Digital Ads and Star Formation

Since January, I've been on an advertising industry Listening Tour: holding 100 meetings - in person and virtual - to listen (and share the trends I'm seeing) with industry CEOs and other leaders. The purpose of the Tour has been to get a complete 360-degree view, as an independent who isn't full time on anyone's payroll, of our industry during this time of major market change. For more information on the Tour, please read my first Tour post, "100 Visions and Parallax"

Supernova

We're in the middle of a supernova. No, not of our sun, but rather of the digital advertising ecosystem.

We all learned about star formation in high school: Gas coalesces. A star ignites. A few billion years pass. It all ends in a supernova explosion.

But the star explodes for a reason. Over time, the star creates new structures and elements which make the core unstable. The explosion itself forms more structures and elements from the forces unleashed, which over time are pulled back together to ignite a new star with the newly created elements at its core, burning hotter and brighter than the last star. And this happens over and over again.

The Explosion of our Ad Industry Star

The first digital industry star had content-adjacency as its core element. If an agency wanted to buy an audience, they bought on sites that "index" highly to that audience. There was a level of trust between the advertiser and publisher... until that trust began to erode. Third party ad serving and verification were born, and that instability triggered the first supernova.

The star that formed from the remnants had the cookie (and in non-display formats, other identifiers generated by code and not known to the consumer) at its core. The cookie was a rickety identifier, but it was an anchor to which both buyer and seller could latch on. The cookie was used as the foundation first for tracking in a 1st party state, then targeting in a 3rd party state, then came ad networks... and finally: RTB. The power in more and more transactions shifted from seller to buyer, for the buyer could buy on their own data regardless of the publisher. The cookie made the internet we see today. It allowed both evolution and innovation in so many ways. Along the way, advertisers utilized these new technologies built on this foundation to try all sorts of tactics to reach their consumers, from sequential messaging to audience targeting to shopping cart abandonment retargeting. But it also caused the internet to become "creepy" (despite the IAB initiative to try and say it's not!) to consumers, and the resultant regulation hastened the destabilization of the core until the 3rd party cookie was receiving too much pressure for it to handle.

First Apple then Google announcing - and in Apple's case, already implementing - the death of the third-party cookie was the start of the supernova. We're in it now. But a supernova is not a small explosion. It's a big one. And just because it starts with the death of the third-party cookie, doesn't mean it ends there.

The End is but the Beginning

I'm 91 meetings into the 100-meeting Listening Tour, and some things are clear - whether or not the participants (CEOs, CROs, and heads of product and tech from the buy side, the sell side, and the tech they both employ) want to have the words associated with them individually: the cookiepocalypse is just the start. Already there are plans by the browsers to obfuscate the USER AGENT, one of the many fields in the HTTP header. And considering how many of those fields are used by various companies to fingerprint-despite-saying-it-isn't fingerprinting (a rose by any other name is still a rose: when you take a few dozen non-cardinal signals and use the Venn diagram of those field values to create near-cardinality... it's fingerprinting), it's only a matter of time if some or all of those signals are blocked. Next to the game of whack-a-mole will be IDFAs, AAIDs, MAIDs, and even IP addresses. The cookie... and its replacements... are going away. It's not just going to affect display, either. It will affect mobile rather quickly, and, while it may take a few more years as the players are different, you'll see similar trends in video ecosystems, too.

You can't stop a supernova. You can't regulate away the core. The governments of the world aren't going to tell Google and Apple to stop, nor are they going to make browsers a regulated utility any time soon, if ever. You can't fix it by rushing to a replacement - because the star we counted on has exploded. All you can do is ride the wave, watch for the new structures that are forming in the explosion... and take advantage of the opportunity on the way in.

As an industry, we need to stop the yelling, stop the threats of lawsuits, stop the call for the browsers to be regulated. We need to watch what is happening, learn from it, and help. And several companies are already starting to do so... and will reap the rewards in the new ecosystem as a result.

Does this mean the death of the identifier and identity? Absolutely not. If anything, it will make those things more valuable. Why? Because identity and the identifiers that power it - as well as probabilistic "modeled-paneled" (created by a model from deterministic data and measured by a statistically-relevant panel) systems - all have a place in the star that's being created with a new element at its nucleus.

Our New Nucleus: The Element of Trust

Let me say it again: TRUST. In fact, I can't say it enough. We've lost it in our industry. And that's what's caused everything that put enough pressure on the already-tenuous cookie to trigger the supernova. It's the cause of the browsers stepping in. It's the cause of the regulation. And it's time to gain that trust back.

If there's one thing that was monolithic in every one of my interviews, it was that we need to create trust-based relationships with buyers. My age 17-22 children are my personal focus group: they trusted Amazon and Hulu and Netflix and the New York Times and their cable company and many others with their personal information. No consent is needed in their book (regardless of what the laws and regulations say - those will morph over time) for those companies' standard use cases. But other uses? That requires either an understanding within the trust structure... or consent. This includes elements of trust and consent not even yet contemplated in regulation: the consent not only to be targeted, but the consent (or other clear signal for trust) place-by-place to be recognized in a particular environment.

Identifiers such as those based on encrypted emails (as you never want to send an encrypted email by itself in the bidstream) and similar have a place of power in this new star - for they are gathered from consumers explicitly giving their information. But in other trusted 1st party publisher environments, the gathering of usage data may be acceptable too. In other parts of the environment, it may be acceptable to use modeled-paneled and aggregate groupings - or "privacy-preserving technologies" such as differential privacy and others - to achieve a world where the ecosystem works for advertisers, publishers, and yet still preserves the trust of consumers. And context may be the secret to mining value from the rest of the ecosystem.

In my next article, I'll share more about how I see the ecosystem forming based on the input from the 91 generous minds who have shared their points of view as I continue down this Listening Tour path. The new world lit up by this new star will have multiple dimensions, all living simultaneously and overlapping each other - a Multiverse of solutions.

Call to Action

Besides the "help figure this out!" call to the industry... Agree? Disagree? Share the article with your network of colleagues. Comment on it. Let me know your thoughts. We're riding this supernova's energy wave together.

Thank You

Thank you again to all those industry luminaries and thought leaders who have taken the time to share their visions, talk through trends, and give me the gift of parallax.

If you're interested in sharing your POV to inform what I'm hearing, please feel free to reach out. If you found these insights valuable, please share it to your own contacts, as well.

About the Author

Andrew Kraft is one of #thesame300 who show up to every ad industry conference. Currently an independent consultant on a Listening Tour of the industry, Andrew was most recently CRO and COO of Maven, a publisher technology provider and parent company of TheStreet.com and Sports Illustrated's print and digital publications. Prior to that, Andrew was the "jack of all trades" member of the executive team at AppNexus (purchased in 2019 by Xandr, a division of AT&T), where he served in a variety of leadership roles operating elements of the business through times of rapid growth over a seven-year span. For four years prior to that, Andrew led the publisher business at Collective from its early days through three years of growth after serving for three years as the head of revenue and member services during the early days of the Interactive Advertising Bureau. He started his career as an engineer in the early days of Sapient after dropping out of MIT senior year to help power the birth of the web. He lives in New Jersey (where he can be most regularly seen at Newark Airport Terminal C wearing his signature #travelsocks) with his wife and four children. Oh, and he curls. Yes, really. The game on ice.