Advertising technology (adtech) companies are being forced to reassess their targeting practices and how they generate revenue with less access to consumer data, according to a new report.
GlobalData’s AdTech report explains that the situation has arisen as a result of increased concern from data privacy regulators and bans on third-party cookies.
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While Apple’s Safari and Mozilla’s Firefox browsers have significantly restricted their support for third-party cookies, Google’s Chrome is continuing to support them but with added privacy options for users.
Traditionally the bedrock of adtech, firms are having to decipher how a cookie-less internet will affect their firms, as regulation intensifies.
All of this comes as the competition within the ad tech industry heats up, with Big Tech looking to buy out some smaller firms.
Regulation steps up
Regulators across the globe have been scrutinising the power of Big Tech in advertising and are looking to increase protections for users’ privacy.
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By GlobalDataThe EU especially has been proactive in restricting personal data use in advertising through the Digital Markets Acts which strengthens the consent requirements for targeted advertising using personal data.
Similarly, in California, the Consumer Privacy Act means consumers are given the choice to opt out of the sale of personal information, inclusive of information collected by cookies.
Adjusting to a cookie-less internet
The role of third-party cookies in adtech has been deemed critical to the industry, and the report states that, currently, “there is no clear alternative to cookies”.
There are over 80 identity solutions on the market claiming to ensure user privacy while obtaining useful data. Unified ID 2.0 from The Trade Desk and RampID from LiveRamp are recognised as frontrunners.
While the industry figures out how to navigate a lack of third-party data, adtech companies are now looking to utilise more first-party data.
The report notes that a 2023 Digiday survey found that 85% of advertisers and 79% of publishers prioritize first-party data strategies ahead of the cookie phaseout.
Another alternative being explored is Google’s alternate profiling system called the Privacy Sandbox. Starting used a technology called the Federated Learning of Cohorts, this technology clustered groups of users with similar interests, by analyzing users’ browser habits.
However, the use of Federated Learning of Cohorts technology still allowed advertisers to identify specific users via browser fingerprinting. Instead, Google now uses ‘Topics’, which allocate users to categories based on their interests over the last three weeks. Google says this prevents advertisers from accessing personally identifiable data.
Despite these issues, the industry is still set to grow with GlobalData forecasting that overall, the adtech industry will be worth $1trn by 2030, up from $581bn in 2023, growing at a compound annual rate of nearly 10% over the next seven years.
