A Two-Tiered System Could Help Digital Advertising Overcome Conflicting Agendas | AdExchanger

Privacy is not the main hurdle to digital advertising’s evolution.

Progress and growth depend on resolving the clash between commoditization and differentiation of assets.

Rather than allowing an ecosystem in which all media is interchangeable to remain the default, media owners must differentiate themselves to maximize their value to readers and advertisers. But pursuing differentiation rather than commoditization will only work if enough top-tier publishers commit to it.

Media owners’ revenues and relationships with audiences have been on a steep decline — one that began long before the cookies started being deprecated and even before GDPR went into effect. Media monetization’s progressive downturn happened largely because of the nature of the programmatic open marketplace and its unfulfilled promise, which has led the high value of select publishers to be diluted across the mediocrity of the many.

In the programmatic environment, ad tech companies depend on access to media owners’ assets at scale: consent signals, user data, contextual metadata, ad inventory and more. This drives the argument for maintaining the programmatic status quo. Proponents of this vision ignore the fact that by replicating the programmatic open marketplace without third-party cookies in a privacy-compliant way, the dynamics that threatened media owners’ existence and wasted advertisers’ budgets will remain in place.

But the reality is that quality media owners can become self-sustainable only by maintaining direct control of their assets, fighting commoditization and strategically differentiating themselves from peers while joining forces in certain areas.

By doing so, media owners will stand out to consumers, which will then help them stand out to advertisers, too.

A two-tiered future for publishers

A thriving network of quality media owners cultivating a safe media and advertising environment is in advertisers’ best interest. But only by creating more direct interaction and collaboration between buyers and sellers can a virtuous cycle of value and growth be kickstarted.

There will always be a clash between buy-side and sell-side priorities. That tension highlights the need for a tiered system, with “Tier 1” publishers being owned and operated by an alliance of media brands. These Tier 1 publishers would be brought together not by the need for scale but by their top-shelf content, user experience and assets. They should work to create innovative ad formats that fight the banner blindness that has arisen from consumers ignoring poor-quality ad experiences. And they should prioritize gathering accurate data, building user trust around privacy and creating clarity about the value exchange offered.

In other words, we need a brand-safe, reputable media walled garden of standards, built on the refusal by media owners to decouple and devalue their assets: data, identity, context, engagement, trust, reputation and relationship with the audience.

This walled garden should be supported by a “new ad tech” category that understands that its role in the first-party web cannot be the same as in the third-party web. It would operate in the background, providing the tools needed by media owners and advertisers and supporting the implementation of their strategies, rather than pushing for visions that historically have fit the ad tech sector’s own objectives.

This strategy would be a differentiator for trusted media brands and advertisers, making audiences more willing to provide consent and data.

But if Tier 1 could optimistically only include the top 30% of media owners, what about the remaining 70%?

Many medium- and long-tail publishers don’t have the resources to differentiate themselves and keep full control and management of their assets. And they lack the coordination to create their own alliances. They also don’t necessarily have a strong relationship with their audience that can rise to the level of trust required for full consent and use of personal data. Plus, they have very little monetization alternatives to advertising, meaning they need to lean into the status quo to survive.

In other words, they will need external help.

“New ad tech” companies will therefore have an opportunity to help the remaining 70% of media owners create a “Tier 2” that could become the new programmatic open marketplace.

This new, open marketplace should be built on contextual targeting and aggregated, anonymized data, moving away from tracking and the collection of personal data. And it should prioritize transparency and accountability.

Doing away with conflicting goals

Ultimately, building a two-tiered system would maximize different resources and business models and cater to different needs and expectations of audiences and advertisers. It would remove programmatic advertising’s existing clash of agendas, reprioritize the distribution of value, protect the revenues of media owners and the budgets of advertisers, while helping ad tech reposition itself.

It would give the industry a fresh new start, as well as a newfound balance and long-term sustainability.

Originally published at https://www.adexchanger.com on April 3, 2023.