Third-party Tracking Got Advertisers Deep Into Debt; Now It’s Time to Repay

A year ago I started to ponder how the digital ad industry might “unlearn” Ad Tech 1.0. This is a continuation of that line of thinking; specifically, an exploration of the wide-ranging “domino effect” that’s happening as third-party tracking goes away.

Ad platforms spent the 2010’s rapidly innovating new ways to target, personalize, and measure advertising, largely based on third-party (3P) tracking. Money poured in from advertisers and agencies looking to shed the waste and uncertainty of traditional media and optimize campaigns right down to the user level.

However, during this exuberant period, advertisers, agencies, and tech platforms were unknowingly digging themselves into a debt that will take years to repay. And this debt can’t be settled by signing a check and swapping out for new tech.

Finding ways to manage the complexity of digital advertising without 3P tracking is putting urgent emphasis on people and process over tech, resetting the tech/agency/client relationship, and generally acting as a forcing function for the industry to clean up long-ignored problems.

3P Tracking—Ad Tech’s Miracle Drug

Digital marketing and advertising are currently running out of easy answers to old problems. One of those “easy answers” was 3P behavioral tracking. I don’t think it can be overstated the extent to which digital advertising molded itself around 3P tracking and the idea that tech platforms could freely collect and access data on user behavior across websites and apps.

The “God’s eye view” that 3P tracking enabled was hugely powerful. It gave birth to retargeting, multi-touch attribution (MTA), audience onboarding (e.g., LiveRamp), dynamic creative optimization (DCO), data management platforms (DMPs), and performance-based media machines like Criteo, Rocket Fuel, and Conversant (to name a tiny handful). Basically: most of 2010’s ad tech.

People and Process Must Rapidly Shore Up Growing Gaps

The convenience of tech masked deficiencies in two other areas: people and process. As 3P tracking breaks down (and for other reasons I won’t get into here), the importance of people and process is going to get increasingly obvious. To illustrate what I mean, let’s consider the example of basic measurement and reporting.

Time was, 3P tracking could measure digital advertising events (impressions, conversions, etc) at a user level, saving everyone a lot of hassle. Campaign setup, ad trafficking, and underlying data (e.g., ad server logs) could all be a complete mess, but as long as user IDs were present for purposes of de-duplication and tallying, brands and agencies could gain a basic understanding of audience reach, frequency, and overlap, as well as performance attribution (remember: cross-site/app/device view-through attribution is only possible via 3P tracking).

However, if you dig deep enough, you find that growing gaps in measurement and reporting caused by the death of 3P tracking are going to require people- and process-based solutions as much as tech-based ones.

If You’re Reading This, Your Data is Probably a Mess

The underlying data for digital ad campaigns indeed was (and still is) a complete and total mess. In May 2020, the UK’s ISBA released its Programmatic Supply Chain Transparency Study conducted with the help of PricewaterhouseCoopers (PwC).

Problems with programmatic media data access, quality, and standardization meant that over the course of fifteen months and massive budget overruns, PwC could only match and audit a shamefully low 12% of ad impressions (to be clear: the “shameful” part is not directed at PwC).

The ad industry was rightly scandalized over the 15% “unknown delta” in supply chain costs that PwC could simply not account for, but having spoken to PwC directly about the study, I can tell you that the team involved was somewhat surprised and disappointed that the industry and trade media seemed to overlook a fresh reminder of how deeply broken advertising data is.

In other words: forget about the “unknown delta”—practically any kind of meaningful direct analysis is still near-impossible for most brands because the data sets aren’t standardized and in many cases are extremely difficult to access in the first place.

Clean Data is Going to Matter a Lot Going Forward

Let’s revisit the problem (or one manifestation of it): without 3P user IDs to reconcile ad impressions and events across time, users, websites, and apps, a brand could show an ad a million times to one person or once each to a million different people.

This is an exaggeration, but without 3P tracking, brands won’t know precisely; they’ll need to model it based on available data and make educated guesses. This is totally a thing. AppsFlyer is doing this, as is Google’s Display & Video 360.

But you can only build reliable models on top of clean data. Because brands’ tech stacks won’t be able to reconcile user IDs, suddenly a brand’s walled garden, publisher, agency, and tech partners will need to adhere to some new set of shared data standards; a “common currency” to take the place of user IDs.

And here’s the rub: this common currency does not exist yet (just ask PwC), so brands will need to create these new data standards, get agencies to use them, and make sure they’re implemented in tech stacks.

Resetting Campaign Data Back to a Baseline (and Repaying the Debt)

Now that we’ve established what “broken” looks like, we can start to sketch out what it would take across people, process, and tech to reset advertising data to a new baseline that’s adapted to a world without 3P tracking:

  1. gain access to your digital advertising data (process)
  2. develop new data standards and instructions on how to use them (process)
  3. get all your media buying agencies to use these standards consistently (process)
  4. make sure anyone with “hands-on keyboard” (agency or in-house) knows how to use the standards consistently (people)
  5. make sure all your tech (agency or in-house) reflects the standards (tech)
  6. collect your now-standardized data in one place for reconciliation, analysis, and reporting (tech + process)

Beyond Step 6, you can use your imagination. Once an advertiser can reset to a new baseline, many of the same use-cases formerly enabled by 3P tracking still apply, including media planning & targeting, creative optimization, and performance measurement.

Two caveats: This was over-simplified for purposes of illustration and 3P tracking is only one factor among many forcing change in the digital advertising industry.

My point was not to pinpoint the death of 3P tracking as the sole catalyst for change or the sole source of “debt.” Instead, my aim was to explore why and how brands, agencies, and tech ought to follow the “domino effect” as far as it takes to build genuinely durable solutions to industry-wide challenges.