Friday, March 29, 2024

Online Media’s New Vulnerability Is a Selling Point for Out-of-Home Advertising

Guest post by Mark Boidman,
Managing Director and Head of Media & Tech Services, PJ Solomon

Tuesday, June 11, 2019

Data Over-Reliance is Becoming Online Media’s Greatest Vulnerability.

Google introduces new data policy changes.

Google recently announced updates to its Chrome browser that will severely limit the ability for third parties to track “cookies” – the most common method online advertisers use to digitally track user behavior across websites. Chrome will now enable its users to clearly view which sites set cookies and to remove those third-party cookies, as desired.

These changes arm consumers with two powerful tools to defend their privacy from advertisers using their data in unwanted ways.

First, the power of information: users will be able to view how specific advertising platforms are setting cookies to their data and choose not to visit any websites they believe are abusing those data limits.

Second, the power to remove: users will have the ability to delete unwanted cookies from their browsers. The result will allow Chrome users to opt out of data-focused online advertising platforms and mitigate the efficacy of sites they may continue using via cookie removal.

Chrome, Google, OOH advertising, DOOH

Mark Boidman, Managing Director and Head of Media & Tech Services, PJ SOLOMON

 

Given that Chrome accounts for more than 60% of browser usage across mobile and desktop, the negative impact of these policies on online and mobile advertising will be significant. At the same time,  this negative effect should help out-of-home (OOH) advertising gain more market share.

How changes to Chrome browser will affect online advertising.

Historically, mobile and desktop online media have had advantage over OOH because of the amount of data they collected and used for targeting and reporting on ad campaigns. In theory, better data access and ease of use enabled excellent targeting and tracking of online campaign results. However, Google’s announced changes will limit advertisers’ ability to target and retarget individuals based on demographic factors.

Online advertising may be forced to adapt by becoming contextual, targeting consumers based on current user activity instead of known user identity features. Lacking third-party cookies, advertisers may begin targeting IP addresses, a transition that would likely grow OOH advertising market share in numerous ways.

OOH is a superior channel for contextual engagement as it is place-based. Physical DOOH networks (particularly those vertical in nature) correlate with specific identities. For example, fitness center screens target ‘Generation Active’ while elevator screens target office professionals.

By contrast, in the case of online advertisers, as IP addresses are tied to devices, not people, it would be difficult to know audience characteristics. If a family’s desktop IP address is targeted, the user could be a father or his daughter whose consumption preferences vary vastly.

Moreover, IP addresses do not necessarily correlate with a specific geography. IP addresses can be dynamic, changing in regular intervals, while others may be tied to a central server located nowhere near a given device. This makes it incredibly difficult to reach an individual at a specific location.

Why the new Chrome updates will help OOH grow its market share.

Since out-of-home audiences are physically present in the asset’s vicinity, OOH will be better positioned to capture regional and local advertising business for clients seeking location-based targeting.

Finally, without the use of third-party cookies, advertisers will have difficulty tracking user activity across the Internet. This would lead to less effective online attribution and tracking, which in turn will make it more difficult to quantify online advertising ROI.

The above changes to online advertising data collection will make OOH media more attractive to marketers. Google’s changes will make it more complex to attribute purchase intent to a particular online advertising campaign.

Against the background of deterioration of online tracking and targeting, OOH is getting more advanced in satisfying advertisers’ needs. The implementation of mobile and sensing technology, augmented reality, drones and geo-fencing are all contributing to OOH’s precision and effectiveness.

Google’s policy changes raise a broader issue facing online advertising platforms: vulnerability to disruptive developments of third-party technology providers, such as Chrome.

As the technology landscape evolves, online advertisers will be left vulnerable to changes in any of the numerous third-party integrations they rely so heavily upon.

Modern technology giants hold disproportionate leverage in the online ecosystem. This dynamic creates an asymmetry that forces online advertising platforms to be “takers” of policy changes that may negatively impact their business. And advertisers are held hostage to these changes, as they cannot oppose the near-monopolies of tech giants.

Google’s announcement could elicit significant spillover throughout the technology ecosystem. The new Chrome policy raises the bar for consumer privacy protection.  As users become accustomed to wielding greater control of their data, other players may begin conforming their functionality to these new expectations. Future privacy-related restrictions shaped by Google’s new policies could further limit the breadth and quality of opportunities in the online advertising ecosystem.

A New Selling Point for OOH Advertising.

As we see, data over-reliance has begun to negatively impact online advertising models. In the meantime, the technological transformation of OOH segment will help it gain a greater share of the overall advertising revenue.

There are indications that online advertising networks contemplate using both M&A and organic investment to build their own digital OOH capabilities.

Published on Tuesday, June 11, 2019 at 10:03 PM

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