While the supposed end of 3rd party cookies is getting closer and closer and practically all players in the advertising market are looking for new solutions and alternatives, many industry observers are wondering which further developments and trends will shape the Programmatic Advertising market in the near future.
Tom Peruzzi, Virtual Minds CTO and adtech expert, offered some initial insights in his keynote speech at the Heroes of Data & Privacy conference, in which he put forward ten hypotheses on the development of the market, emphasizing: “As a rule, our day-to-day business does not allow us to look at certain circumstances in isolation. However, in order to be able to take a more pointed look at certain topics, it makes sense to consider each hypothesis on its own merits – especially because they can be contradictory to one another. The theses should, however, stimulate people to deal with these topics in their own companies.”
10 hypotheses for the development of the market
1. Everything will be on explicit consent only
In recent years, there has been an increasing awareness regarding the request for explicit user consent. On the one hand, to meet the requirements of the GDPR and, on the other, to eliminate the collection of data without consent.
This approach ensures that users are dealt with transparently and that their data is only collected and used with explicit consent. At the same time, it provides a clear and legally sound basis for handling personal data. However, in order to implement this approach successfully, effective and well-informed consent management is required, as well as an appropriate consent archive on the publisher and advertiser side.
Those who focus on explicit consents take a responsible and sustainable approach in dealing with applicable data protection regulations. This can create trust among users and makes it possible to meet legal requirements, while at the same time improving the transparency, efficiency, and security of data processing.
2. Consumer protection will make CMP layers disappear
It’s time to take a hard look at the design and functionality of Consent banners to ensure they are effective, understandable, and user-friendly. This is the only way to ensure transparent and accessible Consent management and user privacy protection.
While the Consent and Cookie banners and associated explanations have met the requirements of the GDPR, consumer protection agencies caution that the complexity and industry-specific terms mean that hardly anyone really understands what consent is actually being given for, or that the sum of daily CMP layers leads to customer annoyance, making the idea of conscious, voluntary decision-making more difficult because of their sum.
One possible solution could be to make greater use of identity and access management platforms to ensure that users better understand what information they are sharing and how it will be used.
The need for users to be able to clearly deny consent without being hindered by hidden options continues to grow. Therefore, opting out of consent should be made easier.
Similarly, everyone would be well advised to reduce the Global Vendor List to a tolerable minimum to ensure explicability. This has the positive side effect of directly simplifying the site’s auditing and due diligence obligations.
3. European data market will open up new opportunities
A European data market (Data Act) would make it easier for companies to access a wide range of data, as the rules and standards for data exchange are uniform and clearly defined. The introduction of uniform rules will also create a transparent and reliable basis for the exchange and use of data. This promotes competition and enables companies to work more efficiently and gain new insights from data. In addition, the European data market offers legal certainty, as data protection regulations and compliance with the European General Data Protection Regulation are binding for all participants.
At the same time, however, participation in the European data market would require adjustments and investments on the part of marketplaces to meet the new requirements. This can positively impact the entire market and strengthen value creation in Europe. For example, it may mean improving data protection measures or reconsidering data management practices to comply with the regulations. However, these adjustments are necessary to continue to reap the benefits of the European data market and remain competitive.
4. Google will not abolish the third-party cookie in 2024
Google has already pushed back the end of cookies several times, resulting in a possibility that cookies could still be in use after 2024. Yes, the roadmap is set, however, there is still a lot of residual hope in the market to continue working in old patterns.
In this case, some companies will succumb to the temptation to no longer actively engage with the integration of alternative solutions, as the need will no longer exist (for now). However, it should not be forgotten that cookies already reach only around 20 percent of users and alternatives are unavoidable.
The transition to a world without cookies also requires thorough consideration and adjustments on the part of companies: Possible effects on data collection, targeting and marketing must be taken into account and require a high time commitment.
It is therefore of great importance that companies do not remain idle, recognize the opportunity to strengthen data protection and transparency, and proactively address the change in the area of data collection.
But when is the best time to look at alternatives? The only correct answer is yesterday. There is a wealth of potential solutions and each one is exciting in its own right, but we will find a highly fragmented market - at least in the transition phase.
5. DSA / DMA will control large companies and small ones will have to fight
The controls associated with the Digital Market Act, such as tracking bids or the origin of ads, require significant resources and constant adjustments. Even though many of the requirements were primarily intended for gatekeepers, the interconnected nature means the burden is on everyone in the chain, or else face financial bloodletting. Transparency compliance also requires close collaboration and improved data sharing between advertisers, agencies, technology providers and publishers, which may require new systems and processes to be put in place.
This can be challenging for small businesses, which may not have the financial resources or technical infrastructure to meet these requirements. They may be at a competitive disadvantage and have difficulty keeping up with the needs of the Digital Market Act.
So it is important that regulators and policymakers take this into account and take steps to ensure that this development is feasible for all companies, regardless of their size. Possible solutions could include training and support programs, simplified compliance procedures, or financial relief for small businesses.
Ultimately, implementing the Digital Market Act will require a concerted effort to ensure that all participants can comply with the required regulations. This is the only way to make the digital ecosystem fair and transparent, which will benefit all participants in the long run.
6. Artificial intelligence will change the way we handle private data
Using artificial intelligence to segment and sort data can help provide information in a more relevant and targeted way – but equally, it is crucial that user privacy is maintained in the process.
The challenge is to draw a clear line between interests and private data. While interests can be viewed as general preferences and likes, private data can include both personal identifiers and sensitive information. The more narrowly interests are considered, the greater the risk that fine granularity could end up creating an identifier again, which would then fall back under Personally Identifiable Information (PII).
It is the responsibility of companies to strike a careful balance between using AI to improve services and protecting the privacy of users. An ethical approach to the use of AI therefore requires continuous review and an explainable understanding of the algorithms used, minimization of data collection to what is necessary, and secure storage of the information collected.
By consciously addressing the challenges and setting clear guidelines for handling data and interests, we can ensure better privacy protection while reaping the benefits of artificial intelligence.
7. Advertising becomes less complex
Complex or nested scripts – especially piggybacks and JavaScript – are often used for various purposes in online advertising, such as tracking user interactions, targeting ads or collecting conversion data. However, scripts are often criticized because they often collect information about users unnoticed, raising security and privacy concerns.
The criticism of scripts is old and justified, as their effects can often only be controlled with a great deal of effort. Companies and advertisers should therefore consider alternative approaches to achieve their goals without relying on corresponding scripts. This could include, for example, the use of simpler technologies and standards that improve advertising effectiveness and user experience while reducing complexity and risk.
It is important that the entire industry works together to develop solutions that maximize the benefits of ad delivery while addressing controllability, privacy, and regulatory concerns.
8. „PUR“ subscription model rules the world in europe
Ad-free offers, where users pay for a website without advertisements, are becoming more and more important. While this offer represents a positive step towards data protection and privacy as well as an effective means of protecting data security, it also leads to less freely available content and less advertising played out.
It is important that editorial content continues to have a sufficient chance of monetization – both openly accessible and closed to strengthen media diversity. The reduction of free content would also end up having a massive impact on the re-marketing industry and how end customers can still be reached on the free web in the future. In the worst case, this would mean a full outflow of advertising funds into social media and thus a further weakening of the European business location.
9. New standards for login solutions will be needed
The introduction of login solutions as an alternative to third-party cookies can provide more control and transparency for users by allowing better management of consent and privacy settings through targeted selection.
An example of such a solution is 1st-party content architecture (1PCA): through 1PCA, publishers can establish a more direct relationship with their advertisers and the number of participants within the value chain is reduced, as data is exchanged directly between the publisher and advertisers. With greater control and accountability for data, publishers can subsequently deliver higher quality content and better ads because they have a better understanding of their users’ preferences and interests.
However, adopting new standards and login solutions will require industry-wide collaboration and coordination. It is important that companies, technology providers and regulators work together to develop consistent policies and procedures. Data protection and transparency must be at the forefront to gain user trust and ensure the long-term sustainability of the digital ecosystem.
10. Large platforms will benefit from the fragmentation of the market
In the end, the question is who will be the profiteer in the near future, and it seems that, once again, the big platforms will be able to benefit the most from the fragmentation of the market. The introduction of new identifiers and solutions in the digital market has led to increased fragmentation, as many vendors and platforms have developed their own methods for identifying users. However, this fragmentation has given advantages to the major platforms in particular, as they have extensive resources and technologies to deal with this diversity, and solutions such as single IDs, such as those offered by Google, could potentially emerge as winners.
There will not be one perfect solution in the future, but it is important that the industry agrees on a few solutions to reduce fragmentation and enable efficient collaboration between different parties. Too much diversity in identifiers and solutions not only complicates implementation and integration, but can also lead to increased effort and cost.
Overall, the fragmentation of the market with new identifiers and solutions is currently a reality that everyone has to deal with. Some solutions from large U.S. players are simply enforced de facto by market size and result in large efforts on the part of all intermediaries. However, it is critical that the industry actively work toward unification and overcome fragmentation within the next two to three years.
Conclusion
In summary, the current evolution of the market requires the active participation of all participating parties to find standardized and heterogeneous solutions that benefit advertisers, publishers, technology providers and users alike. Data protection and the general handling of user data, as well as European legislation, must be the clear focus of these new solutions.
It remains exciting to see which alternatives will prevail and how the digital advertising market will change as a result in the coming years.
The entire keynote speech by Tom Peruzzi “Intermediaries on rough Seas: What the new Data World means for the Adtech Industry”, in which he explains the hypotheses presented, can be viewed again in the video here:
