The blog was a written as a collaboration between Travis Clinger, SVP, Head of Addressability and Ecosystem at LiveRamp, and Jeff Nienaber, senior director, global audience ads at Microsoft Advertising
There’s often the notion that you have to compromise between consumer privacy and desired business outcomes. Consumer privacy is sometimes seen as a compliance check box vs. embraced for the greater good and strategic differentiation. In order to protect consumer data, companies need to architect internal systems around data custodianship instead of acting from a sense of data entitlement. Consumer privacy and business outcomes are closely correlated in a complementary way. The companies that champion consumer privacy will be the winners, now and in the future.
The digital industry is undergoing tectonic shifts with less and less access to data, like the end of third-party cookies and mobile device identifiers. Across industry verticals, the global enterprise ecosystem now faces a critical moment in which it must rebuild and adapt to changing privacy standards and a new norm of putting the consumer first. While this will be challenging and a massive ongoing evolution, the benefits are enormous. Putting privacy front and center can create a sustainable omnichannel ecosystem that drives better results for every constituent.
As we collectively look to redesign how companies interact with and think about consumers, we should first recognize that putting people first also means putting experiences first. When consumers trust a brand, advertiser, or publishers’ intentions, they are more willing to authenticate themselves—to actively share their phone number, email, or another form of identity. Building that trust, however, requires a commitment to developing positive brand interactions and guiding language that clearly explains the value exchange, or providing this personal information in exchange for better experiences, and allows 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.
In order to make this a success, brands and publishers large and small can take three important first steps toward a consumer-first future.
There are no shortcuts when it comes to consumer identity and privacy
Microsoft Advertising 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. A clear signal that consumers want a say in how their data is aggregated and used. As we look toward the future, the true innovators will be those who place privacy at the core of this new era of advertising. Technology used for consumer authentications to connect publisher data with marketer data must be rooted in a trusted value exchange and be privacy-forward, while also delivering better business outcomes.
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. 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. Be wary of anything also referred to as probabilistic signal identity. If it involves unauthenticated elements being pieced together to create a new identifier, it’s likely fingerprinting and therefore lacking a privacy-centric approach.
Simply put, fingerprinting is unacceptable technology that is dangerous to the advertising ecosystem and the consumers we serve. As an industry, we must reject it and lean into supporting consumer privacy. We must remember that the reason browsers are removing the third-party cookie and device manufacturers added consent requirements to the IDFA is because, as an industry, we failed to explain the value exchange to the consumer. Fingerprinting offers a technical solution that only deepens the trust deficit between marketers, browsers, and end users.
Deepen your relationship with consumers through authentication
Results don’t lie. Publishers who lean into the consumer value exchange will authenticate more users. Consumers who trust a publisher enough to provide an email or mobile number tend to be heavier users—and more engaged users deliver higher CPMs. Even with authentication rates starting at 10%-30%, the impact can be disproportionately valuable.
If your authenticated users consume more content on average, they can deliver more page views. As just one example, initial results of Microsoft Advertising and LiveRamp enabling brands to buy authenticated inventory show that Microsoft Advertising CPMs alone increased by over 40%.
There’s a real benefit to building trusted relationships with consumers—the ability to personalize experiences and grow those relationships is much stronger. Microsoft Advertising conducted a series of research studies on the importance of trust to brand love and loyalty. The research showed that 85% of people only consider brands they trust, indicating that a privacy-conscious and transparent approach is the only path toward building brand love and long-term loyalty.
Publishers should have full control of who has access to and can transact on their identity—authentications should enable them to make these connections without having to actually share data.
It will take time for publishers and brands to move to this new way of monetizing inventory and connecting with consumers. Unfortunately, the clock is ticking with Google Chrome confirmed to sunset third-party cookies come 2022. Publishers should start to layer in authentication capabilities now and use the coming months to build first-party relationships with consumers, gain their readers’ trust, and start to benefit from increased authenticated CPMs. 40% of the world is already cookieless, and value can be achieved today.
Building better customer relationships
In 2020, we saw 70% of dollars flow into walled gardens in the U.S. The reason? Widespread data fragmentation and the complexity of how data is used have advertisers seeking out simple-to-use addressable solutions that deliver strong results. The walled gardens effectively built addressable audiences of consumers who have shared their data. Organizations outside of Big Tech and across the open internet should take a lesson from the walled gardens and learn how to build stronger consumer relationships through meaningful experiences.
As the walled gardens have grown, they were not as transparent as they should have been in how data was collected and used. In the future, this is where the ecosystem cannot fail and must always clearly explain the value exchange to consumers. Brand and consumer interactions based on authentication and consent prioritize privacy and simplify media planning, buying, and measurement. They also enable the fortification of meaningful connections across the digital supply chain.
The goal is to improve end-user privacy while delivering relevant customer experiences and drive meaningful publisher revenue. Ultimately, publishers and brands need to use a combination of tools to address the post-cookie ecosystem—authentications, browser cohorts, and unauthenticated publisher data. While the mix of each will vary by publisher and marketer, we know today that authenticated inventory is the gold standard and will continue to be post-cookie.
The path forward is not incremental, it’s visionary.
Changes in the advertising industry during the past year have, and will continue to have, a long-lasting impact on all members of the ecosystem. If the goal is a more sustainable, healthy, and competitive open web that works better for everyone—prioritizing consumer trust and transparency is not only ethical but essential. Not only will it enhance consumer experiences, it will also increase the bottom line.