What We Learned at Dmexco 2019, Ad Tech’s Week in the Spotlight

Optimism over programmatic growth is muted by privacy headwinds

ad tech dmexco 2019
Programmatic companies are working together on new ways to track users in a post-cookie world. Getty Images
Headshot of Ronan Shields

Ad tech’s week in the German spotlight has come to a close, with plenty to think about for the 40,000 advertising and marketing technology delegates at Dmexco.

IAB Europe opened the Dmexco conference, organized by Koelnmesse, with some eye-popping numbers: Programmatic spend is growing, topping 16.7 billion euros ($18.4 billion) in 2018, more than a year since the arrival of General Data Protection Regulations (GDPR). However, the sense of buoyancy at Dmexco in previous years was replaced with a somber sense of realism as U.S. regulators prepare to take the cue of their Europe-based counterparts and double-down on data governance.

Here’s what we learned this week.

Ad tech must reconcile privacy concerns

At the ATS London conference that kicks off Dmexco, ICO’s head of technology policy Ali Shah explained just how seriously the U.K.’s data protection authority was looking at ad tech’s compliance with GDPR.

“If information is being shared, then it needs to have the right data governance controls and technical components, and from what we found … we felt the controls were not robust enough,” Shah warned.

These warnings are being taken seriously by some of the largest names in the industry–a fact underlined by Google’s recently announced measures to clamp down on the tracking capabilities in its market-leading web browser Chrome.

More recently, Apple unveiled an API called SKAdNetwork, an update to the iOS app ecosystem which it claims will help advertisers measure the success of their campaigns while maintaining user privacy.

In typical fashion, Apple has done little to explain the extent of how this will affect advertisers’ ability to assess the effectiveness of their ad spend on iOS apps. Many at Dmexco interpreted this as a precursor to Apple rolling back IDFA, an identifier that has long been the default means of developers tracking how app users behaved post-ad exposure.

Similarly, Firefox—a web browser from the Mozilla Foundation small in scale but often deemed as a bellwether for developers—has started blocking third-party cookies, with publishers immediately feeling the pinch.

In an emailed statement, Andrew Casale, CEO of Index Exchange, explained to Adweek some of his observations on how this move has affected publishers in Germany, where the browser has a 30-40% market share.

With usage much higher than in other parts of the world, Casale said the change has “been felt strongly in Germany” in only a matter of weeks. “This has had direct and meaningful impacts on programmatic revenues and CPMs, as bid rates drop on account of a lack of addressability. This has crystallized the criticality of exploring solutions beyond the cookie.”

How to track users in a post-cookie world

Also in attendance at Dmexco was Johnny Ryan, chief policy officer and industry relations officer at fellow web browser Brave, who echoed the ICO’s Shah in expressing doubt about the legitimacy of the industry’s tracking methods. In particular, he cast doubt on a recently unveiled initiative from the IAB Tech Lab to find a more advanced solution to third-party cookies.

“The IAB and others have proposed to ID everybody on earth so that those who want privacy can thereby reveal it. I do not see how this could pass the GDPR test,” he said in a statement sent to Adweek.

However, such collaboration was a key theme at the show, with some attendees expressing hope for the independent ad-tech sector to collectively devise solutions that will fulfill advertisers’ needs while appeasing the demands of privacy advocates.

For instance, earlier in the week, the World Federation of Advertisers unveiled a partnership with Digital Decisions, an outfit that helps brands better implement ad-tech solutions, that would see the consultancy ease some of the fragmentation woes marketers have experienced.

The partnership introduced the Digital Media Benchmark, which will see consultancy process the reporting data of leading verification providers, including Adloox, DoubleVerify, Integral Ad Science, Meetrics and Moat, and effectively break down the silos between their various reporting methods.

Ruben Schreurs, CEO of Digital Decisions, explained to Adweek that while there was “earlier skepticism” as to whether competitors would cooperate for the greater good, there is a will to work towards a commonly held goal. Which is to say: greater brand spend.

“To see all major partners fully committed to make this work within six months, from inception and delivering over a trillion impressions as a baseline, is magnificent,” Schreurs said. “We will keep working with them and the WFA to add even more value over time.”

Programmatic buyers focus on SPO

Meanwhile, Paul Gubbins, global programmatic strategy lead at Unruly, shared insights on how publishers were more concerned about protecting their revenues this year at Dmexco, as opposed to driving incremental growth in years past.

He further explained to Adweek how the privacy headwinds were affecting media buyers’ approach to just how many programmatic players they work with, i.e. executing their supply path optimization (SPO) strategies.

“Identity challenges aside, the sell side is also trying to innovate in face of aggressive SPO headwinds,” Gubbins said. “Many buyers are currently on a mission, and that mission was apparent this year in Germany: They want to reduce the number of supply-side platforms they work with.”

As a result, many SSPs are looking to sell other forms of media programmatically, particularly in the potentially lucrative connected TV space, with others looking to apply their technology to out-of-home advertising.

“Many [ad-tech companies] are also starting to open up their raw auction logs for interrogation by brand, agency and publisher to illustrate their commitment to transparency and ensure their place on the SPO-approved vendor list is secured,” he concluded.

So, as the industry approaches the close of 2019, what remains clear is that solving the identity problem in a heightened privacy climate will be a crucial conundrum for ad tech to crack in the 2020s if it is to continue riding the wave of growth it has enjoyed since the early part of this decade.

@ronan_shields ronan.shields@adweek.com Ronan Shields is a programmatic reporter at Adweek, focusing on ad-tech.