Transforming Digital Advertising with a Two-Tiered Future
Martech Outlook | Friday, May 05, 2023
Conflicting objectives can be removed by constructing a two-tiered structure, and various resources and economic models can be maximised to meet the requirements and expectations of audiences and advertisers.
FREMONT, CA: The world of digital advertising is undergoing a significant transformation, with privacy concerns and the depreciation of third-party cookies causing upheaval in the industry. There is, however, a conflict between commodification and differentiation of assets that hinders the evolution of digital advertising more than privacy. For progress and growth to occur, media owners must differentiate themselves from their competitors, rather than allowing all media to be interchangeable.
Media owners have seen a steep decline in revenue and audience relationships, which began before the deprecation of cookies and the implementation of GDPR. The downturn has largely been due to the nature of the programmatic open marketplace, which has diluted the high value of select publishers across the mediocrity of the many. In the programmatic environment, ad tech companies depend on access to media owners' assets at scale, which includes consent signals, user data, contextual metadata, ad inventory, and more. This drives the argument for maintaining the programmatic status quo, nevertheless, it also jeopardises media owners' existence and wastes advertisers' budgets.
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Quality media owners must maintain direct control of their assets and differentiate themselves from their competitors to become self-sustaining. This will help media owners appeal to consumers, which in turn will help them appeal to advertisers. A two-tiered future for publishers is necessary to cultivate a safe media and advertising environment that is in the best interest of advertisers. This will require more direct interaction and collaboration between buyers and sellers, with "Tier 1" publishers being owned and operated by an alliance of media brands. As opposed to the need for scale, these publishers would be linked by their top-rate content, user experience, and assets. They should create innovative ad formats that fight banner blindness and prioritise gathering accurate data, building user trust around privacy, and creating clarity about the value exchange offered. The walled garden they create should be supported by a "new ad tech" category that understands its role in the first-party web cannot be the same as in the third-party web.
The remaining 70 per cent of medium- and long-tail publishers that lack resources to differentiate themselves and keep full control and management of their assets will require external help. "New ad tech" companies will have an opportunity to help these publishers create a "Tier 2" that could become the new programmatic open marketplace. This new marketplace should be built on contextual targeting, and anonymised data, moving away from tracking and the collection of personal data while prioritising transparency and accountability.
By building a two-tiered system, conflicting goals can be eliminated, and different resources and business models can be maximised to cater to the needs and expectations of audiences and advertisers. This will reprioritise the distribution of value, protect the revenues of media owners and the budgets of advertisers, and help ad tech reposition itself. Digital advertising can provide a better user experience beyond the two-tiered approach. To ensure that their advertising is pertinent to the user's interests, for instance, advertisers can utilise more sophisticated targeting techniques. To save users from becoming overloaded, they can also restrict the quantity of advertising they see in a specific time frame.
A two-tiered structure is one potential response to the competing interests that manifest in digital advertising. However, it has the potential to foster a more gratifying and advantageous relationship between users, publishers, and advertisers.
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