The State of the "Open Internet" in Advertising

So, where does the "open internet" stand today concerning advertising (the function that largely sustains it?)

Note. Credit goes to Ari Paparo on the "open internet" definition which I will be expanding on. Ie its where users dong log in and where advertiser access is open (ie not behind a walled garden).

I believe the open internet is in trouble. That there is an enormous opportunity as well as an existential threat. What follows are my opinions, backed up by 24 years in the industry, those of my network (my super power) and data from many of the biggest clients and companies on the planet. That's not to say its without challenge and if you disagree I want to hear from you, please sound off in the comments. That's how we learn and produce better content.

Some quick observations:

• Google, Facebook, and Amazon collectively control around 80% of digital advertising. Much of this falls under the category of walled gardens and the logged-in internet, leaving the independent sector with meagre opportunities. Even on the open internet, DV 360, Amazon ads, and Microsoft still hold significant sway.
• Today, the open web can be divided by operating system and browser. Essentially, we have the Web - Chrome (including Edge and other lesser-used browsers), Web - Safari/FF, Android apps, and Apple apps. These ecosystems operate differently in function.
• While the open web encompasses some non-logged-in online video, most Connected TV (CTV) advertising occurs within the logged-in internet, which isn't factored into this discussion. However, the open internet certainly encompasses most offsite Right Media Networks (RMN).
• iOS and Safari/FF largely lack third-party cookies and Mobile Advertising IDs (MAIDs) in advertising. This represents a substantial segment, at least 30% of the open internet, which remains invisible to most advertisers who haven't adapted their strategies. Recent iPhone buyers at the high end of the market exemplify a well-off demographic. When considering ad blockers, nearly half of the market becomes effectively invisible to most advertisers today. Consequently, these advertisers can't adequately measure this portion, limiting Direct Response (DR) spend and leaving only contextual targeting options viable.
• While Google's plans to phase out cookies have been delayed, they're still slated for mid-next year. Consequently, most advertisers lack a plan for how they'll handle open display in terms of measurement or targeting a year from now.
• Among the new options, Privacy Sandbox is prominent, but it has received poor feedback from the market this year. Many in the industry seem hesitant to adopt it at this stage, though given the current flux, the future remains uncertain.
• Clean rooms for shared logged-in buying primarily function within the logged-in internet and thus aren't as relevant here. This also applies to the likes of TTD's UID 2.0 and RampID, which are based on logged-in users. While such graphs can function outside logged-in environments, their scale remains limited for now.
• Other universal IDs like UID 1, ID5, and Panorama are gaining traction and utility. However, it's fair to say they're far from offering the coverage and ubiquity of cookies today. Based on my estimates, relying solely on these options would lose at least 50% of the open web without a significant increase in coverage.
• Will browser bidding supplant IDs and Real-Time Bidding (RTB)? Many senior programmatic commentators are increasingly uncertain whether ID bidding via RTB will exist at scale beyond the next year or so, or if it will all transition to browser bidding (of which Privacy Sandbox, Topics, and Fledge are examples). This would necessitate Safari and FF adopting similar practices in the medium term and the industry quickly adapting to a new paradigm en masse. The entire programmatic ecosystem would need to swiftly rebuild to fit this new world order. My next article will delve deeper into this theme, but I'd appreciate hearing your thoughts in the comments.

Google, of course, will still be able to offer services to the open web. Its ability to target and measure will be impacted the least, given its conversion APIs, CRM integrations, and proprietary data. However, this would require Google to effectively support the open web, which historically hasn't aligned with its interests. What would happen if the Department of Justice (DOJ) forces Google to divest some of its key controlling technology (GAM, GM 360, DV360) remains a big unknown. The above paints a stark picture for the health of the open web. I don't believe many fully grasp the existential state we're in. No one is prepared for this level of change. The regulators and Google hold the power, an unpredictable mix at best. While regulators often have good intentions, they're frequently outmaneuvered by the giants, inadvertently reinforcing the dominance of major players.

However, it's not all doom and gloom. I'm inherently optimistic and excited by the challenge. As Brian O'Kelley recently mentioned in a whatsapp chat, this represents a massive opportunity to build for the new paradigm. I have complete faith that many technology firms will confront this head-on, leading to new winners and a thriving ecosystem in the independent sector.

That said, publishers in need of support face a tough road ahead in adapting to this change. These publishers, vital to our society and democracy, will likely suffer the most.

Consider also the retail media space. Onsite advertising will likely remain largely unaffected, but offsite RMNs will need to be rebuilt from scratch. Already, they're grappling with GAM and CM 360 no longer supporting their use cases, and even the most advanced players in the space will need to swiftly develop new technologies if browser bidding becomes the norm.

So, what should we do? Firstly, I believe the independent sector needs to unite, recognize the issue, and communicate our needs to regulators. Advertisers must understand the implications and leverage their spending power to influence decision-makers (notably Google). They should also recognize the importance of publishers and establish new, future-proof networks and relationships (curated content, direct deals, and novel buying mechanics can all play a part in the solution).

The future is approaching, and it needs new leaders to shape it.