Permutive’s VP of Products, Chloe Grutchfield, takes a look at the key first-party data trends for 2024 especially in light of the sunsetting of third-party cookies this year. As audiences disappear, it’s publishers that can address users and scale campaigns.
2024 will be a transformative year for digital advertising as the industry finally bids farewell to third-party cookies for good. Yet, with or without cookies, publishers already face a huge challenge that needs to be solved: addressability.
As consumers increasingly opt out of sharing their data with third parties and use browsers that block cookies, just 30% of audiences on the open web are addressable today, decimating publishers’ revenue potential.
According to Digiday research, 83% of publishers have experienced significant revenue loss on the open marketplace (OMP) in 2023. A solution exists in direct sales, and data shows the trend will continue to grow.
Shifting tides to direct-sold
Many of the issues experienced in the OMP are alleviated by direct relationships between publishers and advertisers and by addressing all audiences rather than the 30% available in the open. Publishers can unlock 100% addressability, opening the flow of direct revenue for publishers, alleviating losses in the open and improving advertisers’ reach and performance.
Permutive data shows that publishers saw a 55% increase in direct-sold audience revenue in Q1 2023 YOY, which increased to 62% in Q2 2023. On the advertiser side, one large global technology brand recently ran a global campaign in the US, Canada and the UK across 15+ publishers. It increased reach by 150%, reaching more users in a cookieless environment than the largest walled gardens and adtech companies.
This shift only scratches the surface. Major brands, including The Hershey Company, have identified the need to abandon their reliance on the OMP. The chocolate manufacturer, which spends between $350 million and $450 million a year on advertising, concluded that it was wasting money on ads that did not appear in premium environments and appeared too frequently. To tackle this, Hershey’s has been working toward making 80% of its media addressable through private marketplace deals and limiting its OMP spending to just 20%. In 2024, we expect more budget to flow directly from advertisers to publishers.
The shift toward direct relationships positions publishers as the new data providers, but they must continue encouraging buyers to see the benefits of working directly with them through insight-led narratives about their audiences.
It starts with education. Publishers must showcase their ability to leverage their known audience alongside behavioural, lifestyle and demographic signals they capture online and offline and model it to reach advertisers’ target audience. Publishers also need to showcase the engagement of their audience and how that translates into greater campaign performance.
Classified platform Gumtree took this approach for direct advertising campaigns using insights from cohort behaviours and affinities pre- and post-campaign to optimise against advertiser KPIs. The publisher rebuilt all its existing cohorts, variations, and lookalikes to create more accurate and customised segments, resulting in nearly 600 targetable audiences available to advertisers. Over the past 12 months, they served over 22m impressions to “lookalike” and “clicker” audiences (users who clicked on other ads), extending campaign reach and improving campaign performance (+27% in CTR).
Publishers must also showcase their innovative steps to enable advertisers to access audiences that are invisible to most but are highly valuable, particularly in leveraging technology to provide addressability across transient audiences.
The coming year will see publishers begin to leverage audience affinities to specific content to evolve their contextual offering and reach the promised land of 100% addressability across these valued audiences for advertiser partners.
An example is Penske Media Corporation. The publisher can apply granular audience targeting capabilities across 100% of their audience, including transient audiences. Reaching audiences with precision regardless of consent status and from first-page view means they have reached a very engaged audience traditionally invisible to adtech. The results for PMC’s campaigns show a 5x increase in performance (CTR) in campaigns that only used first-party data and a 5x increase in driving effective CPA for a clothing retailer when using PMC’s first-party data.
Part of the educational push around the value of publishers’ first-party data has to include how advertisers can leverage their first-party data, match it with a publisher’s data to create a seed and use the right modelling tactic (lookalike, classification, event prediction) to create a scaled audience that can meet campaign objectives.
The future lies with publishers
This will be an essential year for the entire digital advertising industry, but publishers have a tremendous opportunity to take the reins and lead the industry. Even ahead of 2024, publishers should be focusing on building direct-sold businesses and focusing go-to-market efforts on educating buyers on the value of their audiences and the performance that comes with it. As audiences disappear, it’s publishers that can address users and scale campaigns.
VP of Products, Permutive
Permutive’s privacy-forward audience platform helps publishers build audiences and develop insights to win more RFPs, grow re-bookings and build deeper relationships with advertisers based on data.