It’s no news that with the deprecation of third-party cookies, brands and media companies alike will need to explore new methods to address audiences as well as they have in the past. User data is incredibly valuable, but there’s a clash: how can advertisers balance the utility of this data with user privacy? And how will data flow, what solutions will emerge out of the changing data ecosystem?
Our Director of Business Development & Strategy Juan Baron joined Juan Mendoza of The MarTech Weekly on the Making Sense of MarTech podcast to tackle first-party data addressability, new relationships between media owners and advertisers, and how a growing awareness for user privacy is changing how data moves in the ad industry. They also discuss how advancements in cryptography are changing the ad tech ecosystem. Here are our top 3 takeaways from their conversation — or scroll to the end to listen to the full episode.
User privacy isn’t a new story, but the tipping point is now
Advertising — and thus user data collection — is woven into the fabric of how the internet works. The more users came to understand how their data was being collected and used, and the more they perceived ads as invasive, the more pushback grew.
“There's been a growing trend of things that are starting to affect the internet advertising industry,” says Juan Baron. “The iPhone, when it was originally launched in 2007, already blocked third party cookies. Then you have the rise of ad blocking as a consumer signal and backlash. And that has continued to remain steady, in some countries it could go all the way up to 60% (of users).”
As ad blockers proliferated, privacy regulations also came into effect and then, one by one, tech giants began to move away from the third-party cookies that informed digital ad targeting for decades.
“When it comes to internet advertising addressability, it's at an all time low,” says Baron. “If you talk to any marketer about advertising, all the open ad exchanges — if you’re relying on third party cookies, you have to throw away Safari, you have to throw away, Firefox, and Google Chrome already said publicly they're going to completely discontinue supporting third party cookies by 2024. So it's really changing.”
Brands stand to gain better customer relationships from a first-party approach to advertising
Where does this sea change leave advertisers and publishers? In the absence of third-party cookies, first-party data — user data a company collects directly — will take on new significance. But brands and media owners have a chance to transform this valuable data into better, more direct customer relationships.
“It's part of the digital transformation journey of any company to build your own data source,” says Baron. “Whether you’re a highly regulated industry, like a bank or insurance, or a CPG brand — if you build your own first-party data through different types of collection points and customer experiences, you can create a first party data taxonomy and start to understand exactly who your customers are.”
Media companies who create content — and publish ads — are the other side of the first-party-data coin. They hold insights into their audience’s interests and preferences far beyond what an individual brand can determine.
“Building that relationship between a publisher, a brand, and the reader on a first party basis is critical” says Baron. “You have the publishing world, gravitating more towards getting users to log in and create a direct connection,” says Juan Baron. “And at the same time, you also have the brands that are sitting on a lot of first party data that they've never been able to fully utilize.”
But in order to create this closer relationship to customers, brands and publishers need a forum to join this data — one that protects and respects a user’s privacy.
“Clean rooms allow for these two sides to collaborate in what I call a data-intimate relationship,” says Baron. “Through a data clean room, you can identify incredible insights out of that data collaboration — but no individual user data ever leaves the clean room. And that's quite unique and exciting. It's more targeted, more precise reach, and you know these are real humans that you're actually targeting rather than a third party cookie.”
The “privacy paradox” is driving new MarTech developments based on cryptography tech
First-party data collaborations can be a chance for media companies and brands to create a more intimate relationship with their audience and with their customers. But intimacy and respect go hand in hand. As users set boundaries around their privacy and how their data is used, it falls on companies handling the data to strike the right balance between user privacy and utility of the first-party data they collect.
While this poses a challenge, it’s also driving the creation of new data solutions that preserve both privacy and utility — like Decentriq’s data clean rooms.
“Individual profiles go in, but the only output is aggregated insights — in this case high affinity segments from the publisher’s inventory, for targeted advertising,” says Baron. “No individual profile information ever leaves the clean room. And you can control who gets to see what in the collaborating space. So an advertiser can upload data for activation with a particular publisher, and then the publisher can even upload their own proprietary lookalike model inside of the data clean room. Both can remain completely private even while the two parties collaborate on that dataset.”
At the heart of this solution is a hardware-based cryptography technology called Confidential Computing. Not only does the technology protect users’ personal data, it also gives companies more control over how their sensitive data — or valuable intellectual property.
“There's a lot of controls inside of our data clean rooms, but at its core, it's Confidential Computing,” says Baron. “Confidential Computing is a game changer. For many decades we’ve had data encryption at rest and in transit. But the new development with confidential computing is that you can actually keep it encrypted even during computation. And you'll have cryptographic proof of what actually happened with your data. This is technical proof that nobody can see your data — not Decentriq, and not even the cloud provider. Only you, the person holding the encryption key, has access to your data and is fully in control.”
To hear more about how Confidential Computing works, and more on the technology trends shaping the advertising industry, listen to Juan Mendoza and Juan Baron’s full conversation at the Making Sense of MarTech podcast.