February 09, 2022

IAB: Marketers Misunderstand Cookieless Measurement, Unprepared For 'Blackout'

Measurement is one of the industry's biggest challenges. The IAB State of Data 2022 report released Tuesday reveals that many executives are less prepared for the deprecation of third-party cookies than first believed, and there is a great deal of work to be done to mitigate the risks to revenue, brand visibility, and customer relationship management.

The IAB called on the industry to form universal measurement standards during the company's annual leadership study, citing Meta's $10 billion revenue hit based on changes in privacy standards.

The data concludes that advertisers “are on the brink of losing their ability to measure advertising campaigns.” As the industry’s sense of preparedness grows, implementations have made little progress. Some 77% of industry executives -- up 15% from the previous year -- claim to be prepared for the loss of cookies and identifiers, but most are not taking the necessary steps to adapt their data approaches and operations.

More than two-thirds of advertisers have not increased their use of artificial intelligence, and 66% have not adjusted their measurement strategies this year. About 59% are not increasing their investment in first-party data.

IAB commissioned Ipsos to examine how changes in privacy legislation, deprecation of third-party cookies and identifiers, cross-media addressability, and platform rules and mandates affect the collection, measurement, and optimization of data.

This report surveyed more than 200 industry leaders across brands, agencies, publishers, ad technology, and data companies and examines how the inability to properly capture data and measure success will disrupt the industry.

There’s a false sense of confidence. Nearly 60% of industry leaders expect that the loss of third-party cookies and identifiers will affect ad measurement, but they are not taking actions to mitigate the risk.

Some 46% of marketers said they do not know enough about major initiatives like Google’s Privacy Sandbox, suggesting the industry doesn’t understand the impact that it and other proposed industry solutions will have on addressability and measurement.

Despite widespread adoption of the Open Measurement SDK with more than 100 SDKs and apps integrated, only 15% of participants use the Open Measurement SDK signal checks in bid requests — an integral component for buyers’ ability to standardize and consistently measure video and apps.

Big money is at stake. Since third-party cookies and identifiers power the addressability and measurement in open RTB programmatic buying, up to $10 billion of sell-side annual revenue is in jeopardy, according to the analysis of the findings.

Advertisers will feel the financial pressure, particularly to find cost-effective alternatives to reach addressable audiences and measure ad campaign success.

Increased ad costs due to the privacy-driven disruptions on the digital ad supply chain will shrink the pool of available addressable audiences driving up costs to maintain campaign ROAS/CAC/CPMs from 29% to as much as 200%, per the findings.

The report suggests that all companies must invest time, resources, and money reconfiguring existing and implement new data tools and infrastructure including AI and machine learning, campaign functions, privacy compliance authorization, measurement, and attribution modeling. Brands may even want to hire and retain legal counsel, though it’s difficult to determine the exact impact of the loss of third-party cookies and identifiers.

Copyright 2022 MediaPost Communications. All rights reserved. From https://www.mediapost.com. By Laurie Sullivan.

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