How Data Privacy Regulations , Privacy Browsers and iOS Change Publishing Going Forward

Being in Digital Media we have become accustomed to an annual shift of the winds into a new trend.  Over the years we experienced the evolution of ad networks, then cookie re-targeting, cookie behavioral targeting, programmatic, multi-touch attribution, mobile, ad fraud mitigation, video, CTV, and now Privacy.  

Each shift in digital media has always created both pain and new business opportunity.  Often these changes have required massive tech investment across the spectrum from publishers to ad tech and ad agencies.  Most all of these changes have been somewhat unfavorable to web / app publishers diminishing their ability to capture most of the ad spend.

For a publisher, at the end of the day, capturing ad spend is the most important element of running their ads business.  Publishers sell direct, open exchange, custom packages, 1st Party Data and through resellers.  All of these are expensive tactics for a publisher to run.

I estimate that publishers only get about 10 cents on the dollar from a brand.  Let's visit how a dollar flows from a brand to a publisher:

• Ad Agency - Media Strategy, Account Strategy, Brand Strategy, Media Mix Fees
• Ad Agency - Media Buying Flat Fee Services 
• Ad Agency - Programmatic trading desk fee flat or arbitrage
• Ad Agency - GAM Ad Serving and Analytics
• DSP Fees
• DSP Data Fees or Agency Data Fees
• Loss to Publisher as buyer finds a way to buy the impression at the lowest available price
• SSP Fees
• IVT / Viewability Fees (Agency, DSP, SSP, and Publishers all pay separately for each impression)
• IVT / Viewability Hidden Fees of Lost Ad Impressions due to incorrect scoring of an impression
• Ad Serving Fee
• Ad Serving Time out / broken creative / VPAID errors / etc
• Publisher Sales Operations Team
• Malware service to ensure ads are safe to users
• Consent Management Platform
• Legal Fees 
• Ad Product Team to keep up on tech changes
• Sales Team - Salary + Commission
• Sales Management

By the time a major brand like Toyota or Coke takes $1,000,000 out of their media budget and applies that to the media landscape, their dollar is paying the publisher $100,000 or perhaps less.  

So, how will this shift in privacy change the math?

Now publishers will need to determine if adding a CDP / DMP to their mix is needed, if they haven't already taken the step?  Most publishers have not, but many majors have begun this process over the past 5-7 years.  

Advantages to the Publishers opting for using CDP over FLoC:

• Less potential for media arbitrage on user level data - Plus for Publishers
• Context and Publisher Brand Reputation mean more the the buyers
• More Direct Deals, lowering total cost
• IVT and Viewability are TBD - unsure how this will be impacted as these systems rely on PII
• Selling Big Packages with time based commitments vs. Open Market or PMP limitations
• Protecting very high value shopping or contextual proprietary data from leaking into a 3rd Party data ecosystem, forcing buyers to get your audience on your site, vs 3P cookie targeting on low cost medium.  
• Scarcity of data targeting should result in scarcity of buying inventory / increasing CPM's for high value contextual experiences

Disadvantages of CDP over FLoC

• Media buyers tend to go for what is easy and familiar / Google will have a huge advantage with FLoC and media buyers will adopt over higher CPM direct deals
• Attribution will be diminished and clicks will become important again - even though a very flawed measurement method.  It will be easier for a media buyer to buy clicks from FLoC vs individual publishers
• It's difficult and expensive to develop a strong CDP programmatic offering and will skew to larger mulit-site web properties who have the resources to pull this off
• It will take more selling to agencies to gain traction as a publisher with 1P data
• Agencies will question viability and ComScore / Nielson Match to target audience, vs FloC being a more trusted data source

Each publisher will need to react to this change, and some have more at stake than others.  In all this will be yet another tax on the business, except for the sites with great contextual content, shopping, reviews, concentrated interest and audience segments / high volumes.

I believe this will lead to a consolidation of websites into large ownership groups where they can aggregate 1st Party data with massive scale.  This will be the only path forward, as i see it.  Go Big or Go Home (out of business).

So, I anticipate a significant amount of M&A associated with cash rich companies seeking to buy highly contextual verticals at scale.  Some will focus on shopping, others tech, others lifestyle.  Perhaps some will diversify in all making them attractive to a multitude of brands.

#ChrisVeraello