Exec summary:

Privacy updates made by Google and Apple will have implications on how media is delivered, what information can be captured, and how media performance can be measured.  These actions won’t kill major sectors of digital media and media measurement, but they will create significant challenges.  New processes will need to be built to account for these privacy restrictions.  These new processes will likely favor larger media partners which will continue to fuel media consolidation.  We expect that these updates will drive adoption of more privacy-compliant Multi Touch Attribution alternatives such as Gain Theory’s Sensor.

Key implications:

  • How legislation (GDPR, CCPA) and business decisions by the major internet browsers (Safari, Firefox, Chrome) have limited data capture, media delivery, and measurement over the past few years
  • How Google’s decision to block third-party cookies/tags will impact Chrome
  • How Apple’s release of iOS14 will impact user opt-in requirements on apps
  • The difference between “first-party” tags and “third-party” tags and the implications on consumer data capture and media delivery standpoint
  • The implications of third-party tag and cross-app restrictions on AdTech, i.e. the challenges of server-to-server integrations to audience pool sizes, retargeting, and implementation bottlenecks
  • The impact on Multi-Touch Attribution and potential alternatives such as Gain Theory’s Sensor
  • Media consolidation and how it plays to advertiser’s ability to create contextual audience targeting

Legislation and business decisions have limited data capture, media delivery, and measurement

Over the past few years, a combination of legislation (GDPR, CCPA) and business decisions by the major internet browsers (Safari, Firefox, Chrome) have made data capture on the open internet and via Apps more restrictive.  Legislation broadened (or formalized) the definition of PII (Personally Identifiable Information) for the digital age.  This broadened definition created a potential liability issue for non-compliant business (e.g. everything needs an “opt-in” now).  At the same time, the browsers and web operating systems have begun rolling out privacy features for several reasons: to protect consumers, to comply with legislation, and to avoid liability.  Beyond the basic implication that these events limit data capture, they also by proxy impact how media is delivered and measured.

Where we are right now?

Two major events are unfolding currently:

1. Google will soon be blocking third-party cookies/tags “by default”, joining Safari and Firefox, who are already doing so. 

Chrome represents a clear majority of U.S. web browser installs.  When Google activates this change, the impact will be huge.  Between the three browsers, 90+% of browser-based internet activity will have third-party tags blocked by default.  For definition, “by default” means the user of the browser would proactively have to opt-in for third-party tracking…but why would anyone do that? Once Google releases the Chrome update, consumers will begin updating their software and buying new devices.  As consumers start doing this, the % of third-party tags blocked by default will grow until it’s virtually the full Chrome user base.

2. The release of iOS14 Apple will require users to opt-in for IDFA (The Identifier for Advertiser) cross-app tracking, on an app by app basis. 

IDFA is Apple’s “Identifier for Advertisers”.  This will limit an app’s ability to see a user go to another app on the same device.  Cross-app tracking is similar in nature to third-party tagging (as described below) but one could argue that it’s easier for an app to make the case for how cross-app tracking can be a benefit to the consumer.  For instance, American Express could argue that allowing their app to be able to talk to the apps of their business partners could be a benefit to their cardmembers.  Since this iOS opt-in is at the app level, the consumer will be able to choose if they want to allow American Express cross-app tracking. As iOS14 is released, consumers and app owners will begin to face this choice very quickly.  And as consumers update their iOS and buy new devices with it pre-installed, it will become standard across the iOS ecosystem.

Why are third-party tags and cross-app tracking important?

Firstly, let’s look at the difference between “first-party” tags and “third-party” tags:

  • First-party tags: When a consumer is on Amazon.com, Amazon can track that visitor via first-party tags.  “First-party” in essence means the company doing the tracking owns the website the consumer is on.  This is akin to a shopper being in your brick and mortar store; they’re on your property therefore you have the right to observe where they go. 
  • Third-party tags: this is when the company who owns the “tag” is not the owner of the website the “tag” is placed on.  This allows the third-party to track consumers on sites they don’t own.  In the real world, this is akin to companies following people around all day and logging everywhere the people go and when.  This would obviously be a breach of privacy.  But on the internet, this is exactly what third-party tags had enabled companies to do unrestricted up until now. 

So, what were the implications? 

AdTech was basically built around third-party data capture.  Picture this: if a company places third-party tags across several hundred websites and paid media ads, capturing all the data of consumers hitting those media properties, that company could create a fairly accurate representation of internet behavior.  They could then mine their repository of cookies, all their associated behaviors, and leverage the data to deliver targeted media to their pool of cookies. 

Companies have been doing this for well over a decade.  And while cross-app tracking isn’t exactly the same as third-party tags it enables many of the same things: broad data capture, retargeting, audience/creative optimization, etc. 

If companies can’t use third-party tags and cross-app tracking, is AdTech dead?

No, AdTech isn’t dead. But it has to change.  There is a new approach to data capture that has come along to replace third-party tags and cross-app tracking: server-to-server integrations (S2S).  A server-to-server integration is when ABC.com matches its users to XYZ.com’s users so they can see the overlap in users on their sites.  Doing this is a bit more restrictive than what’s possible with third-party tags; ABC and XYZ need to have shared data elements they can match on.  They would typically match on an encrypted email address.  Net/net, they can only match consumers that have registered on their sites; they can’t match general visitors.  As a result:

  • Shareable audience pool size shrinks
  • Major implications on retargeting and, more generally, at any time digital audiences are created
  • Implementation bottleneck: for instance, Facebook can’t just do a server-to-server integration with every major media property and/or client overnight.  Right now, they have a waitlist that could be upwards of a year

Measurement implications: Is Multi-Touch Attribution dead?

No. However, everything above implies severe limitations as these changes take effect.  The challenge is that it will become increasingly difficult to create a “complete” user path of media touchpoints that led to a conversion.  There were always challenges at play, but they will only become worse.  Server-to-server integrations will become the major way raw media data gets stitched together across platforms by players such as LiveRamp, but they, too, face challenges due to the blocking of third-party tags (which LiveRamp uses heavily). Since server-to-server integrations only work for registered site visitors, not general visitors, the audience scale and matching accuracy of partners such as LiveRamp will suffer. However, with data integrators such as LiveRamp it is nearly impossible to actually QC their work; it’s all anonymized.  As a result, the true gaps created by the loss of third-party tagging and the switch to server-to-server integrations may never be known; this could sew distrust within the Multi-Touch Attribution (MTA) ecosystem, for example, raising questions like, “how accurate is this?”  Measurement partners will still deliver MTA solutions to clients but will the accuracy decline?  The marketplace doesn’t quite know yet.  If it does suffer, we can expect to see clients begin to reevaluate their measurement needs and become open to other near-term measurement solutions like Gain Theory’s Sensor

Media consolidation is at play as well

While this privacy battle has unfolded there has been significant consolidation in media.  We’ve seen the rise of major video platforms like Hulu, YouTube, etc.  These platforms have an endless supply of video content and consumers are typically logged in when they use them.  These two factors enable a massive amount of contextual understanding of the consumer. Given the scale of these platforms, and their ability to target, we’re seeing a massive shift towards contextually targeted media.  These platforms simply know so much about their massive audiences that they don’t need digital behavior data from outside their ecosystems to optimize media delivery effectively. 

Long story short, the large streaming video partners aren’t being hamstrung very much by the blocking of third-party tags and cross-app tracking.  And consumers’ attention and media consumption will continue to centralize around these platforms.  This means that with a handful of large-scale server-to-server integrations across these platforms, plus Google, Facebook, etc, we will be able to see a very comprehensive view of users’ digital media consumption. In the future, there will simply be fewer “critical” media partners, and all of them equipped with logged-in users.  This will make it easier to integrate a handful of major players than it was to track hundreds of third-party tags on mid-tier media partners.  Eventually, new measurement solutions or measurement workspaces like “white rooms” could become much more prevalent and holistic.

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