Why The 2020s Are The First Decade Of Consumer-First Advertising
The ‘70s got bell-bottoms and disco. The ‘90s got Furbies and the Internet. The 2020s will be known for consumer-first advertising.
Sound boring? It’s not. Since Apple announced the new rules last summer – that iOS users should choose whether or not their device IDs can be shared with third-party companies for advertising – the ad tech world has gone into a frenzy.
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The death of the IDFA will drastically limit the amount of third-party data many advertisers rely on. Wiping out these iOS swaths of third-party data will create a domino effect, impacting everything from campaign targeting accuracy to mobile attribution. Here’s why that’s a good thing.
Whether you agree with Apple or not, the method they chose to eliminate the IDFA is pro-consumer. The new iOS update will explicitly message every user of an iOS app up front, asking them directly whether they would like to give advertisers the ability to track them across the internet.
Advertising has been moving in a pro-consumer direction for the last five years, since the whirlwind onset of digital gave way to clean-up crew regulators like CCPA and GDPR. They were tasked with rescuing the consumer – and more importantly, consumers’ consent– from underneath a pile of ad-tracking rubble.
The question of consumer privacy didn’t exist in the days of TV and radio advertising because advertisers had far less data to work with. With the advent of digital came both exciting new channels as well as the first fully transparent look into the lives of consumers; a look that was so alluring, marketers justified any potential breaches in privacy by chalking them up to the small price to pay for such well-targeted and personalized ads.
Now that ad tech giants like Apple and Google have made it clear they’re putting consumers’ privacy first, it’s time for the rest of the ad tech world to get on board. According to the Interactive Advertising Bureau (IAB) State of Data 2020 report, 57% of marketers said they have already increased their use of first-party data for targeting over the past 18 months.
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First-party data, also known as consent-based data, is consumer information collected directly from consumers with their knowing cooperation. First-party data allows marketers to both comply with data privacy regulations while also using the data to segment consumers and deliver personalized ads. The way companies use their first party data to serve targeted ads will shift in the next decade, from an individualized approach to a cohort-based one, in order to avoid the stigma of targeting people on a 1:1 basis. A cohort is a group of people sharing something in common, like their location, the day they downloaded an app, or the time before their first purchase.
The 2020s will also see a consumer-first approach seep into the code of their machine learning models, which will ditch private consumer-level data tied to individual device IDs (IDFAs for example) in favor of using anonymous cohort-based models to identify common patterns and behaviors. Google’s proposal for interests-based cohorts, called FLoCs (federated learning of cohorts), announced in January that FLoCs delivers around 95% of the conversions per dollar spent when compared to the cookie-based advertising of the past.
And it’s not just the way advertisers collect data that’s becoming more privacy-conscious; the ads themselves are moving towards an opt-in, consent-based format. Value exchange advertising, where consumers are rewarded for watching an ad with an extra life in an app or free wifi, has grown exponentially in recent years. Today, 79% of consumers said they prefer value exchange advertising over every other ad format while 71% of US mobile app users report that value exchange ads capture their attention more than any other type of ad, according to research by the IAB and eMarketer. This is because the ads put the consumer first, allowing them to choose whether to engage with the ad in the first place, and then rewarding them when they do so.
It has become abundantly clear that the most successful companies in the next decade will adopt a privacy-conscious, consumer-first approach when it comes to advertising. Advertisers and DSPs alike must stop swimming upstream, and instead learn to evolve alongside an increasingly privacy-minded world.
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