Travis Clinger
In business today, many believe that consumer privacy and business results are mutually exclusive — to excel in one area is to lack in the other. Consumer privacy is seen by many in the technology industry as an area to be managed.
But the truth is, the companies who champion privacy will be better positioned to win in all areas. This is especially true as the digital industry continues to undergo tectonic shifts in privacy — both in government regulation and browser updates.
By the end of 2022, all major browsers will have phased out third-party cookies — the tracking codes placed on a visitor’s computer generated by another website other than your own. Additionally, mobile device makers are limiting identifiers allowed on their devices and applications. Across industry verticals, the global enterprise ecosystem now faces a critical moment in which digital advertising will be forever changed.
Up until now, consumers have enjoyed a mostly free internet experience, but as publishers adjust to a cookieless world, they could see more paywalls and less free content.
They may also see a decrease in the creation of new free apps, mobile gaming and other ad-supported content unless businesses find new ways to authenticate users and maintain a value exchange of free content for personalized advertising.
When consumers authenticate themselves to brands and sites, they create revenue streams for publishers as well as the opportunity to receive discounts, first-looks and other specially tailored experiences from brands.
To protect consumer data, companies need to architect internal systems around data custodianship versus acting from a sense of data entitlement. While this is a challenging and massive ongoing evolution, the benefits of starting now are enormous.
Putting privacy front and center creates a sustainable digital ecosystem that enables better advertising and drives business results. There are four steps to consider when building for tomorrow’s privacy-centric world:
Transparency is key
As we collectively look to redesign how companies interact with and think about consumers, we should first recognize that putting people first means putting transparency first. When people trust a brand or publishers’ intentions, they are more willing to share their data and identity.
This process, where consumers authenticate themselves — or actively share their phone number, email or other form of identity — in exchange for free content or another form of value, allows brands and publishers to get closer to them.
This trust building requires two things. First, a commitment to developing positive interactions and using language that clearly explains the value exchange. Second, there must be allowances for people to signal both what they want and what they don’t want.
Consumers are comfortable with personalized ads and communications from their favorite brands and publishers, but they want something in return — be it quality content, first dibs on discounts or early access to new offerings.
People have made it clear they want a say in how their data is collected and used. Studies show 91% of individuals are concerned about the amount of data companies can collect about them, with 72% having stopped using a product or service altogether because of those concerns. These striking statistics confirm true innovators will be those who view privacy as the foundation for building the future that we want.
Any digital initiative designed around using consumer authentications to support advertising must be rooted in a trusted value exchange. That means it must be inherently privacy forward and always respect consumer choice.
The entire industry is looking for ways to rebuild and adapt better privacy standards. For example, Microsoft’s PARAKEET connects publisher data to marketer demand, keeping the action to where it is today, using existing adtech infrastructure to prioritize consumer transparency and control. Google’s FLoC leverages its browser to anonymize personal information and allow consumers to authenticate themselves and opt-in and out of ads easily.
Though these are different workflows, ultimately, industry proposals aim to improve end-user privacy while continuing to drive meaningful publisher revenue to uphold the free internet. The more companies become familiar with and provide feedback on these, the stronger the system will be.
Avoid unsavory shortcuts to consumer identity
Know your partners and the methods they’re using before agreeing to advertise on any given platform. As the backbone of the open web, publishers sometimes feel the end of the cookie means the end of scale, which leads them to consider tactics that claim to offer the allure of scale, but don’t pass the sniff test when it comes to privacy. For example, brands operating digitally today must avoid getting to know their customers through methods like fingerprinting, where consumer permission and authentication is not required.
Technically speaking, fingerprinting pools a set of signals from a variety of user device settings and characteristics, such as screen resolution, operating system and model, to create a “synthetic” ID in place of a cookie. By ingesting consumer data without permission, fingerprinting puts publishers and the brands they work with at high risk. In fact, all major U.S. browsers are against it. To say it’s sketchy would be an understatement.
This is especially important for publisher and brand startups, which often start out with limited resources for customer relationship management (CRM) and must work to build credibility and familiarity in their industries. Taking shortcuts and building a strategy around fingerprinting is a lot like building a business on a sandcastle. If that sounds secure, think again.
3 adtech and martech VCs see major opportunities in privacy and compliance
Try an authentication strategy
Most leaders understand that data is king. However, collecting, managing and activating on data can be tricky in today’s environment. Luckily, we can all learn from publishers who, on the front lines of advertising shifts, have learned how to authenticate more users in order to stay alive.
Sustainable monetization for publishers isn’t just important for their bottom line, it’s essential for free speech and accessibility to truthful information. The cookie changes represent an existential threat to the publishing industry’s ability to provide free content in exchange for ad views. To ensure a few tech giants don’t control the flow of information, independent publishers have sought new ways to build trusted relationships with consumers.
Publishers’ ability to lean into the consumer value exchange leads to more users trusting and valuing them enough to provide an email or mobile number. Not only are these users more vested in the brand, but they tend to spend more time onsite, consuming content. More engaged users are disproportionately more valuable users, as more time spent onsite drives more advertising opportunities.
As just one example, the initial results of Microsoft Advertising and LiveRamp enabling brands to buy authenticated inventory show that Microsoft Advertising CPMs alone increased by over 40%.
For businesses and publishers alike, authenticated users (think: fans of the brand) are essential to delivering better business outcomes. The real benefit to building trusted relationships with consumers is the ability to personalize experiences and grow relationships. In fact, 85% of people only consider brands they trust. A privacy-conscious and transparent approach is the only path toward building brand love and long-term loyalty.
Authenticated solutions can, and should, enable a business to connect their data without sharing it. Further, every brand should have full control over who accesses and can transact on their identity. There have been too many instances of platforms building audiences off nonpermissioned data and ultimately not respecting the consumer’s privacy in the process. Some examples of ways to generate authenticated data include:
- Ask consumers to provide an email address in exchange for early notification of funding rounds or business news.
- Provide a discount in exchange for customers signing up for text alerts.
- Place some content behind a “freewall” and ask readers to create a membership in order to access the bonus section.
For anyone hoping to monetize data inventory and connect with consumers, the clock is ticking. Those who begin to layer in authentication capabilities now and use the next few months leading into this year’s holiday season to build first-party relationships with consumers will gain trust and benefit from increased ROI. About 40% of the world is already cookieless, and value can be achieved today.
Don’t rely on Big Tech to build customer relationships
Widespread data fragmentation and the complexity of how data is used have driven many advertisers to seek out simple-to-use addressable solutions that deliver strong results. This is why we’ve seen 65% of dollars in 2020 flow into the walled gardens (e.g., Facebook). The walled gardens have always had strong addressability — they’re built on consumers sharing their data. If a brand’s primary objective is to drive a meaningful consumer journey and maximize the ROI of ad spend, walled gardens are a shortcut.
Companies should look to the walled gardens to learn how to build consumer relationships and better monetize their inventory, they should also be aware of the lack of transparency. Walled gardens are authenticated, but the businesses using them are not able to access the underlying data or campaign results to further campaigns and drive business goals. To compete and build a strong data foundation, focus instead on building direct relationships with consumers as a brand and advertising with publishers who have these same relationships, but enable transparent media buying.
An ecosystem of brand-consumer interactions based on authentication and consent not only prioritizes privacy, it simplifies the media planning, buying and measurement cycle so companies can work on fortifying meaningful connections across the digital supply chain. Audiences live everywhere, not just in walled gardens.
With clarity of vision, privacy can improve business outcomes. It’s essential to recognize the long-term, commercial impact of creating a sustainable, healthy and competitive web that works better for everyone.
Prioritizing consumer trust and transparency is ethically the right thing to do, but as it turns out, it helps the bottom line, too. It’s impossible to overlook the tangible business impact and the halo effect this imparts on enhancing the consumer experience. The fundamental shift toward a more trusted ecosystem is not an incremental approach. It’s a visionary one.
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