t go into the mechanics here, but the DMP sometimes act as an agent of the first party and can store IDs in a first-party domain. By creating linkages across these first-party domains, a DMP platform of scale can be very valuable to the industry.
The key to the throne for any of these solutions is unification. There’s almost no scenario in which one of these methodologies wins out completely over the rest. Although they will all vie for the throne to the exclusion of others, what is more likely is several competing kingdoms will dominate within each layer and there will be a need for one player to serve as the unifying glue or the railway between the kingdoms. That means technology will be used to translate address spaces across all of these solutions, enabling marketers and publishers to use them all without recreating work every time they try a new one.
That is how this game of thrones will play out. No single king will be crowned, but a republic of very large entities will survive in the absence of the third-party cookie. Data activation will continue to be the central theme of the digital advertising industry, and we will have to learn to thrive in a world of fragmentation.
PS: I want to thank and acknowledge Terence Kawaja for providing the “Game of Thrones” analogy.
Omar is the co-founder and CEO of BlueKai, the industry’s leading data activation system that supplies both Fortune 100 companies and leading publishers with solutions for managing and activating first- and third-party data for creating highly effective customer and marketing campaigns. Omar’s previous roles include Chief Advertising Officer for mobile search and advertising solution Medio and Chief Marketing Officer for early behavioral data leader Revenue Science.