It’s 2020 and user data is what drives the digital advertising ecosystem. And guess what? The four platforms that govern the majority of commerce within the industry are fundamentally changing how the tens of millions of advertisers and publishers can use this information. So, should all affected parties put their trust Google, Amazon, Facebook, and Apple to lead them in whatever direction the future holds?
I’d argue that the death of the cookie is actually quite unimportant to publishers and advertisers long-term. To me, the idea that publishers and advertisers should build a first-party data strategy to combat Google, Facebook, Apple, and Amazon is foolish … but, that’s because thinking of it as a data strategy, to begin with, is a losing battle.
Publishers are unlikely to find any bargaining chip large enough to threaten the major platform’s hold on the direction of ad targeting and user-tracking. So, why bother when the root of everything in digital publishing isn’t about data? It’s about the audience.
Cookies, 3rd-party data, 1st-party data … wtf?
Google announced in January that it will eliminate third-party cookies in Chrome browser by 2022, and in the announcement’s wake has been the subject of a lot of recent conversation about the importance of programmatic ad targeting.
These changes echo the Apple ITP policy changes from years earlier that dramatically changed the efficacy of using 3rd-party data for user tracking and ad targeting in their Safari browser.
Recently, Apple has taken further steps to make user-tracking on all Apple devices equally as ineffective. Without killing you with the technical details, I can summarize the changes by highlighting that it will essentially kill off all the workarounds and methods developed to facilitate user-tracking used by programmatic ad buyers (marketers) for personalized ad targeting. This extends beyond Safari browsers and extends to all apps installed on Apple devices.
… and by the way, you know it’s disruptive when Mark Zuckerberg is like, “hey, this isn’t fair”.
In light of these changes, large media publishers have been strategizing how they can take back control of the data collection and user-tracking process themselves. Over the last year, The New York Times built 45 new proprietary first-party audience segments. These segments are broken up into 6 categories: age, income, business, demographics, and interest. By the end of the year, they are planning to introduce 30 more segments.
The Times and other major media brands are trying to stay ahead of the curve by cultivating their own first-party data. Now, the millions of independant and non-media brand publishers are starting to wonder if they should be making similair plans and alliances. Certainly, they too must adopt some kind of first-party data strategy, or they’ll be left out in the cold without access to advertiser dollars, right?
No. Almost certainly not.
Tech giants won the first-party data war… it’s over
First-party data is something that Google, Amazon, Facebook, Apple (GAFA)— have been positioning themselves around for well over a decade. It’s been their focus and they”ve literally spent billions of dollars building cultivating the process of acquiring it.
The fact that both advertisers and audiences are both so relying on these platforms is a double-edged sword.
- Since so many people use their platforms, the tech giants are arbiters of content. They can choose how, when, and where people see content.
- Publishers are then reliant on GAFA to acquire an audience.
- Advertisers and publishers are in-turn reliant for their core business outcomes (marketing and revenue)
Google is the most prominent example of this for most digital publishers, and it works like this…
Google has the most popular search engine in the world.
They make the world’s most widely used internet browser and provide some of the most well-developed word processing, email, spreadsheet, calendar, web development, and file storing applications ever built… all for “free”.
This means that the people that use these features are inexplicably linked and intertwined with using Google to access information.
These are the people that read publisher content so…
Publishers optimize their content for Google Search.
Then, if they comply with Google’s guidelines, Google will begin sending them visitors.
And hey, good news… since Google is also the largest display advertising platform in the world (AdSense, AdX), there’s a perfect synergy for publishers to acquire and monetize those visitors using Google’s ad products.
You see how enticing and addictive it is to get hooked on Google if you’re a publisher?
Of course, of course… I’m probably not telling you anything new.
Now, think about this…
This is millions of publishers, and with every single one, this model that Google has designed gets stronger and stronger. In fact, so strong that advertisers are in the same boat.
Up until now, advertisers leveraged this synergy by scaling something that used to really suck. With third-party tracking, advertisers could cookie somebody then when someone visited their site, then target them with display ads and search ads practically anywhere on the web.
Now, in this example, the only entity with meaningful first-party data is Google. All other first-party data doesn’t show up as a blip on the radar in comparison.
Again, I feel like you know this, so I won’t repeat the exercise with Amazon, Apple, and Facebook. But, it’s the same story, just a different chapter.
Can publishers acquire first-party data and compete?
The notion that publishers are going to try to re-orient their business with a first-party data strategy is far-fetched at best.
It seems likely that they would fail where everybody else has failed in the past decade to that’s tried to create:
- A search engine to compete with Google
- A social network that competes with Facebook, Instagram.
- A singular hardware and software ecosystem competitive with Apple
- An e-commerce platform, like Amazon
Yeah, but what about… whoever you’re thinking of… their market share likely doesn’t register vs. these parties where they are most dominant. Their greatest competition is each other and that’s why the cookie-tracking stuff has more to do with them than it does end-users, publishers, or advertisers.
Publishers really have to ask themselves: what first-party data are we going to gather that someone like Google or Facebook isn’t already gathering, and to what degree is it significant or even remotely as robust as what the major platforms have available to advertisers?
Even in the case of the biggest publisher in the world, The New York Times. The first-party data that they can gather is insignficant compared to the data that GAFA can garner in a single day (maybe an hour or two).
The first-party data product question…
AdExchanger has said that for publishers, first-party data is a “product question”. The theory is that visitors will give publishers their email and their consent so they can be cookied and recognized, and then sell these segments back to advertisers.
But there’s a problem with this is philosophy. Take Gmail for example. It launched over a decade ago, and now it’s the most ubiquitous email service in the world with over 1.8 billion users, doubling from 900 million users in 2015.
What’s occurred in the past decade is that almost everybody has a Facebook, Amazon, Gmail, etc. If you don’t have at least one of those things, you’re a rarity (statistically, you’re more likely to be allergic to water… I’m dead serious). This idea that publishers are going to come along and compete with these platforms that have created ubiquitous tools and services that essentially own the first-party data marketplace is kind of nonsensical.
So, I don’t understand this idea of a first-party data product as a successful business strategy for publishers.
But, I do think that publishers can use the data they do have to begin circumventing GAFA to protect their core product, content.
Publishers can use the DTC model to beat GAFA
Realistically, publishers have a singular product that they are selling. And it’s not to advertisers, it’s not to the platforms, it’s to audiences. It’s their content.
Content is a great business to be in now too, because digital content has never been more popular and digital ad budgets are swelling YoY at a staggering rate.
Even with the pandemic, digital business is booming. Look no further than the steep rise of eCommerce when we saw the start of the COVID-19 pandemic.
It’s estimated that the U.S. has seen 10 years of eCommerce growth in the last 8 months, largely because the pandemic has created the need for people to make purchases online.
This changes everything for marketers. Now, digital advertising is more important than ever. And yes, GAFA wins again, but it’s the other winners in the world of e-commerce that publishers can learn from.
DTC (direct-to-consumer) brands, like Lululemon and Wayfair, experienced unprecedented stock growth and revenue performance as a result of the pandemic. Meanwhile traditional retailers, like JCPenny and Bassett Furniture, have struggled with hardship and bankruptcy.
It used to be that if you were a brand like Nike, retail was the end-all-be-all. Every major brand wanted to be in retail. Fast forward to 2020, and retail distribution as a primary sales channel is the kiss of death for many brands.
Luckily for DTC brands, they were built on the idea of circumventing traditional retail sales channels. They went directly to the consumer and offered them something unique. In almost all the cases, the successful DTC brands operated digitally with low overhead and relied on providing better quality, value, or ease-of-transaction.
That’s why DTC brands with strong products thrived during the pandemic. What’s more, the legacy brands that were already borrowing from their business model have seen equal growth.
Take our Nike example above, Nike has been on the forefront of adapting to the rise of digital commerce and an increasingly direct-to-consumer form of distribution. They have been investing heavily in their Nike apps and building channels to reach their audiences directly. They even announced they would be pulling out of the majority of retail outlets.
Nike Inc.’s digital sales soared as much as 36% after online-order growth helped its overall revenue vault to $10.10 billion in its fiscal third quarter ended Feb. 29. Additionally, digital represents more than 20% of its overall business.
Looking at this from a digital publishers perspective, first-party data should be seen as similar to retail. What DTC clothing brand wants to be in JCPenny right now?
Retailers often had major guidelines, bylaws, and purchasing agreements that brands had to fulfill to satisfy if they wanted to use their channel for distribution. None of these were ultimately in the best interest of the brand, but were “worth it” because of the sales potential.
“We’re increasingly concentrating on our online-to-offline journey… while creating frictionless experiences for consumers throughout the world,” Nike CEO John Donahue said.
On the other hand, you have Adidas that’s been harder hit because they haven’t grown direct-to-consumer relationships as early on as Nike did. Both companies since 2017 have grown their DTC model aggressively, with plans to reduce the retail presence significantly in the future.
The moment the consumer needed to go to Nike.com or the Nike app to buy Nike instead of retail locations is exactly when Nike got to stop relying on the commodity of retail distribution. Now, they’re more profitable and worth more than they ever have been in history.
Digital publishers can build the same relationship, and while it may not allow them to stop reliance on GAFA, it will give them back control of their product and ensure that less and less of what that product looks like is dictated by someone without the publisher’s business interests in mind.
Publishers are in a very prime position where they already have the content that people want. This actually makes them the gatekeeper of an audience. But, the key to executing like a successful DTC brand is using data better than publishers have in the past.
Publishers can evolve using data-driven marketing
Data-driven content can help publishers grow their businesses regardless of changing circumstances in the world at large.
For example: Publishers in the travel niche were hit hard by the pandemic (people stopped searching for a lot of traditional travel content). Travel publishers reliant on audiences browsing Google for travel information saw a severe downturn in web traffic.
The Coronavirus affected ad demand and advertiser spending, with travel being one of the hardest-hit categories. This is a double-whammy. Less visitors and lower advertising interest.
However, there are some forms of travel right now that are thriving.
Publishers hit hard by a decline in travel topics can turn to their frenemy, Google, to see where new opportunity has actually surged ten-fold.
Camping is seeing major growth as a search term right now. This is a travel activity that people are doing and searching for amidst the pandemic.
These publishers are in a great position to start creating specific types of content for people actively seeking it. While it’s not a listical about the “Top 10 Things to do in Bali,” it’s an example of pivoting your strategy to meet search demand.
I know what you’re thinking: Camping is a seasonal trend… Yes, it is, but even when you look at the past 5 years, this summer season’s increase is the highest and most dramatic. It even reached 100% on the “interest over time” graph on Google Trends.
You can even get more specific about this with college sports. You can see the trends are going down.
But if we scroll through you can see that “Ohio state football” fans are still looking to follow along with what’s going on. You start having to think about, “This content is my product.”
Yeah, but isn’t this just content research? … hold on…
These surges in opportunity create holes where there is simply not a lot of good content. Instead of simply writing this content and surfing the wave that Google send from new searchers, capture this audience. Publishers should be figuring out how to make their platform the direct-to-audience channel for that little slice of the overall pie of travel topics.
Successful examples for this could be:
- Building camping a oriented newsletter with niche tips, deals, hacks only available via email newsletter to free subscribers
- Acquiring visitor phone numbers for text updates regarding Ohio State Football
- Gated content and material that can only be accessed when logging on directly or through a PWA
Remember: the product for publishers is largely content.
The steps all publishers should be taking in light of this are…
Publishers here’s what I’d do…
Get visitors to “sign up” for your site to follow along with topics that lack quality content elsewhere. This could be for the whole site or just specific content or pages. Example: Create a newsletter or “Updates” area for a landing page or post. For those people who sign up, there is now a direct channel of distribution.
Use data to figure out which verticals are thriving right now and which ones could be the most profitable using the ad revenue index. Identify the content that is missing and get a stranglehold on it, and don’t be afraid of investing in new mediums, like video or audio, to make the content less of commodity.
Experiment with opportunities to gate your content (but for free), send out a podcast, set up a forum, develop unique research. You can choose specific offerings that are extensions of your content that will allow you a more direct relationship with the audience.
Good content is very valuable
These relationships with the audience don’t have to completely take GAFA out of the equation for publishers, that is the error in a first-party data approach (even if it includes some of the same methods or approaches). A direct relationship allows publishers to mitigate the risk or being universally dependant on platforms, like Google, for revenue and for their audience. What’s more, it opens up some other unique financial opportunities as well. Acquisition for example…
This phenomenon of brands buying publishers’ sites has been on the rise in recent years.
Example 1: Food52
TCG Capital Management bought a majority stake in Food52 for $83 million. These venture capital firms that own DTC brands invest in digital properties like Food52 because they likely want to promote their products through these websites’ audiences.
You can start creating these direct relationships now that will become these great verticals later.
If your audience becomes valuable enough, that’s when these DTC brands that maybe want to sell to Ohio State football fans, are going to ask, “Where is the #1 place where people go to for Ohio state football stuff?”
Then they see a website that basically is a walled garden for people who love Ohio State football (mini Facebook for a a very specific audience).
Example 2: Barstool Sports
Barstool Sports is an example of a brand that actually advertisers their bloggers, because they want to generate a following for each personality within the larger Barstool Sports brand. In turn, visitors want to follow specific people for their written content, podcasts, video series, etc.
Publishers can mimic this same concept, with either people, or spin it as a one-off content series.
Many of their past bloggers are now independant themselves, working for ESPN, or have branched out within Barstool to build new segments base don the popularity they’d grown in a previous one.
One more example for the road please, Tyler
What’s a good example of a potential one-off content series for a publisher? Let’s say you’re a website in the automobile niche.
Recently, when Hertz went bankrupt, there was this huge surge in people searching, “Hertz bankruptcy cars,” because people were interested in knowing if it was possible to buy their inventory since the company was going bankrupt.
You can create a subsect of your website that’s a Hertz bankruptcy expert, or you can create a separate news feed on your site and make people subscribe to get that content. The listing for Hertz cars for sale didn’t exist and was clearly something people wanted. I’d imagine people would be willing to sacrifice their email address to access that kind of database. Plus, that kind of database would take time to build and not fun to duplicate. gating it would prevent Google from taking it and adding it to the search results page and the niche focus would eliminate most competitive risks of someone else providing the same content for free.
Last Example: The Athletic
The athletic.com is offering people free trials, but it’s a subscription-based sports-news segment.
The Athletic received a $50 million investment in January of 2020. Averaging 6-10 million visits per month, investors likely see an opportunity to take on a portion of ESPN’s market segment
While there is no guarantee that subscriber model is going to work, but with such a larger readership, the ceiling on value is high.
Publishers can start a similar journey by asking visitors to subscribe for free to get their content.
Then, in time, they could sell them potentially, different deeper dives into certain types of content, and they could perform tests and look at the data and see whether that’s possible.
Publishers, get the audience first, then test the commerce model (like so many DTC brands have done).
This process allows publishers to start chopping up audiences and being able to figure out:
- Could I sell my audience a product?
- Can I do a deal with Wayfair and sell my audience furniture directly?
- Can I do a deal with Fansided who sells sports merch, and potentially sell their merch to my dedicated audience of Ohio State fans because I’ve created an Ohio state segment on my site?
This is the strategy I believe that digital publishers have available to them. Publishers to build a first-party data strategy. The nature of that kind of approach is old and over. Publishers need to learn how to “sell” audiences their content with the only cost being exclusively, and then using data to define what and how that exclusivity looks.
Don’t rock the boat at your own risk
Publishers should want to reduce reliance on tech giants. Look no further in why these needs to be addresses before it’s a critical issue than Apple and Epic Games.
Epic Games CEO Tim Sweeney sent an email to Tim Cook and other Apple executives declaring that Epic is launching direct payments in “Fortnite” on iOS. This change was intended to give players access to make in-app purchases directly to Epic, and offering lower prices to customers if they purchased directly rather through Apple.
Apple argued that they are entitled to In-App purchases through an Apple device, and Epic Games is trying to refute that. Their belief is that just because players have to download Fortnite from the Apple App Store doesn’t mean they get a percentage of all that money. In retaliation, Apple and Google removed Fortnite from the App Store and Google Play.
If all of your audience is from Google or Facebook or a combination of the two, you’re beholden to them and the changes that they make. Every time a publisher makes something where an audience comes to them directly, that is something that mitigates that risk.
Digital publishers should stop thinking about first-party data, cookies, and these changes in the ecosystem. They likely can’t affect the outcome of what will come and will almost certainly be swept up in whatever technologies and processes drive things forward in the future.
One thing’s for sure. Collectively the platforms, like Google, require publisher content for the major of their ad revenue. The ad revenue will make its way to the publishers no matter what system is used, but publishers can decide how they cut off these platforms from dictating what audiences they are able to do this with if they start now.
Prioritizing it data acquisition first is a backward model that keeps publishers intertwined with tech giants. Instead, focus on creating a great business — there’s finally proof that there are many out there not named Apple, Google, Facebook, or Amazon.
Tyler is an award-winning marketer that was featured on the cover of the September 15′ Business Journal for his unique approaches to digital marketing and was included in the publications 30 Under 30 the same year. Tyler is a 2019 & 2020 member of the Forbes Communication Council, the host of Pubtelligence (digital publishing events held at Google offices around the world), and CMO of Ezoic. Tyler has had articles featured in some of the world’s top publications regarding marketing, business, psychology, and even pop culture.