Are Advertisers Ready To Ride It?

An AdTech industry veteran, Martin is CEO of Ogury, a global leader in personified advertising.

I’m a little amazed how generative AI, mainly in the form of ChatGPT, has dominated the attention of the press over the past six months—not to mention the water cooler impact it has made across the advertising industry and society at large. While AI’s importance in advertising will grow, there is a more immediate game-changer that I predict will have seismic consequences for our business.

In less than six months, in a more accelerated manner than had been anticipated, Google will begin its long-awaited deprecation of third-party cookies—those lines of identity-based code that have acted as the primary technological engine of consumer tracking by advertisers.

And as a consequence of the major global trend toward restoring consumer privacy—which has often been compromised during the ID-based era of digital advertising this past decade—cookies are on the verge of obsolescence. The broad digital advertising ecosystem that encompasses brand marketers, online publishers, media agencies and ad tech purveyors is facing a strategic crossroads for future sustainability and success.

There has been much hand-wringing from concerned members of the ad community who fear that AI could jeopardize jobs in digital advertising. But I think they are not seeing the forest for the trees, as the end of cookies and other IDs will bring about a revolution that will be just as disruptive as AI. And this same industry is clearly not ready for it: According to a global survey commissioned by my company, 41% of advertisers are only moderately, if not at all, familiar with targeting methods other than cookies or IDs.

The Four Waves Of Advertising

To fully appreciate the pivotal importance of this imminent post-ID and cookie era, it would be instructive to look back at the previous three epochs to understand the throughline of technological innovation that binds them together.

First, we had the search advertising wave that rose with the preeminence of Google’s search engine and transformed marketers’ ability to optimize consumer-intent advertising. The second wave followed with the rise of social media, driven largely by Facebook’s dominance in amassing first-party consumer data.

We are now in the third wave of digital advertising, that of retail media—in which I personally played a role leading an ad tech pioneer’s retail media practice. Retailers are leveraging their unique access to consented consumer data to generate new revenue streams through the creation of retail media networks that allow marketers to reach their customers across many verticals at their point of purchase. In quick order, retail media has established itself as the third-fastest ad channel in terms of growth. According to GroupM’s Global Mid-Year Forecast, it is expected to grow around 10% this year to hit $125.7 billion.

The social media and retail media waves have been fueled by the native ability to harness troves of first-party data. Consumer data—freely given and with full consent—is the consistent dynamic that binds these two movements together. But aside from retailers and walled gardens—with social media platforms in the lead— there is a whole ecosystem of companies (and advertisers) that still rely on third-party cookies and IDs.

And, as we have seen, the disappearance of these identifiers is imminent, with 2024 shaping up to be the dawn of a new era.

This is why the fourth wave will be the era of ID-less advertising. In my view, this wave is unstoppable, and those who stubbornly cling to the nonviable idea that IDs will maintain scalable relevance are hiding their heads in the sand. Why?

First of all, users are rejecting advertising tracking en masse. At the same time, regulators all over the world are attuned to consumers’ concerns and have responded with a multiplying raft of privacy regulations, like the GDPR and the CCPA. Safe to say, there will be no putting the privacy genie back in the bottle.

The Ride To The Top Starts Now

Here’s the good news: We have the opportunity to craft a scalable, privacy-first paradigm in place of the old practices our industry has relied on. But it has to happen now. There are three immediate steps that digital ad players can take to put them on a new path forward.

Step one requires acknowledging that the era of personalized advertising is indeed ending. Consumers and regulators are no longer accepting third-party cookies for audience targeting. I think those segments of our industry that continue to insist on some next-stage form of ID-based targeting to replace cookies are truly living in denial.

After acceptance comes action. Step two means doing a complete assessment of your brand’s data technology infrastructure, which includes an analysis of available first-party, fully consented consumer data. Once you have determined what tools and capabilities you have in-house, you will now be able to prioritize what gaps you need to fill.

This leads me to step three, which is instead of focusing on user IDs, marketers have the wherewithal to set their sights on digital destinations where content is consumed. I believe this alternative offers our industry a promising pathway to implement a scalable, privacy-first approach to replace the problematic identity-based modality of the recent past.

Still, according to GroupM, AI is expected to impact half of advertising revenue by the end of 2023. However, the imminent disappearance of third-party cookies is reshuffling the cards in this industry like never before.

I truly believe the impact on digital advertising in the next few months will be much more significant than any detriments caused by ChatGPT or other AI products. The implications of emerging AI definitely warrant industry attention; however, transitioning to an ID-less digital ecosystem could be an even more urgent endeavor that requires action from the entire advertising industry.

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