Client marketers are finally beginning to wake up to consumer privacy concerns and “supply chain issues” in the digital ad market by embracing first-party data and moving away from the controversial practice of realtime bidding to strike private deals with trusted publishers.
So says Zenith’s Programmatic Marketing Forecasts 2019 report, which also reveals that the strong growth rates of programmatic’s early days are starting to wane. Global programmatic growth will slow to 22% this year from 35% in 2018, and eventually shrink to 16% in 2021. Not that it is exactly a shrinking violet; globally 69% of digital media will still be bought programmatically in 2020, up from 65% this year.
The UK and the US are the most advanced programmatic markets in share of digital media, where respectively, 87% and 82% of digital media will trade programmatically in 2019. In fact, Zenith forecasts programmatic spend will still reach $106bn by the end of 2020, rising to $127bn in 2021.
However, it seems that the threat of action from data protection regulators – and a reduction in quality data – is starting to have an impact on the market.
The UK Information Commissioner Office has been widely condemned for taking a softly, softly approach to programmatic, especially realtime bidding (RTB) systems.
In June, it published a damning report into the adtech industry, insisting its “immature” understanding of data protection is triggering the mass unlawful use of consumer data for RTB, leaving millions of users at risk of potential harm.
At the time, it gave the industry six months to get its house in order, although many data protection experts believe the regulator is still “pussy-footing” around the tech sector, especially since it only committed to potentially issuing further guidance, rather than enforcement action.
Last week it held another “fact finding” forum behind closed doors but there is still no sign of any action.
Nevertheless, more and more brands are now switching to private marketplaces to transact safely with trusted publishers rather than embrace RTB, the report claims, although it insists the programmatic industry needs to address a number of issues before marketers, publishers and consumers can realise its true potential.
The first challenge is to develop new technology and processes that better balance consumers’ need for privacy with the benefits of targeting and personalisation. GDPR in the EU has made some forms of personal data unavailable, while the California Consumer Privacy Act, which comes into force in January, will further this issue.
Meanwhile, some browsers are blocking the third-party cookies that programmatic advertising traditionally relied upon for measurement, insights, targeting and retargeting.
The report states: “The ongoing death of the cookie means that the industry needs to rethink the way we design targeting and personalisation while respecting consumers’ privacy rights. High-quality, first-party data is more vital to the success of programmatic marketing than ever before.”
It seems this message has not been completely lost on client marketers. As third-party data becomes commoditised and less efficient, brands are stepping up collection of first-party data, provided directly by consumers or produced indirectly by activity on websites, CRM programmes and other brand-owned sources.
Because this is unique to each brand, first party data can provide true competitive advantage. However, Zenith points out that its important to connect customer data platforms (CDPs) to other sources of data for a complete view of each customer and continually measure performance to deliver true people-based marketing.
Increased use of first-party data and CDPs, in combination with other assets, will make programmatic marketing more effective and attract higher levels of investment from brands, the report maintains.
However, Zenith are points the finger at the glut of adtech businesses that sit on the supply path between publishers and brands, charging fees, and providing unknown value due to their lack of transparency. The report urges brands and buyers to review every platform they have a contract with, to ensure they contribute to campaign goals transparently and effectively. Those that do not add value should be jettisoned, the report concludes.
Zenith head of forecasting Jonathan Barnard said: “The industry hasn’t grappled with the privacy and personalisation issues. Growth is being tapped out because there’s a ceiling at the moment because of these issues. [However] we do see first-party data as being really, really important. It’s one of the core building blocks to a proper solution to these problems.”
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