As you likely know, the recent launch of iOS 14.5 dropped the gauntlet on mobile data collection. That includes more in-app notifications to explicate data tracking, and offer opt-outs. This is part of Apple’s broader privacy reform that most notably puts greater restrictions on the erstwhile-pervasive IDFA.
Like similar moves we’ve examined in the past — such as iOS 13 location-tracking notifications — this transparency could drastically reduce the level of in-app user tracking that’s possible. That tracking includes several things including your web history, app use, and location behavior.
The latter is obviously where local media and commerce come into the picture. App publishers, ad networks and brands/marketers have enjoyed more than a decade of in-app user tracking to inform ad targeting and attribution. That’s been gradually stepped back over time and now takes a big jump back.
Beyond Apple, Google is likewise turning things upside down by deprecating the third-party browser cookie, pushing its Floc construct instead. So what does all this mean for publishers, advertisers and ad-tech companies? They’ll have to find clever ways to target ads and content within new parameters.
Context is King
One of those clever workarounds could be the revival of an old standby: contextual ad targeting. As you may already know, this is the flavor of targeting that uses the content itself (such as an article or eCommerce page) as the relevance trigger for ad placement. It’s all about complementary or conquested insertion.
Contextual targeting was prominent in early days of the web before the smartphone and browser cookie created a runaway train of “deterministic tracking.” But it’s returning to popularity as it’s privacy safe: the content is targeted versus the user. So innovations in contextual targeting could spark the next era of ad tech.
Beyond theoretical signals for contextual targeting’s alignment with the current environment, we’re seeing real buy-side demand signals. Specifically, 70 percent of mobile media buyers (brands & agencies) believe that contextual targeting is primed for a comeback according to an Advertiser Perceptions survey (n=252).
Correspondingly, the data indicate that advertisers are intent on spending in content environments with overt contextual signals. That includes gaming (53 percent), entertainment (48 percent), lifestyle (43 percent), and demographically-specific media like childrens’ programming (15 percent).
But back to the local media industry, it could take a hit from this trend towards contextual ad targeting. Specifically, the Advertiser Perceptions survey reports that 37 percent of advertisers have or plan to decrease or discontinue location-based targeting. Of all tracking modalities, location is arguably the most sensitive.
Unintended Consequences
Back to the “innovations in contextual targeting that could spark the next era of ad tech,” some kinks still need to be ironed out. For example, one downside of contextual targeting has always been unintended consequences. For example, the Amtrak ad that accompanies a news story about a train wreck.
This could require innovative ad tech startups to redeploy the AI and machine learning otherwise channeled towards deterministic tracking. The same or similar technologies can be used to improve the art and science of contextual targeting. That translates to an opportunity gap for the next era of ad tech startups.
Meanwhile, a separate but equally impactful market outcome will be continued ad-tech consolidation. We’ve seen this play out in the location intelligence sector over the past two years. With growing restrictions on data collection, companies are compelled to join forces, pool resources and grow data sources through M&A.
We could see that trend migrate to the broader ad-tech world. If so, expect consolidation to follow in the coming months. We could also see an overall culling of the herd as escalating restrictions sink some ad-tech companies that don’t survive the storm. In all of these scenarios, industry shakeout is the likely outcome.
