Team IAB or Team Google?

Or, you know, neither.

Midjourney Prompt: An image in the style of Norman Rockwell, of two children facing each other at opposite ends of a wooden-frame sandbox. They are mad and pointing accusatory fingers at one another, while mushroom clouds appear in the background

“We’re never really sure what they’re after.”

The ad sales head and I were, as is customary, getting very honest over beers about how the digital ad business was changing in the wake of the programmatic revolution.  He was describing the dynamic between the people on his sales team who sold ads via insertion order and the parts of his organization tasked with figuring out how to sell programmatic ads effectively.

He had adopted a strategy that was typical of the time – allow only a small portion of their property’s ad inventory to be biddable, and look frequently at who is buying those ads.  Then, cut them off and send the insertion order team over to see if they could convert the programmatic business into a contract.

But he was telling me the difficulty with this approach was trying to discern what audiences the advertiser was after, programmatically speaking.

By and large, he felt like he was lucky because of how his web properties were structured – in fairly strict content categories and with little overlap.  Most advertisers were after contextual relevance, which made it easier for his teams to figure out why a given advertiser was bidding on ads on his site.

“I feel bad for the less-focused sites who have to guess,” he said.

Aren’t we defeating the purpose here?

It would have been easy to dismiss this entire ad sales approach as defeating the purpose of programmatic sales.  Shutting off a revenue stream in order to convert it to business that required insertion orders?  That approach would strip away the time, paperwork and manpower savings that are some of the major selling points of programmatic.

But in revealing this seemingly self-defeating strategy, the ad sales head also demonstrated the central tenet of The Great Decoupling – the notion that separating audience from content has a very detrimental effect on publisher revenue.

Knowing what we know today, was this a smart strategy?

Flash forward to today…

Today, ad spending on the open web accounts for a quarter to a third of digital display ad spending, depending on who you believe.  The rest goes to walled gardens like Meta, Google, Amazon and others that have built closed ecosystems.  And the open web percentage of ad spending is expected to continue to decline.

Whether or not we fix the problems associated with The Great Decoupling largely depends on a reasonably healthy ad-supported Internet.  The walled gardens have taken an approach that involves defining audiences how they like and then offering it up to advertisers on a ‘take it or leave it’ basis, with little transparency into how those audiences are constructed, and even less transparency into whether ads are really running against those audiences.

And, of course, most advertisers have reacted to this by accelerating commitments to walled gardens, in favor of simplified product offerings and the unbreakable tenet of dollars following eyeballs.

Rearranging deck chairs

Meanwhile, the hot news in the open web sector of the business is this: The Interactive Advertising Bureau and Google are in a pissing match over the minutiae of Privacy Sandbox.  Privacy Sandbox is what Google invented to create standards for web advertising that can share limited targeting information in a way that doesn’t use third-party cookies.  With the path outlined for Chrome – which controls roughly two-thirds of open web consumption – to deprecate third-party cookies in 2024, the IAB has to use whatever influence it can to support its publishers and keep the technologies that support digital advertising alive.

What it found is that the vast majority of use cases for the supporting tech of digital advertising are unsupported by Privacy Sandbox, going so far as to claim that Privacy Sandbox will kill Real-time Bidding.  To which the collective response has been “Yeah?  And?”

(If you are interested in this topic and hate it when people use the term “use case,” you can be reasonably educated without going down mind-numbing rabbit holes by subscribing to Ari Paparo’s Marketecture newsletter.)

So who do I root for?

If you’re not sure who to root for, you’re not alone.

On one hand, the digital ad ecosystem is now largely built on the separation of audience and content.  We know this kills publishing.  The “use cases” the IAB is complaining about are largely used to support that largely self-defeating ecosystem.

On the other hand, Google is the entity most likely to gain from moving forward with deprecating third-party cookies, as it will absorb a disproportionate share of the ad dollars that will need to be reallocated in deprecation’s wake.  With Google, those dollars will be spent in a way that exacerbates the effects of The Great Decoupling, to the benefit of a megacorporation.

Rock, meet hard place.

The answer, of course, is to root for the reunification of content and audience – putting targeting decisions back in the hands of content publishers and using their first-party targeting data to do so.