Why Data Privacy Could Create an Exciting Opportunity to Rethink Programmatic

Data innovation, new ad tech partnerships and refreshed programmatic sales strategies are on the horizon

Privacy regulations such as CCPA and the limitations on third-party cookies are likely to challenge the programmatic industry in 2020. Some experts are predicting a flat-to-down year, but I am much more optimistic. Why is that?

Because as privacy regulations and limitations on third-party cookies force a reevaluation of the programmatic space, I am reminded of the early days of programmatic when the exciting parts of the job were establishing strategy in an ambiguous environment, finding the right technology partners and sharing knowledge with internal partners to grow revenue. It required creative problem-solving, visionary thinking and a fail fast and pivot quick approach.

In 2020, programmatic leaders should adopt this pioneering attitude to gain an advantage. Here are my thoughts and predictions on the potential future of data, ad tech partnerships and programmatic sales strategy.

Data quality and innovation will matter

We are likely to see even more stringent evaluation of the data used in programmatic. I searched for auto-intender segments in the data management platform (DMP) we use at IBM Watson Advertising and found segments built with third-party data with over 100 million U.S. uniques. But, according to an estimate by market research firm, Edmunds, the U.S. auto industry sold approximately 16.9 million new vehicles in 2019. While not an apples-to-apples comparison, many data sets can be inaccurate and shouldn’t be used by marketers. Quality data is likely to become more apparent and valuable in 2020.

It is exciting to think about the innovation that can happen when data tied to cookies and ad IDs is limited. Contextual, intent and weather data are alternatives. It remains to be seen what other types of publisher first-party data can drive results for advertisers. Necessity is the mother of invention.

Laws like CCPA and limitations on third-party cookies require transparency and user consent to use data from visitors to websites. In addition, they may necessitate that the data collected from publishers be used for ad tech services bought by these same publishers. If there is limited data and ad tech companies cannot use the data for services not purchased by publishers, there is likely to be a bigger push for innovation from publishers. For example, publishers may seek to offer content in exchange for consent from their users for their data.

Ad tech partnerships will evolve

Traditionally, supply-side platforms (SSPs) aggregate inventory from many publishers making it easy for marketers to buy ad inventory from publishers at scale. Data regulations might increase the responsibilities of SSPs. It remains to be seen if SSPs will pass the responsibility to publishers and have them contract directly with buyers or if they will address compliance for both parties by transacting within the SSP marketplace. I believe they should choose the latter because the most privacy compliant way for publishers to sell their inventory is to serve it directly to buyers.

SSPs should offer an alternative. We have already seen supply path optimization (SPO) reduce the number of SSPs. Addressing privacy compliance can accelerate the reduction to innovators who offer a privacy-compatible way to transact inventory at scale programmatically.

The capabilities of DMPs are blurring with the capabilities of consent management platforms (CMPs). DMPs aggregate a publisher’s data, give access to third-party data and provide for the transfer of data. Consent management platforms collect users’ consent and pass consent flags to partners. Given that the use of data should come with consent, DMPs and CMPs should integrate. With restrictions on the transfer of data, publishers are likely to utilize their DMP/CMP technology partners even more in 2020.

Programmatic sales strategies will be refreshed

Publishers have seen a major reduction in CPMs from ad inventory sold with data (Chrome, Android), compared to inventory sold without data (Safari, Firefox). It might be difficult for publishers to keep producing the same level of free ad-supported quality content with lower CPMs.

Whether society is better off with less free quality information but more data protection is up for debate. What is likely is that publishers will look for ways to make up for the lost revenue through a fair exchange of payment for the cost of creating quality content.

The makeup of the sales team is likely to change if publishers start providing different content and ads for paid subscribers, visitors who give consent and nonpaying visitors who don’t give consent. A combination of sellers, sales support, partnership development and ad server optimizers make up current programmatic sales teams.

With the equalization of pricing among partners with Google’s Unified Pricing Rules and SPO reducing the number of partners, the opportunity in 2020 is likely to be on the sales and sales support side. Programmatic sales teams should develop insights from the data given with consent from users and sell buyers on why they should purchase their inventory.

I don’t think we can rely solely on advertiser data to buy our ad inventory in the open exchange. More inventory is likely to be sold using publishers’ first-party data. Good sellers who can persuade buyers on the value of a publisher’s first-party data and data scientists who can analyze large amounts of data to find insights will likely become important to programmatic sales.

The programmatic industry is likely to see major changes in 2020. Although there will be challenges it is an exciting opportunity to rethink the business. Data, ad tech partnerships and programmatic sales strategy are among the areas that will require change and thought from industry leaders. The publishers who are thinking ahead and prepared for major changes in 2020 are most likely to set themselves apart and grow their businesses in this challenging environment.

Felix Zeng leads a team of sellers responsible for programmatic sales of Watson Advertising’s inventory on The Weather Channel digital properties to agency trading desks, demand-side platforms (DSPs), agencies and advertisers. Prior to joining IBM Watson Advertising, Felix spent 11 years at About Inc.