AdTech Earthquake Part 1: Cracks in the Foundation
A powerful earthquake can rock foundations, destroy our greatest creations and permanently alter large swaths of landscape.
The AdTech world is about to experience one such powerful earthquake. We don’t often think about it, but our best practices and complex ecosystems are built atop foundations controlled by a small handful of big tech companies—namely Facebook, Google, and Apple. Those tech companies are about to cause—or experience—some big changes. As a result, the digital marketing landscape will be disrupted, and the industry landscape will be changed forever.
This blog is the first installment in an ongoing series where I’ll be looking at this tectonic shift affecting the digital marketing landscape. In this piece, I’ll begin with an overview of what’s happening, why I think it’s happening and the resultant impacts businesses can expect to feel.
Big Tech’s Big Moves on Advertisers and Privacy
Over the past 4 years, Apple has steadily been leading a turn towards privacy that has begun to affect the entire digital media ecosystem. Let’s take a look at the progression of Apple’s decisions (past and future), what some of their initial impacts has been on advertisers, and how other some other tech platforms have reacted:
2017 saw the announcement of Apple Safari Intelligent Tracking Prevention (ITP) version 1.0. Safari already blocked third-party cookies by default. But it’s also possible to use first-party cookies as trackers. ITP 1.0 introduced a restriction on this type of use to a maximum of 24 hours from visiting the ad platform. Pureplay ad platforms got hurt, but Facebook and Google were only gently bruised since their services are used daily and their cookies would often renew multiple times within the 24-hour window.
2018-2019 brought the decision by Apple to scrap the 24 window for using first-party cookies as a tracker, impacting retargeting and attribution of Safari users across all ad platforms. Firefox followed suit shortly thereafter, announcing its Enhanced Tracking Protection (ETP) which, by the end of 2019, blocked third-party tracking cookies by default. Still, the impact is only moderate as Safari and Firefox have limited desktop market share. And while Safari is the #1 mobile browser in the U.S., ad platforms were still able to track and target mobile users in-app on iOS devices using Apple’s Identifier for Advertisers (IDFA)—a rug soon to be pulled out.
2021 appears to be bringing the practical end of advertisers’ ability to track and target individuals across mobile apps. Announced in 2020, but going into effect in spring of 2021, Apple will make participation in IDFA opt-in for users. It’s expected 20% or fewer will choose to opt-in—effectively killing the ability to target, personalize and attribute mobile advertising at the individual level. This is big. To learn more about the sweeping effects of this change on advertisers, read our blog What Apple’s Changes to IDFA Mean for Marketers.
2022 will see Google Chrome—by far the world’s most popular web browser—following a course on Apple Safari ITP. First announced in 2020, Google Chrome will eliminate use of third-party cookies within the browser by 2022. Since third-party cookies power AdTech’s current real-time bidding ecosystem, are the basis on which independent ad networks operate, and are critical to how advertisers handle attribution, I believe the impacts in these areas of the market will be profound. The likes of Google, however, will probably survive just fine by steering advertisers to their walled garden initiative, Google Privacy Sandbox.
The impacts of these changes to marketers and to the AdTech ecosystem will be sweeping. We’ll be covering many of those impacts in this blog series. But it’s first important to look at why these changes are happening.
Consumers Demand Far Stricter Privacy
Some will say the changes Apple is introducing are a power grab to drive the data collection economy out of Facebook’s hands and into the Apple ecosystem. One expert even believes it’s a play to resuscitate Apple’s flagging App Store. But I think the true driving force is the one that’s staring everyone in the face: the consumer.
Because of continued data breaches and countless stories of misuse and abuse of the mass surveillance and microtargeting that’s part and parcel of big AdTech, consumers have become increasingly vocal about privacy concerns. In recent years, we’ve seen governments respond to these concerns by introducing regulations like GDPR, CCPA/CPRA, and more—each intended to protect consumers and the data collected from consumers.
But despite all the new regulations, there’s still an overwhelming lack of transparency with regards to data collection and usage. Consumers are simply unaware of how much data is being collected, how it’s protected or what’s being done with it.
Think about all the popular mobile apps and services billed as “free” that continue to collect individuals’ personal data for their own financial gains—literally selling it off to the highest bidder. Layer onto that the sheer breadth and depth of data available on a personal mobile device: up-to-the-moment geographic location, searches, browsing activity, photos, social media interactions, person-to-person communications, and more. Now factor in that minors is some of the most active users of such services.
It’s no wonder the average citizen is becoming increasingly alarmed about data collection. I’m alarmed about data collection!
CX and Marketing Leaders Brace for Upheaval
For all the reasons I described above, the drive towards privacy is now an unstoppable force driven by the all-powerful consumer. Couple that with Apple looking to take the lead on privacy, and all the other actions and reactions of big tech—and it really does feel to me like an earthquake for the advertising industry.
Marketing and CX leaders are working hard to prepare for the upheaval that’s coming. Brands are beginning to rethink their strategies, tech stacks, and operations. The impacts will span every area of the business:
- Leadership will need to devise strategies to overcome a near term hit to their ability to drive and predict revenue
- Business won’t have the same data, won’t be able to sell or market in the same way, and won’t be able to use some of the tools they’ve come to depend on
- Analytics will no longer have access to the same data they’ve counted on in the past, forcing them to rethink how they measure and predict customer behaviors
- IT will need to revisit the marketing stack as elements of it will become obsolete (e.g. the DMP), and bring in-house new sources of data that can shore up widened insight gaps
Here are a few sobering stats that begin to tell of the magnitude of the upheaval businesses will be facing of these changes that marketers must consider:
- In a recent survey conducted by Epsilon, 69% of marketers believe the elimination of third-party cookies and IDFA will have a greater impact than CCPA and GDPR
- To put the above stat into perspective, initial compliance with CCPA alone is believed to carry a price tag of $55B
- Facebook stands to lose several billion dollars as a result of Apple’s privacy changes while marketers will need to reassess where and how to effectively spend ad dollars as Facebook becomes a diminished channel for acquisition and remarketing
Preparing to Adapt and Overcome
As a marketing or CX leader, you’re likely going to have to make some important decisions in the near future that will impact revenue, budgets, and every team in your organization. It doesn’t make it any easier than the situation on the ground is changing on almost a weekly basis. The magnitude of the challenge presented by these fast-moving changes can feel overwhelming. It’s tough to stay updated and even more difficult to distill out the potential impacts of new news.
I’d like to be here to help! As this series continues, we’re going to help you think through your strategies and how to best adapt to the changes that are coming.
Tell us How You’re Preparing
Are you in the process of figuring out how to adapt your marketing and CX in a privacy-first economy? I’d love to hear your insights, concerns & questions and (anonymously!) bring them into the discussion as I write this series. Drop me a line at email@example.com.
Stay tuned for the next installment in this series, where we’ll drill into near-term strategies for navigating the AdTech earthquake.