1. Renewed focus on transparency in programmatic media buying
The Association of National Advertisers (ANA) commissioned a new in-depth study of the programmatic media buying ecosystem, as a means to address what the ANA’s CEO has characterized as a system “riddled with material issues, including a lack of transparency, fractured accountability, and mind-numbing complexity.” The ANA has said that worldwide programmatic ad spending was expected to exceed 200 billion in 2021, and estimates from eMarketer peg worldwide digital ad spending as on track to grow from $455 billion this past year to nearly 646 billion by 2024. As reported in an article from MediaPost, consulting firm PricewaterhouseCoopers (PwC) estimates that more than 70% of an advertiser’s budget does not result in media that reaches the end consumers for programmatic purchases, when you take into account “ad fees, fraud, non-viewable impressions, non-brand-safe placements, and unknown allocations.”
A similar report on transparency in programmatic advertising issued in 2020 by the Incorporated Society of British Advertisers (ISBA), also in conjunction with PwC, likewise revealed that 15% of total advertiser spend on programmatic media was “unaccounted for.”
Given these concerns, the latest investigation from the ANA will look at (1) how advertisers’ media budgets are absorbed among all players in the ad tech supply chain from demand to supply side; (2) how this process works within the walled garden platforms (e.g., Google, Facebook, and others); and (3) if, and how, media purchasing models affect transparency to the advertiser (e.g., comparing when brands buy through media agencies versus directly using in-house resources).
The ANA announced in December that its investigation will be led by PwC with assistance from Kroll, an investigative firm, and the Trustworthy Accountability Group (TAG), an information sharing and analysis organization co-created by industry trade organizations such as the American Association of Advertising Agencies (4As), the ANA, and the Interactive Advertising Bureau (IAB). Results are expected to be released in October 2022 to coincide with the ANA’s Masters of Marketing Conference, and will include PwC’s findings and guidelines.
Industry participants in the US will likely recall the ANA’s last deep dive into the media buying process, which resulted in the release of its 2016 media transparency report. That report focused largely on transparency issues on the demand side, namely between advertisers and their media agencies and the role media agencies play for their clients in investing their media budgets, whereas this investigation is intended to look at the supply chain more broadly. The 2016 report prompted some advertisers to more closely scrutinize their media buying processes, both through formal audits, as well as re-negotiations of their contracts with media agencies. The ANA also issued a template contract for advertisers to use in engaging media agencies to provide their services, which was intended to address many of the findings from the 2016 report. Although it’s difficult to measure the effect of the last report on the industry as a whole, many saw greater attention paid to transparency and fraud issues in digital advertising.
I would expect a similar response following release of the ANA’s 2022 report, so industry participants – advertisers, media agencies, publishers, and other ad tech companies in the supply chain – would do well to get their arms around their current digital advertising practices and contracts, and plan to dedicate resources to address the report’s new findings as early as the end of 2022. For companies entering into new, long-term media relationships now, you may want to build in optionality to address the new guidelines that PwC recommends, to ensure your organization’s media buying and selling activities remain consistent with industry best practices going forward.
2. Testing of new cross-media measurement and identity solutions
- Focus on developing uniform cross-media measurement standards
The problem of different measurement standards being used across media channels (e.g., linear TV, connected TV, digital media) is also one that has been identified by the industry as an area of focus for 2022, particularly given the impending loss of cookie-based measurement systems. For months, advertisers have insisted that uniform measurement standards across TV, digital, and other channels are necessary for them to (i) accurately measure and verify who is seeing their ads across channels in any given campaign, (ii) cap the number of times the same individual will see an ad (called frequency capping) and (iii) assess the returns on their media investments. Likewise, it is within media companies’ best interests to have accurate and uniform measurement standards so they can support their ad pricing and meet advertisers’ campaign measurement and ad frequency capping needs. And for all parties, there is incentive to avoid the battles of the ad verification vendors on the back-end of campaigns, which holds up billing, payment, and requires significant resources to work through discrepancies in campaign reporting.
For these reasons, various industry trade organizations and participants are testing new measurement methods that can be broadly used across channels.
The ANA has launched a cross-media measurement initiative which “aims to create a transparent system of measurement that restores essential metrics of campaign measurement and provides complete measures of all ad exposures, including deduplicated reach and frequency across all platforms.” The ANA is partnering with several measurement partners, including VideoAmp and Comscore, to pilot various solutions by the second quarter of 2022. The pilot with VideoAmp, for example, will test the use of Virtual ID (a solution designed to address the loss of cookies and other personal identifiers across digital media) for TV advertising in the US. The TV networks’ trade group, the Video Advertising Bureau (VAB), and the American Association of Advertising Agencies (4As) announced their support for the ANA’s cross-media measurement initiative last month, reflecting the broad appeal for reform in this area.
In addition to the ANA pilot, media and measurement providers are also testing new measurement capabilities this year; for example, Nielsen is expected to launch its cross-media measurement solution, Nielsen One; and various TV networks are working with ad agencies to test alternative measurement providers like VideoAmp and Comscore for measurement purposes in campaigns including both digital and TV ads.
We can expect to see results from these various tests emerge later this year, and hopefully one or more of these solutions will receive widespread industry support to enable the implementation of uniform cross-media measurement standards.
- Focus on alternative identity solutions in a post-cookie world
Given these changes, advertising trade organizations and industry participants are testing different solutions to enable addressable advertising based on non-cookie identifiers, like individual users’ email addresses or phone numbers. For example, the IAB, through its browser/operating system ads testing task force, is collaborating with others in the industry to develop a framework for personalized advertising in a cookie-less world, with the stated goal of coming to an industry consensus on the best approach for all entities in the ecosystem, which it will then share with Google to consider in implementing its own solutions, which are often necessarily adopted by the rest of the ecosystem. The IAB is also working with programmatic exchange The Trade Desk, which has started to pilot use of its “unified ID 2.0” as a “privacy-safe” identifier based on user email addresses that is interoperable with various other ad tech participants. Numerous other industry vendors have similarly announced testing of their own proprietary solutions.
We can expect to see more of these identity solutions available for testing over the course of this year, although it remains to be seen which, if any, will secure widespread industry support or be declared legally compliant with the latest privacy regulations.
3. Doubling down on first party data
As a direct result of the changes outlined above regarding restrictions on how consumer data can be collected and shared with third parties for ad targeting, advertisers and publishers have been actively investing in their own customer database profiles to instead leverage their first party data for their marketing efforts. We can expect such efforts to redouble this year, given the impending deadline of Google’s deprecation of support for third-party cookies by 2023. As reported in a recent article from the Wall Street Journal, advertisers and media companies are turning to their loyalty programs, as well as launching new newsletter and subscription offerings, contests, promotions, and events, to directly engage with their customers in ways that will allow them to receive more information for their customer database profiles, so they can continue to deliver personalized advertising without relying on data collected from third party providers. The benefits of collecting this data from consumers directly are threefold: (i) the brand’s customers are willingly supplying this information in exchange for certain benefits offered by the applicable brand (e.g., a discount, premium newsletter content, etc.), (ii) the information provided is typically more accurate than any third party profile that’s been cobbled together from various data sources, and (iii) brands can get more granular detail about their customers’ interactions with them – everything from a customer’s preferred store locations and products they typically purchase to how much the customers typically spend for any given purchase. As the WSJ article notes, there are also significant cost savings for brands who are able to rely on their own customer data, as it can be less expensive to supply your own data for targeting on third party media and tech platforms, rather than using the data sets they supply.
While companies’ investments in their own data collection efforts will help them avoid certain privacy laws regulating third-party data transfers, companies must still be mindful of ensuring their own data collection efforts are done in a privacy compliant way, and should pay attention to contractual rights and restrictions they have with respect to any customer data collected through limited-time contests, promotions, and sponsorships to ensure they align with their longer-term data use goals.
4. Continued proliferation of retail media networks
It seems every time I read a media industry alert, it’s about the launch of a new retail media network – by which I mean, a retailer who has set up an advertising program on their platforms (websites, mobile apps, email lists, social media accounts, through publisher partners, etc.) to allow their partners to target the retailers’ customers directly, typically on or near the point of sale. The most well-known retail media network is probably Amazon’s, but in the past few years alone, everyone from traditional retailers to mobile e-commerce companies have launched their own ad programs. And it’s easy to understand why – these retailers have incredibly valuable first party data about their customers, which they can offer to their partners to help them tailor their advertising directly to those purchasing their products from the retailer, and at the exact point in the sales funnel when it really matters. No doubt the increasing reliance on retail media networks was also helped by increased at-home shopping during the pandemic – but regardless, it seems retail media networks are here to stay.
Relevantly, they are becoming increasingly sophisticated in their ad products, delivery mechanisms (often partnering with programmatic providers to deliver off-platform ads), and ad verification offerings – many can provide the same type of customer match solutions as the largest tech platforms, matching advertiser partners’ first party data sets with the retailers’ own customer transaction data to create a hyper-targeted campaign.
Of course, there are many considerations that should be top of mind for companies involved in retail advertising. For brands who want to advertise with retail media networks, it’s important to determine whether you are getting the same protections, reporting, and validation as you would in traditional publisher campaigns to address click fraud, brand safety, and measurement issues, among others. This may not always be possible since many of the newer retail media networks do not allow the same level of transparency and prohibit use of brand-selected tags/vendors for ad verification purposes. On the other side of the transactions, retail media networks need to be clear about the levels of transparency and metrics they can deliver in their media purchase contracts, and flag where there may, justifiably, be differences from what advertisers and media agencies can expect for their campaigns on the retailers’ channels, as compared to their traditional campaigns.
5. Digital advertising in the new world – the Metaverse, Zoom, and the latest channels for ad distribution
It wouldn’t be a 2022 digital media or tech forecast without a mention of the Metaverse, which can be understood (I’m told) as an immersive, 3D virtual world that will allow for the interoperability of various experiences and functions (e.g., payments, messaging, A/R, VR, etc.). In addition to all of the other things our avatars can and will be able to do in the metaverse, digital advertising is surely on that list. There are already a number of ad tech providers that offer advertising solutions to help brands deliver ads in virtual environments (like video games) and provide the type of campaign measurement that advertisers expect for their traditional media campaigns in these non-traditional channels, and they will no doubt extend these offerings to the metaverse.
In addition to the Metaverse, increasingly, other technology providers and content distributors are getting into the digital advertising business for the first time. Some of us should now expect to see ads while on our daily Zoom calls, or on charging stations while charging our electric cars – and despite the novelty of the distribution channel, this really shouldn't come as a surprise.
While the same regulatory, privacy, and brand safety considerations that apply to traditional advertising placements apply to those in these new worlds, companies should carefully scrutinize these new distribution channels, including with respect to the nature of the platforms, their data collection, and their interoperability, to understand how best to achieve the same goals of compliant and brand-safe advertising. For example, how can an advertiser ensure that their ad placed in the metaverse will not appear next to objectionable content? Will the same post-delivery ad verification tools work? Zoom, for its part, was careful to address some of the privacy questions that were likely to arise with respect to its new advertising program by stating clearly in its ad program announcement that “we will not use meeting, webinar, or messaging content (specifically, audio, video, files, and messages) for any marketing, promotions, or third-party advertising purposes.”
While this post outlines just a few of the major developments on the horizon, it is clear that 2022 is going to be a year of significant uncertainty and advancement in the digital advertising and ad tech space. Industry participants will need to stay on top of new developments and should expect to revisit their privacy and advertising practices, and related policies and contracts, in response to many of the changes ahead.