Clubhouse Session: March 17, 2021

COOKIE CRUMBLES: The Impact of Google’s Recent Changes 🚫🍪 

Presenters:

Jim Anderson- SocialFlow, CEO
Vince Errico- Trusted Media Brands Inc., President of Digital

Vince & Jim will unpack the many layers of Google’s digital advertising moves. Trusted Media Brands includes
Reader’s Digest, Family Handyman, & Taste of Home. Join us for a fast-paced 30 minutes!

Missed the session? Here are some highlights:

Bottom Line: People's Web Experiences are Going to Change.

Jim Anderson:

You said that you had a slightly contrarian view, I’m fascinated to know.

Vince Errico:

I actually think there is opportunity to improve that link for advertisers, publishers, readers and consumers with the demise of some of the third-party cookies and some of the ad techs structural changes that have to happen to accommodate that.

How to Evolve from Current State to Future State

Jim Anderson:

Let’s take a step back and talk about what marketers or your advertisers want to do, right? Simply put,  they want to advertise to people and get them to buying stuff. Right? And then the complexity though, that’s where everything goes haywire, right?

I mean, you’ve got this third-party cookie ecosystem and you’ve got attribution models and cross-device tracking and frequency capping, and conversion funnels and retargeting. It’s just kind of insanely complex when you get into it.

Marketers are loathed to waste, dollars on wasted advertising. Why bother to advertise to people who are not a good candidate to buy your product? All of these conventions were created to help marketers be more precise, more efficient.

Ultimately advertisers seem to want to go really deep. They want to know everything they possibly can about users–household income, interests, where they live–whatever they can know, they want to know because it helps improve the marketing efficiency. And until now, they have been able to.

From a consumer standpoint, almost every consumer doesn’t want that. Right. They want the opposite.

So there you are, at Trusted Media sitting in the middle, right? You’ve got a trusted relationship with consumers and you have a trusted relationship with advertisers. How do you sit in the middle and broker that?

Vince Errico:

Well part of it is, I’ll just overlay efficiency on top of this. So what you, when looking at how some of the ecosystem has evolved as it has to where we are now, there’s when you think about how advertisers actually go in and buy media, they’re, if you go way, way, way, way back, they would have to work directly with every individual publisher to buy media. And so there, so as ad tech evolved in particular, things became a lot more efficient and an advertiser is it, was then able to go one place or few places and buy media across all of those, across many, many, many, many different publisher websites.

Think of It As Dominos Starting to Fall

Vince Errico:

I kind of think about what’s happening as a big domino set up and that, and someone has hit that first domino. And what we don’t know is how those dominoes are all set up, but they are on multiple paths. And so it’s hard to know exactly how they will all fall and it’s evolving. We don’t really know will advertisers then still want to maintain that efficiency.

And let’s say, go all through Google and within the sort of the system that ecosystem that Google has set up, or will they want to continue to, or will they be willing to give up some of that efficiency in order to get to that specific set of consumers that they would like to address and work, maybe work outside of the Google system with other partners, or even directly with publishers.

Publishers: The Gatekeeper to Readers Privacy?

Vince Errico:

And then on the publisher side, we do have a very strong relationship with our readers. They do trust us with a lot of information. And I think, as a publisher, we also are very involved with, and advocates for consumer privacy. We want to give the control, the ultimate control to the consumer, where they can decide what information they want to give up, what’s the right value exchange for giving up the information, what do they get in return? And then what happens to that information? Who can it get shared with, or how can it get used? And that there again, you have what I’ll call the efficiency for a consumer, right? So, go to a website and to really control their privacy, that they would actually have to spend a lot of time to set those controls with a specific website that they might want to visit, as well as settings within their browser, and then potentially on the devices they’re using as well.

And if you think about a consumer, and let’s say, I’m just looking for a recipe to make dinner tonight, or a pair of shoes, I might not want to spend all that time trying to set up all those different privacy settings in order, just to get a recipe or just to see, how many different colors that pair of shoes comes in. So yes, so it does get very complicated. And, and the only way I think that we’ve been able, or I’ve been able to kind of wrap my mind around it is to break the ecosystem down into its constituents parts and kind of say, okay, how do you deal with this piece, how do you deal with that piece and how do you, et cetera.

Will the Consumer Make Out?

Jim Anderson:

The last thing I want as a consumer is more complexity and more sophistication and more privacy settings that I have to expend the mental overhead to go try to manage. Right. I mean, I might do it if I’m prompted enough, or if I feel outraged enough about something, but in general, most consumers, I think, want less complexity, not more. So that suggests that the default assumptions or Google Chrome to the degree that that becomes the default behavior and the browser is going to go a long, long way, because who wants to sit there and play with the browser settings if they don’t have to.

Is Big Tech the Hero or the Villain?

Jim Anderson:

And then, the next logical extension of that is big tech, right? Google represented here, but we hear it a lot. I think it’s fair to say the big tech will win with this change. Google will win. And that doesn’t mean they’re wrong in making the change necessarily, although I think people would say they’re very much self-interested and they’re making a change, that’s going to benefit them, in the long run, more than everybody else. But it is fascinating with so many of these big tech conversations.

One of the advantages big tech brings, whether it be to the consumer or to the advertiser, is that scale and simplicity and ease of use and efficiency. You said we all want that. We want it as consumers, advertisers want it as advertisers, but it carries a cost, right. And a world that’s dominated solely by the big tech. I think that the societal narrative that’s going on around that is pretty indicative, right. I don’t think anybody really wants to say, okay, my entire digital experience is controlled by a handful of three or four companies that all are effectively monopolies.

Vince Errico:

Right. And Google, in this respect, Google really does have a finger in every single aspect of this particular ecosystem. So if you think about the dominance of the Chrome browser, if you think about the dominance of Google ad manager for ad serving and their dominance in interacting with customers directly, whether that’s through their search habits and history, YouTube, an Android phone, they really, really, really play an outsized role in this entire ecosystem. And so it, and one of the things I think that’s interesting about that, is that there was a lawsuit brought against Google. Yes. I think it was yesterday, by the state of Texas for this most recent announcement that they made, implying that, in fact, that they are, that this move, although Google is trying to say, this is to protect the consumer. The state of Texas is saying that in fact, this is going to consolidate Google’s power.

Jim Anderson:

Yeah, no, it’s a great point. By the way, those are not mutually exclusive. It could be protecting privacy for consumers while also consolidating Google’s power.

I think big tech broadly, Google specifically recognizes that there’s a lot of pent-up angst, if not outright outrage from consumers. And so again, whether they may be self-interested, it doesn’t necessarily mean they’re wrong at least about the consumer feelings, whether they are in the right position to do that and how they do it, and whether they do it more to their benefit than the ecosystem’s benefit, all very good questions for us to dive into.

What is the Alternative? Can Workarounds Succeed?

Jim Anderson: 

So let me shift it back over to what other alternatives are out there, right. There are lots of what I’ll call user-level IDs competing to sort of just take the space of the third-party cookie, right? So I’m thinking of companies like LiveRamp, which uses hash, got mail addresses, and creates a live ramp ID. I’m thinking of The Trade Desk, who’s leading the charge on something called ID 2.0, and there are probably a dozen others out there as well. What’s your thought from a publisher’s perspective, is there going to be a work-around?

Vince Errico:

Yeah, I think, yes, it’s so hard to understand where this is going and I think this will affect smaller publishers, much more negatively than a mid-sized publisher or a large publisher. You know, we are sort of placing our bets around the table, so to speak. We obviously are working within the Google system and exploring how to use their quote, unquote sandbox, the flock with pulling groups, anonymized groups of users together. We’re also working with Trade Desk and Prebid on that 2.0 user ID that you just mentioned. And we’re also simultaneously looking at how those things might work together.

So is there some way we have, I’m happy to say we now have a data science team. It’s only three people, so it’s quite small, but they are looking at, can some of these ways that we identified consumers be translated to these other systems?And so, that remains to be seen. And it’s also a question of how big of a lift that is. And then how effective is that? Will advertisers still find that effective?

TMBI: Titles Positioned Well for the Next Phase

Vince Errico:

I think we have one small, one advantage, maybe actually not a small advantage, a big advantage in this, in that so many of our sites are highly contextual and that does drive beyond any sort of user, individual user identification. The context for, that our readers are within a particular article on, if someone’s reading how to paint a room, you know exactly what their intention is. And that intent based content actually has greater weight in this whole equation in converting a consumer or targeting a consumer for an advertisement.

Jim Anderson:

That’s a great point. And obviously, as I think about your titles, yeah, that’s definitely, if I’m looking at any Family Handyman and I’m reading different articles on Family Handyman, the odds are pretty good that I’m interested in things around the family and handy topics. Right? So that makes perfect sense for your titles. General interest, maybe is a little bit harder, although, I mean, if you’re reading a sports article, the odds are pretty good that you’re a sports fan, right. And so you can divine to one degree or another, those kinds of things. But that seems like a pretty profound shift. It’s not that contextual advertising is new. It’s been around for 150 years, but at least for digital and the way digital’s grown up with third-party cookies, it’s almost like, yeah that’s nice.

Digital Advertising Taking Steps Backward?

Jim Anderson:

I think advertisers have gotten so used to knowing so much about a user, anything short of that feels like a step backward. I mean, they’re just going to have to deal with that contextual relevance and inferring things, rather than, declaratively with some degree of certainty from your data science team, being able to know that. Does that seem like a fair supposition?

Vince Errico:

Yeah. And so I think there are two pieces to that. One is, there again, if an advertiser working directly with a publisher, is going to have better access to that individual user information and being able to communicate directly with that user rather than going through a third party. And then the second piece of that is contextual advertising. Can we bank on the fact that contextual advertising will be enough to produce good revenue?

Jim Anderson:

Yeah, I’m intrigued by that and encouraged. I think it’s, I think about that balance between publishers and consumers and their privacy. I mean, that’s just that context. That is certainly where publishers can play very well. You get some very broad parameters. And at that point, you’re probably just selling aggregated access to an audience that you can define some things about them. But that then leads to this idea of cohorts, which just a fancy name for a group. It implies that you’re making statistical judgments.

Looking For Answers in Google’s White Paper

Jim Anderson:

Help me. I read that white paper at least as much as I could. And I think I lost two years of my life trying to get my way through that white paper. I mean, it’s about as dense and arcane as you can get out there. But I mean, at its core it’s, hey, let’s create these anonymized groups. Let’s do a bunch of statistical magic and very smart things to prove that it truly is anonymous. 

And then I’ve got a group of some number of people and there’s like five pages about how you define the size of that group. Let’s call 10,000 people who are interested in, family or, home projects around the home, right. You know, handyman-type projects. So that’s not hard to imagine that you could create a group like that. It’s not hard to imagine that then advertisers would want to reach those people. But going back to dominoes point, it’s not at all clear how you actually go about doing that, right. As these blocks get incorporated in the browser, how does the buying actually occur? Does all the buying have to go through Google’s ecosystem? What about things that are not built on the Google stack and I guess that’s where we all have to wait and see where this unfolds in the coming months, quarters, and maybe even years.

Vince Errico:

Yeah, definitely. I mean, I feel like, as I said, that first domino just got pushed, and since we don’t exactly know what the pattern or how all the dominoes are set up. I think it is going to evolve as to what happens next. I mean, Google did say that they are modifying the, as a specific field in their Google ad manager tool. They’re expanding that to allow more variables into it. So for better targeting, if you’re using that as your ad serving platform. And so I think that we’re going to see more things like that, evolving, as people start really understanding some of these implications and mapping them out and saying, oh, well, to make that cohort group actually work, you actually do have to expand that field in a Google ad manager, or you’re not going to be able to actually target against that group, even though they might be an anonymized group and you’re still going to have some identifier to say that person, Jim, is part of that cohort, right.

 I don’t feel like I knew more after reading the white paper. I think it sounded to me like a lot of this, is still being worked out, honestly by Google. Google is such a huge organization and really fairly siloed. So the people who work at Google, and Google ad manager are not the same people who work on Chrome browser and, and in some ways, there is a really, really big wall between them. And they’re not even allowed to speak to each other about certain things.

Jim Anderson:

Yeah. It’s kind of remarkable that something, that a change to the entire economic underpinnings of the internet, and there are so a few definitive answers, so many unanswered questions. It’s remarkable if you think about it, normally you would expect things to be a lot more buttoned-up before you make such a profound change.

Does this Change a Publishers' Revenue Strategy?

Jim Anderson:

Let me ask you, I want to see if I can put you on the spot a little bit here. I mean, all this talk about cookies and the cookie apocalypse, all these changes all the uncertainty, and we’re not sure where the dominoes are going to go, but we know the first one has been tipped over. I mean, it’s almost enough to make publishers want to pivot to subscriptions if you will. And not depend as much on advertising. And of course, that’s not new. That’s been going on probably for the past year or more in many publishers and a lot longer for others. What’s your current thought on subscription revenue versus advertising revenue? And what’s the relative importance of those, especially given all that we’re talking about today?

Vince Errico:

Yeah. I mean, that’s a, it’s such an interesting question, especially at this time, as you also look at the rise in streaming services and one method that advertisers have used in reaching people on TV is really drying up for them so rapidly. And now those streaming services are trying to figure out ways of how do they integrate advertising back into them because there’s the desire for the advertisers to be able to reach consumers that way, but also a desire from the streaming services to add revenue streams. And for publishers, I would say, we are lucky our history as a publisher is that more of our revenue, by a long shot, comes from directly from consumers rather than from advertisers. That’s not true, generally speaking in publishing. And so the scramble, I mean, I was actually flipping through some slides from a couple of years ago from a presentation. And, and it’s funny because it’s like this conversation and it’s now front and center and someone characterized it as, gather data or put up a paywall. It’s either a data wall or a paywall or die.

Jim Anderson:

Yeah. Well, that’s a great point. And I guess we’ll have to wrap here because we’ve got one minute left, but I’m thinking about the subscriptions. I mean, I’ve got my Reader’s Digest and my Family Handyman subscription. And then my layer on top of my Netflix, my Disney Plus, my HBO Max, my Hulu, my Paramount Plus, my Amazon Prime, my Wall Street Journal, my New York Times.

It’s just crazy from a consumer standpoint, it’s like how in the world are you going to manage all that? So we’re going to end up back in a world of bundling. I think we all have complained about the cable company and the bundle of channels that we don’t watch, but it exists for a reason.

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