Google/Meta’s Jedi Mind Tricks; Pubs Take Rates: Two Percent?; Apple — IDFA Regrets; UK Online Safety Bill

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March 23, 2022
Google & Meta’s Jedi Mind Tricks
Publisher Take Rates: Two Percent? Really!?
Apple — Living with IDFA Regret?
New UK Online Safety Bill
Google & Meta’s Jedi Mind Tricks Still Under Fire
Jedis may typically be known as supernormal warriors trained to guard peace and justice but when Google and Meta are in alignment, EU and UK regulators won't be looking at them like the heroic force that Star Wars' Qui-Gon Jinn and Obi-Wan Kenobi are together.

The European Commission has launched a formal investigation into alleged anticompetitive conduct by Google and Meta when it comes to online display advertising. Dating back to an agreement code-named Jedi Blue in September 2018, the tech giant duo is being side-eyed for possibly excluding rival ad auctioning services to maintain its market dominance.

The UK’s Competition and Markets Authority (CMA) launched a parallel investigation to determine if the alignment’s sole purpose was to gain an unfair advantage over competitors. The trouble does not stop across the water as the Jedi Blue deal is at the center of complaints in Texas and 15 other US states. As expected, both Google and Meta deny these allegations and insist that its “non-exclusive bidding agreement” was nothing less than welcoming to other bidding platforms.
Why This Matters
We have been covering Jedi Blue from the beginning and have no doubt this is just another episode in the saga. We know that remembering news from just last week can be a struggle so remembering the duopoly's agreement from nearly four years ago is not likely top of mind so let's refresh your memory.

Header bidding was set to enhance and transform revenue streams for publishers, providing more transparency and an opportunity to gain more advertising dollars on their sites. Even Meta (known as Facebook back then) was on board. But that was short-lived after Google and Meta made a deal that would give Meta exclusive rates and prime ad placement in exchange for supporting Google’s Open Bidding program and halting its plans to build a competing ad tech service — allegedly. If this actually happened, it would have essentially taken both platforms to another level of dominance and blocked smaller competitors from providing alternate bidding services to publishers — ultimately violating the Sherman Act.

A U.S. lawsuit was filed over a year ago and the investigation has been ongoing since. However, the latest expansion by the EU and UK have bought a few things to light:

Investigation Pile Up: While each investigation is currently within its own territory, a formal announcement of simultaneous investigation points to a willingness to work jointly in an effort to expedite the process. Combine forces to fight combined forces.

Google Over Meta: The EU investigation focuses on both the deal itself as well as whether Google abused its power in the marketplace. If the latter comes to light, Meta could slip under the radar without any wrongdoing.

The Fines Are Adding Up: While both platforms seem to blink money, the fines are coming more rapidly which could force tech giants to play nicely with their smaller counterparts.

We don’t anticipate any major decisions to be made soon but with regulators attacking from multiple angles, there should be more significant updates as the year continues.
Publisher Take Rates:Two Percent? Really!?
It’s no secret that publishers can sometimes get the short end of the stick when it comes to programmatic advertising revenues. A recent study by Adalytics found that, on average, the take rate for intermediaries is around 35% of the bid. For some publishers, however, up to 98% of advertiser revenue goes to technology intermediaries — meaning only a shocking 2% (!) of ad spend is making its way to publisher pockets for certain transactions.

While this extreme figure might be an outlier in the research, it echoes some of the findings of the 2020 ISBA and PwC study, which reported that publishers receive on average 51% of the ad spend – with 15% of that being unaccounted for. Both studies highlight the opacity of programmatic trading for much of the ecosystem. And while the reality of the situation is probably more complicated, publishers in the research agreed with the general findings.
Why This Matters
With findings like these, it’s perhaps no wonder that there’s a general trend in programmatic focused on closing the gap between advertisers and publishers. But closing the gap is just the first step. Smart publishers are seizing this opportunity to explore new commercial models with their buy-side partners, swapping first-look inventory access, post-auction discounts, measurement support, and reporting intelligence in exchange for larger spend commitments. Activating these types of arrangements, though, without disrupting entrenched buyer workflows and processes, requires purpose-built technology.

The MediaGrid is a next-generation SSP and curation platform, designed with the sole purpose of bringing buyers and sellers closer together and empowering both sides with transparent supply and data packaging tools that take SPO to a new level. Agencies are using The MediaGrid to curate bespoke supply marketplaces and data partnerships, while publishers are leveraging its data monetization and supply packaging tools to build new ad products that connect directly with agency buyers. Connect with The MediaGrid today to learn more.
Apple — Living with Regret?
Apple’s executive team is reflecting on some of their strategic decisions with regret. No, unfortunately, this isn't about launching ATT. Instead, in hindsight, they're looking at IDFA with mouths wide open in OMG fashion.

Erik Neusenschwander, Apple’s privacy chief, and his team created the identifiers for advertisers (IDFA) in 2011. This software-based solution was developed as a replacement for hard-based identification codes to allow for user tracking across devices. Because Apple has been a proponent for privacy for so many years, they also built in a feature that allowed consumers to switch off the tracking identifier but most were unaware and never used it.

While the intention was harmless, IDFA opened a can of worms as developers realized its potential and found an exception to every identifier’s rule, including continued tracking for those few who did turn it off. Neuenschwander and his team attempted to control its use with additional guardrails in 2014 and 2016 but by that time it was terribly too late.

The regret and lack of control appear to have weighed heavily on Apple’s executive team, sparking internal debate and ultimately led to the solution we now know as App Tracking Transparency (ATT).
Why This Matters
When Apple rolled out ATT, it was met by developers and publishers with more clenched fists than rounds of applause. While this all-in approach to consumer privacy is admirable, it really gave a lot of folks' ad revenue a beating. Oh, we'll never hear the end of Facebook's woes.

Now we have more insight into the idea that Apple is trying to rectify a problem they played a big part in creating. The IDFA dangling carrot was too low to ignore and immediate revenue became more important than then a user's privacy or experience. While we can all point an accusatory finger towards Apple, we have to take accountability for the critical role we played in the deterioration of consumer trust.

From ATT to Google’s Privacy Sandbox, all of these privacy initiatives are forcing the advertising ecosystem to revert to the basics. Of course, this is much easier said than done. But maybe it isn't too late to regain credibility.
New UK Online Safety Bill with a Side of Scam Ad Regulation
Scam Ads. We’re not going to take it anymore, according to an updated proposal for the UK’s Online Safety Bill. If passed, this will put social media sites and search engines on the hook for creating processes to block scam ads and remove them if they slip through the cracks.

The goal is to better protect consumers from a growing list of scam opps in the marketplace. From significant financial loss to blows at self-esteem and overall mental health, people are feeling misled and detrimentally harmed by scam adverts causing the government to step in.

This proposal has also led the UK government to take a closer look at how online advertising is regulated overall. This could lead to stricter rules and hefty penalties for social media influencers who forget (or blatantly omit) the appropriate #ad or #spon hashtag for paid promotions online.

The how of these regulations is still TBD but ID checks for those who publish ads have been an option mentioned to confirm validity.
Why This Matters
The plethora of “got ‘em” ads out there are nondiscriminatory and have turned users of all walks of life into victims. However, users may not be the only ones rooting for the Online Safety Bill.

Publishers have a good amount to gain depending on the bill expansion. The fight against scam adverts is a never-ending steep hill which more often than not, leaves pubs playing the middleman with lost dollars and disgruntled users.

With a government-backed initiative, publishers have the opportunity to protect their audience and their reputation. Not to mention, preserve the aesthetic of their site. But regulation is no easy feat, especially as bad actors only get more advanced. Heavy-handed repercussions are the only thing that may keep them at bay.

"The Online Safety Bill must now ensure that the regulator has the support and resources it needs to hold companies to account and take strong enforcement action where necessary so that fraudsters are prevented from using adverts to lure unsuspecting victims," said Anabel Hoult of consumer group Which?.

As always, we've got a watchful eye on Europe for the global pubs but also to anticipate what may come to the US next.
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