Pixel Envy

Written by Nick Heer.

Cutting Out the Adtech Middlemen

Gilad Edelman, Wired:

In May 2018, as the European Union’s landmark privacy law, the General Data Protection Regulation, went into effect, the main Dutch public broadcaster set in motion a grand experiment. The leadership at Nederlandse Publieke Omroep — essentially the BBC of the Netherlands — interpreted the law strictly, deciding that visitors to any of its websites would now be prompted to opt in or out of cookies, the tracking technology that enables personalized ads based on someone’s browsing history. And, unlike with most companies, who assume that anyone who skips past a privacy notice is okay with tracking, any NPO visitor who clicked past the obtrusive consent screen without making a choice would be opted out by default.

[…]

On the whole, the new tracking-free ad server was performing so well that NPO decided to abandon cookies entirely beginning in 2020. As of January, visitors aren’t even asked to opt in or out; the site simply doesn’t track anyone. The results have been striking. In January and February of this year, NPO says that its digital ad revenue was up 62 percent and 79 percent, respectively, compared to last year. Even after the coronavirus pandemic jolted the global economy and caused brands to scale advertising drastically back — and forcing many publications to implement pay cuts and layoffs — its revenues are still double-digit percentage points higher than last year.

The main explanation is simple: because the network is no longer relying on microtargeted programmatic ad tech, it now keeps what advertisers spend rather than giving a huge cut to a bunch of middlemen. A report by the Incorporated Society of British Advertisers found that fully half the money spent by advertisers was getting sucked up by various ad tech companies before it got to the publisher running the ads. Even Google publicly states that when an advertiser and publisher both use Google’s platforms to buy and sell programmatic ads, Google takes more than 30 percent of the money. That’s before factoring in other players in the hyper-complicated digital advertising world, as well as the ever-present problem of fraudulent sites sucking up money in exchange for fake clicks.

Companies that build ad targeting are surely more enthused about tracking individual users because they can get a cut of the revenue stream, not because it is actually better for anyone. It doesn’t matter to them that they are buying that cut from struggling publishers and entirely corrupting user privacy in the process. In much of the world, it is an unregulated industry that offers huge growth potential at virtually no risk of a bad reputation — there are thousands of marketing technology companies that nobody outside of the industry can name.