Takeaways for Marketers From the IAB’s State of Data Report

Although brands and publishers are building on their first-party data capabilities, the industry is largely unprepared for the signal loss that’s to come with the tightening of privacy regulations and the deprecation of third-party cookies. Those are the findings from the Interactive Advertising Bureau’s State of Data report 2022. Besides the gulf in preparedness, marketers are overlooking potentially fertile ground by focusing on the known and authenticated audiences, rather than the unauthenticated. And when it comes to choosing a portfolio of alternative ID solutions, marketers are still testing the waters, while publishers are finding early success with seller-defined audiences. But “a lot of work still needs to be done when it comes to educating and having the brands and agencies embrace SDAs,” Angelina Eng, vp, programmatic and data center at IAB told Adweek. Next year, as five state-wide privacy laws come into effect, marketers are grappling to keep up with addressability measures and protocols. While there are numerous alternative targeting solutions available, respondents in the IAB report agreed the most logical approach is for the company to adhere to the most stringent state-wide privacy law, but it’s a strategy that overlooks nuance, and opportunities to leverage data across state lines where possible, the report claims. Here are the key takeaways for marketers from the research. A Marketer's Guide to the Key Differences Between the Statewide Privacy Laws The industry is unprepared for signal-loss There's a gulf between how prepared the industry thinks it is and the reality. The study found a disconnect among senior-level, data decision-makers between their sense of preparedness and their knowledge of all the factors beyond the deprecation of cookies that are driving the evolution of the privacy landscape. For example, many of the interviewees rated themselves as highly prepared (ranked by scores of four out of five), but the report found that they weren’t fully versed in the signal loss that comes with privacy laws. “With third-party cookies, the sky has been falling for more than a decade,” said Eng. “No wonder there’s a deepening disconnect between how prepared data decision-makers feel, and how prepared they actually are.” Markets should review their current data processes and be cognizant of who they share the data with, according to Andrew Sandoval, vp, biddable media at marketing agency Croud. Privacy-compliant investments will quadruple Third-party data’s exact effect on ad revenue is unclear. While publishers estimate a revenue loss of 25%, large brands predict an estimate of 15%, per the report. A McKinsey report from 2021 has shown up to $10 billion of sell-side annual revenue already in jeopardy. Simultaneously, the industry has made multimillion dollar investments to build on first-party data management solutions in the last 12 months, many still testing privacy-complaint solutions like data-clean rooms. However, organizations desire a balance between human capital and technology, according to Eng. The report finds privacy-compliant identity solution investments to quadruple over the next five years. This includes hiring more employees such as data scientists and investing in privacy organizations. Moreover, the cost of human capital will easily be 10 times the cost of the technology itself. The revenue loss added with the increase in investments will largely impact smaller businesses, according to David Cohen, CEO of IAB, which lack the funds and infrastructure to keep pace with compliance and future solutions. Opportunity for marketers to target 80% of unknown audiences Email addresses and IP addresses face restrictions as state-wide privacy laws evolve, restricting what information can be shared with third parties for advertising purposes. The minority, roughly 20% of online audiences, are authenticated, subscribed users or people who have logged in. It’s this cohort that publishers and marketers are focussing on, leaving a missed opportunity of 80% of audiences that marketers are ignoring. Interviewees noted a challenge with garnering this type of data given the dearth of solutions available in the market. An ideal solution, according to Eng, would be a combination of sophisticated contextual or cohort targeting, such as Google Topics, combined with various solutions like SDAs. Publishers optimistic about seller-defined audiences, if the buy-side would bite Many publishers, according to the report, are betting on seller-defined audiences (SDA) to create custom cohorts as a replacement for their post-third party-cookie monetization plans. Details are still scant when it comes to SDA performance. However, the buy-side is less aware of SDA as a solution, according to Cohen. “Frankly, it's pretty complicated,” said Sandoval, adding that Croud’s clients weren't actively seeking this solution. SDA is appealing to the buy-side, but some amount of transparency is still needed, like understanding how the cohorts are built and whether publishers are taking the right steps to build them, said Sandoval. Even then, SDA doesn’t solve for measurement. “There are interim solutions like statistical methods,” said Konrad Kopczynski, vp, data solutions at Croud. “But those are slower and less granular than what brands are used to right now.” Ad Tech Granted Some Relief With Federal Privacy Bill 'Dead' in This Congress