Early during the summer I went to the mecca of Gaelic Games, Croke Park, to watch my beloved Monaghan play the eventual All-Ireland champions, Tyrone. We lost a tight game by the bare minimum score - literally, a kick of a ball.
It was gut-wrenching. We have a good team with a progressive style of play, but ultimately we fell agonisingly short at beating a cannier, more game-savvy team.
The loss and anger was palpable. I was gripped by a sense of ‘woe is me’. I blamed a rigged system. We do have a tiny playing population compared to the bigger teams. Of course, I blamed our Croke Park curse. Overall, I just felt a loss of agency - and generally kicked out at the injustices of the world.
Mentally and emotionally, I feel this is where the industry sits right now. The deprecation of mobile IDs and third-party cookies is undermining the economics of legacy-based ad tech, and there is no obvious solution to keep the show on the road.
A continuous groan of despair is emanating from all parts of the industry about this new reality.
The recent moves by Apple are a good case in point. Apple introduced ATT earlier this year to “protect the privacy” of its users. ATT prevents third parties from tracking and measuring user activity across iOS, effectively putting an end to addressability. But the same rules don’t apply to Apple.
As well as using privacy as a marketing tactic, Apple has been building out - gasp - its own app-install ad net.
By placing one single targeted ad atop its app-install marketplace, the company literally switched on a potential runaway ad business. Its click-to-install attribution is clean and seamless unlike its deliberately sabotaged competitors.
Advertisers are clearly loving the new solution: the Apple ad net is now responsible for nearly 60% of app installs on iOS.
The industry (including the *AHEM* downtrodden Facebook) is angrily shouting about anti-competitive behaviour. Perhaps they are right. And maybe regulators will act in time.
But thinking that regulators will save the status quo is a reductive conclusion. Margrethe Vestager cannot waive her magic knitting needles and make big bad Timmy go away.
Legislation doesn't exist to deal with these types of anti-competitive practices. And if it did, you can be sure that the well remunerated big tech lobbyist groups will have a hand in writing any new laws.
It's also important to remember again: Apple does not owe you a living. It doesn’t care about your business.
We, as an industry, must steel ourselves against the inevitable collapse of the old legacy system, remembering that Apple, Google, and the other walled gardens own the rails.
What should you do then? You need to look at the problem and evolve your solution. The app-install business is done now for third parties. The DR-arbitrage game is knackered.
But, dear reader, there is still a lot of money sitting further up the funnel. Apple will ultimately come under the same scrutiny as the rest of us with regard to use of user data - so its full attribution model will get hammered.
At FirstPartyCapital we see this fragmentation and new privacy environment as the biggest industry opportunity in over a decade.
“Where are the opportunities?”, I hear you say. Here are some very top line areas of innovation that we are investing in:
Measurement: What can I say about measurement? It makes everything work. Now that the cookie/ID is going away, it’s time to reimagine how measurement should work. There will be big innovation around panel-based and attention-based measurement. This is the biggest game in the industry.
Infrastructure: The current ad tech ecosystem is not fit for purpose. The demise of cookies and IDs have rendered cookie/ID-based tech unworkable. We need to reimagine the fundamental layer of media execution, moving away from a margin-hungry media arbitrage business to tech enablement. Value will also move back toward constituents (marketers and publishers) as first-party data becomes the trading currency.
Data tech infrastructure: From onboarding, to ID intelligence, to segmentation, to activation, data tech infrastructure is a key area of innovation. CDPs and clean rooms are attracting huge amounts of investment right now. FirstPartyCapital’s recent participation in the Evorra seed round, and the unstoppable rise of InfoSum are real indicators that we are at the start of an exciting investment cycle for clean room tech.
Creative: There is going to be a move away from addressability to creative. It’s a transition that was long overdue. And it's a huge area of growth. You only have to look at the stellar success of S4Capital that was built on the back of its creative utility solution, MediaMonks. You can also see the big holding groups making huge investments in back-end resources and tech. Creative is back.
Commerce: It’s hard to quantify the amount of analogue marketing spend that is yet to transition to digital. With the demise of cookies, there will be a shift of DR spend to intent-based commerce sites and apps, as marketers chase addressability on spend. There will be innovation around ad infrastructure that enables both customised ad experience, targeting and measurement.
Fragmentation: The world is becoming more fragmented - on both a media channel and localised basis. With no scaled measurement/targeting proxy, tech is required to help marketers to navigate the mess. Never has there been a better time to build SaaS tech without an appended managed media business.
Privacy: Underpinning everything in the commerce, media and marketing ecosystem will be privacy. New privacy focused startups will focus on DPO workflow and processes that ensure data use adheres to privacy legislation and platform requirements. This will be a requisite for everyone going forward.
The 20’s is about thinking privacy-first, and building tech that can work with or work around the tech giants. So let evolve not die. But let’s not sit in a heap crying about Timmy and co making our lives a little more difficult.
Note to readers: If you feel you want to invest in the type of companies that fit this new mould, come join our global investment network at FirstPartyCapital.