MediaMath Fallout; Privacy Sandbox Rollout; US & EU Data Privacy Framework Launch

AdMonsters Wrapper: The weekly ad tech news wrap up
This Week
July 31, 2023
Sequential Liability: Case by Case Risk
Google's Privacy Sandbox Goes Live
US & EU New Data Privacy Framework
Around the Water Cooler
Sequential Liability: Case by Case Risk
The News: Sequential liability is again in the news, with many questioning how much it benefits the digital ad tech space. Sequential liability dictates who assumes the risk if a player goes bankrupt. This week, AdExchanger reported that multiple SSPs are leaning on the sequential liability clauses in their contracts to claw back from publishers the money they lost when MediaMath went belly up. The sums cited aren't insignificant. According to AdExchanger, Magnite is owed $12.6 million, and PubMatic is owed $10.5 million.

While SSPs with sequential liability in their contracts have every legal right to clawback money, it's not a strategy with wide support within the industry. According to a 2021 MediaPost survey, just 14% of ad executives believe it's the right approach for handling responsibility when a company like MediaMath goes bankrupt. Only 9% said that publishers should "eat the loss."

"Sequential liability is an ad tech tax that burdens the entire supply chain," Scott Messer, Founder of Messer Media. "For me, it was always a top priority in contracts, but it depended greatly on the leverage in each negotiation. As the topic has become more popular and repercussions clarified, I think we'll see much less flexibility on payment terms across the board. Missteps here can have disastrous results."
Why This Matters

People may not like it, but it's here to stay as an ad tech tax. Eliminating sequential advertising from the ecosystem will require publishers to band together to refuse to work with any SSP that offers it — an unlikely scenario. "No single publisher has enough scale to make an SSP take that out of their contract. The SSPs will keep sequential liability protection for themselves as long as possible. I highly doubt any significant volume of publishers will stop doing business with PubMatic, Magnite, TripleLift, Wunderkind, the SSPs that have clawed back," said Justin Wohl, Chief Revenue Officer at Salon.

Emry Downinghall, SVP of Programmatic Revenue and Strategy at Unwind Media, agrees. "I don't think publishers are in a position to drop an SSP with a meaningful 'share of wallet' due to a clawback. However, if the SSP is a marginal contributor to overall revenue, it would make sense for the publisher to re-examine their relationship if they felt uncomfortable with how SSP managed their risk."

Enforcement is Case-by-Case

Not every SSP plans to enforce its sequential liability clause. Google told AdExchanger that it will continue to pay its publishers, as did GumGum, Colossus SSP, and Index Exchange. “None of the companies who are choosing not to enforce sequential liability are going so far as to remove the clause from any publisher contract. They would much prefer the option to be benevolent when convenient and to protect themselves when necessary,” Messer said.

That may be so, but there are good business reasons for some SSPs to be benevolent. Take Colossus SSP, an SSP that has focused on building a strong roster of general market outlets as well as diverse, multicultural and niche publishers that have previously been left out of the programmatic ecosystem. “We're well aware that the latter group often has cash flow constraints, and being a responsible partner — to not disrupt payments — is vital in maintaining those strong ties to support a truly inclusive marketplace,” said Mark D. Walker, CEO of Direct Digital Holdings, which owns Colossus SSP.

And that’s kind of the point: Many SSPs have invested in building a roster of publishers in order to curate unique audiences their sales teams can sell to advertisers. Opting not to clawback money is a way for at least some SSPs to protect their investments.

Publishers Beware
Even if a publisher isn't asked to pay back money to PubMatic or Magnite, it's still a wake-up call for the industry. For people like Jana Meron, founder of Lioness Strategies, the downstream effects of MediaMath's bankruptcy should spur everyone in the industry to focus on its overall health. "Publishers need to be aware of what's happening in the market, within the digital ecosystem, to ensure its health and safety. We cannot turn a blind eye to understanding how revenue is generated, who the players are, what differentiates them, and which companies continue to support the ecosystem for the better."

In a LinkedIn post, Robert Janes, Head of Product at AdButler, suggested that publishers can protect themselves by moving away from programmatic and focusing on direct deals.

That’s one way to get rid of future clawbacks, but it might not be to everyone’s taste.

Ad Tech Prepares to Play in Google’s Privacy Sandbox
Much like when Beyoncé dropped her surprise self-titled album in 2013, the ad tech world stopped when Google announced plans to deprecate the third-party cookie.

World Stop…Carry On: The ad tech industry entered a frenzy when they realized the third-party cookie safety blanket was being pulled from under them. Firefox and Safari let the third-party cookie go a while ago, but Google owns a 65% share of worldwide web traffic, which is a massive blow to publishers and advertisers.

Amid the announcement, Google also soft-launched its Privacy Sandbox initiative. The tech titan delayed both on multiple occasions, but the time for waiting is over. Google is rolling out the first phase of the Privacy Sandbox API.

America Has A Problem…And Its Third-Party Cookies: This week, Google will enable Privacy Sandbox APIs for about 35% of Chrome users. The percentage will rise to 60% by August and about 99% by the end of the year. Topics API enables Chrome to share information with third parties, such as advertisers, while maintaining a certain level of user privacy.

"Topics are a signal to help ad tech platforms select relevant ads," said developer relations engineer Adriana Jara. "Unlike third-party cookies, this information is shared without revealing further information about the user or their browsing activity."
Why This Matters
Attention all publishers! The time to start testing Google's Topics APIs or any other cookieless solution is now.

At AdMonsters Ops NY conference, Joey Trotz, Director of Google's Privacy Sandbox, surprised the audience when he announced that Google would deprecate third-party cookies in Chrome in H2 of 2024 in accordance with their CMA commitments. Paul Bannister, Chief Strategy Officer at Raptive, also emphasized the importance of raising red flags and providing valuable feedback about what works and what needs improvement when testing.

"Publishers that start testing the Privacy Sandbox APIs now will also be in a better position when third-party cookies are gone," Trotz said. "I guarantee you're not going to drop in Topics on July 1, 2024, and have your revenue be what you want it to be without a cookie."
US and EU Launch New Data Privacy Framework
The U.S. and E.U. collaborated on bridging the privacy gap, but is the resulting framework enough to help publishers and advertisers sift through compliance confusion?

In response to mounting concerns over data privacy and the transfer of personal information between the U.S. and the E.U., both parties have reached a crucial agreement, finalizing a new data privacy framework.

The Privacy Framework: It aims to align the E.U. 's GDPR and the U.S. data privacy laws, such as the CCPA. The negotiations involved extensive efforts to ensure that protecting individuals' data rights are upheld while facilitating cross-border data transfers essential for transatlantic business operations. It addresses issues like surveillance practices, data access by law enforcement and establishes a new Ombudsperson mechanism.

However, there are still challenges to ensure the agreement's implementation and enforcement are effective. For instance:
  • Companies must now familiarize themselves with the specifics of the framework to ensure compliance with the new requirements.
  • The framework's success will heavily rely on the effective functioning of the new Ombudsperson mechanism, which will act as an independent overseer to address data access complaints and concerns from E.U. individuals.
  • The U.S. must commit to stricter privacy standards, aligning more closely with GDPR principles.
Why This Matters
The U.S. has struggled to create a federal privacy framework. Several states have passed robust privacy laws — Oregon recently passed a comprehensive state compliance law— but the federal government has not had the same luck.

At issue is the federal government and the advertising industry aligning on a standard agreement. While both understand the importance of federal data compliance standards, their ideologies differ.

Maybe the U.S. and E.U. framework to streamline overseas data traffic can set a precedent for the U.S.? It's possible, but some industry experts are already combating the U.S. and E.U. framework. Privacy activist Max Schrems is calling for a change in U.S. surveillance law. His efforts struck down the previous two frameworks. Is the third time the charm?
Around the Water Cooler
Elon Musk's Rebranded Twitter Slashes Ad Prices In a bold move to boost advertising accessibility, Elon Musk's rebranded Twitter, um, X platform has implemented significant cuts in ad prices. The decision aims to attract a broader range of advertisers and potentially revolutionize the social media advertising landscape. (WSJ)

Netflix Faces Backlash Over AI Product Manager Job Post Netflix received criticism and sparked controversy after posting a job advertisement for an AI Product Manager role. The role has raised ethical concerns about technology and data privacy limits in the entertainment industry amidst the heat from the writer’s strike. (Deadline)

FreakOut Strengthens Advertising Security through IAS Brand Safety Integration Asia’s leading ad tech provider, FreakOut, reinforces its dedication to secure advertising practices by partnering with IAS to enhance brand safety. Through this collaboration, advertisers gain access to advanced tools and measures, ensuring their ads appear in brand-safe environments. (Newswires)

Xandr Exists the Political Ad Game Come September, Microsft-owned Xandr is bowing out of the political advertising game. The end-to-end platform for buyers and sellers is forbidding election-related content, including fundraising for political candidates, parties and PACs. There will also be restrictions around alchohol, gambling, tobacco and vaping in certain markets. Microsoft-owned Linkedin is also unfriendly to political advertising. With so much fraud and illegitimate advertisers in the political ad space, this could be a trend for the advertising ecosystem. Other big tech companies like Google and Meta have also slammed down the hammer on political advertising in recent years. (MarketingBrew)
Sweet Tweet
Protected Audience API
Are we calling Protected Audience API PAAPI? Like is that a thing?

#privacysandbox #cookieless #cookiepocalypse
Worth a Listen
Bloomberg Media CEO Scott Havens on why publishers should mostly embrace AI
This episode of the Rebooting Show features Scott Havens, the CEO of Bloomberg Media. He talked about how Bloomberg is embracing AI tools, as it has for several years, with BloombergGPT for financial information, and Bloomberg Media is using AI tools for productivity, translation, video clips, and summarization.

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