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Ad-tech companies need to shift back to brand image if they want to survive in a private world.
The map of ad-tech has changed dramatically. In its golden age, the ad-tech industry has thrived with hundreds of major ad-tech companies that were making a fortune. These days have long passed.
IPO’d giants could not fulfill their potential. Small players have evaporated. The medium ones either consolidated or filed for bankruptcy. In Tandem, Google, Facebook and Amazon revenue from digital advertising has skyrocketed.
Among all reasons that explain this deteriorating state, trust seems to stand above it all. A programmatic ad involves multiple players in the chain that may be attached with fraudulent activity and inefficiency. According to various estimations, more than 20% of clicks are managed by bots or click farms. In the race for legitimacy, Facebook and Google try to adhere to the recent regulation, and pose difficulties for ad-tech players that benefit from a fraudulent activity.
Although some ad-tech companies still endure and manage to generate profit, the future of ad-tech remain unstable outside the realm of the Big Tech.
Performance marketing as a symptom
The forms of performance marketing can be highly connected with fraudulence and privacy violation. On the one hand, performance serves the need of marketers to measure engagement by number of clicks and social reactions, even when those metrics do not correlate with actual sales. On the other, effective performance marketing may be connected to hyper-targeting invading the user privacy.
Moreover, marketers that were once charmed by the ability to track engagement up to the last click and measure direct ROI, are shifting back from hyper targeting and focus on brand image instead. The main reasons behind this shift are associated with cost effectiveness and a negative impact on brand image.
Performance marketing is the bread and butter for many ad-tech companies, as the price-per-click is high, thus allowing them to buy cheap and involve tools that will increase margins. For example, ad-tech can buy inventory and pay per view (CPM), while charging the marketer several dollars per click.
Privacy actions are a setback in performance marketing
Google’s recent announcements to provide more transparency and block third-party cookies are an omen for ad-tech players. Some even say that Data Management Platforms (DMPs) will become obsolete, as they rely on third-party data for the programmatic bidding.
Nevertheless, the ad-tech industry has prepared for this scenario and in recent years tried to find alternative ways to collect data on users in a cookie-less world. According to Adweek, one of the initiatives are standardized IDs that do not rely on third-party cookies.
Privacy regulations are expected to become more stringent moving forward, but their effect on Big Tech advertisers and ad-tech players is not conclusive. Big Tech maintain their own data sources, while ad-tech will focus on new methods that would probably precede the upcoming regulation.
A way out for ad-tech in a hyper-privacy world
Privacy concerns are stemming from users that have developed ad blindness, and are wary of ads that seem to violate their privacy.
When users and regulation speak the same language, ad-tech companies need to support that need by exploring other options beside performance marketing.
Brand image does not cost like performance marketing, but is less intrusive and more sustainable.
