Contextual Advertising is Set to Soar in 2021 and Beyond.

06/07/2021

Mark Bembridge, CEO, Smartology

Privacy online is coming of age and contextual targeting is helping. In the opening paragraph of his March 3rd Google blog, David Temkin sets the scene with a recent Pew Research Center study which finds, ‘72% of people feel that almost all of what they do online is being tracked by advertisers, technology firms or other companies, and 81% say that the potential risks they face because of data collection outweigh the benefits’. 

As we’ve seen with the recent ‘social dilemma’, we should be careful what we wish for online. Audiences are wising up to online advertising industry tactics and tiring of so called ‘relevant’ ads following them across sites. While nomenclature adopted by those in the know, such as ‘cookie-pooling’, ‘frequency-capping’ and ‘retargeting’, aren’t widely understood by citizens in general, there is finally a major upswing in concern around data exploitation. WhatsApp can attest to this after the public outcry following its recent privacy policy changes.  

Ever since Temkin’s blog, announcing Google would block third party cookies from January 2021, my LinkedIn feed has been drowning in articles about FloC (Federated Learning of Cohorts), Unified ID 2.0, fingerprinting, IDFA and the like. The blog made front page news across every trade media publication alongside extensive editorial across all the major news outlets. Campaign, AdAge and Adweek all used the word ‘bombshell’ in their headlines. 

Phasing out third party cookies by 2022

Fast forward to June this year and Google has backtracked on delaying the phasing out of third party cookies and shifted the date forward by almost 2 years, demonstrating that privacy is a complex challenge which they need more time to resolve. While Mozilla and Apple blocked third party cookies back in 2019, Google’s business is more heavily reliant on advertising and third party data. Their alternative ‘FloC’ approach has run into problems in Europe with GDRP regulation. Meanwhile they correctly surmise that the industry as a whole needs more time to resolve privacy; genuine panic set in across the sector during the first six months of 2020 as the end of the year deadline drew nearer. 

Tim Cook opened 2021 by calling out privacy as ‘one of the top issues of the century’ putting it up there with climate change in order of magnitude. Apple’s imminent retiring of Identifier for Advertisers (IDFA) has Facebook up in arms. It should come as little surprise that Google has now announced it will focus on its own FLoC approach at the expense of adopting other industry ‘identity solution’ initiatives.  

These are businesses who whether we like it or not, are responsible to their shareholders and will understandably promote growth and self-interest. That their tactics support this should not be reason to cynically argue their positions only fuel the preservation of big tech. Of course, they do and to think otherwise is naive. Oracle’s ‘We’re all FLoCed’ blog only reasserts this position.  

Moving to be less privacy intrusive

With the glaring exception of Facebook, that big tech is moving to be less privacy intrusive is to be celebrated. Big tech in particular has plenty to lose if it buries its head in the sand on this issue. US antitrust regulators have several of the major players in their sights and in the UK, the Competition Markets Authority is investigating whether Google’s Privacy Sandbox plans are truly in the interest of end user privacy.  

Meanwhile independent players have real reason to be concerned. At last count well over 50 identity solutions are available. Media agencies report being in an impossible position in terms of deciding which horse to back. The Unified ID 2.0 from The Trade Desk is leading the race with major players onboard including LiveRamp, Criteo, Nielsen and Xandr as well as global publishers backing their efforts. There is no doubt that they will continue to exist as an alternative to the Google super-power even while more clients move to Google for the sake of simplicity.  

But even if one identity solution becomes the de facto standard in due course, identity solutions still face at least two major hurdles. The first is they require users to consent to sharing their email address in order to build scale which is by no means a given considering the public’s increasing concern with data privacy.  

Secondly, it is unclear how regulation will evolve, and many are of the opinion that identity solutions are simply a mechanism to replicate cookies which is not a long-term solution to genuinely manage data collection concerns. 

Next generation contextual advertising targeting platform

As the founder of a next generation contextual advertising targeting platform, I welcome the move to a privacy first centric marketplace and breathe a sigh of relief that years of data exploitation are being unwound to the advantage of consumers worldwide. Our contextual targeting innovation is an alternative to third party cookies and has seen our post click dwell times soar to an average of 3 minutes with bounce rates below 30% on SmartMatch campaigns providing clear evidence that when done right, contextual targeting can outperform any audience or behavioural targeting results by some margin.  

While Google’s FLoC and independent identity solutions may not be the perfect solution, they are still in their early stages and continue to be steps in the right direction. Google’s delay on blocking third party cookies is only a short term reprieve and the issue of privacy is still front and centre. Time will tell how new industry led approaches to privacy ultimately succeed.  

In the meantime, the public scrutiny on data exploitation and the 81% of us who agree that the potential risks faced due to data collection outweigh the benefits, will continue to be a driver for change that the online advertising industry ignores at its peril.  

And as we have always contended over the years at Smartology, privacy will ultimately win the day and contextual targeting remains the only genuine solution to one of the biggest problems of the century.

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