Taboola Founder and CEO Adam Singolda
Andreas Rentz | Getty Images
There’s a famous scene in “Back to the Future” where the time-traveling Delorean runs along a train track in order to reach critical speed and teleport to the future. The only problem is that the railroad is incomplete and if the car doesn’t accelerate fast enough to jump into the future, it will fall off a cliff.
It’s a great analogy for the predicament at the center of digital advertising today.
With recent changes made by Big Tech and government entities to move beyond a longstanding part of the foundation of the advertising world – specifically, user tracking cookies and in-app identifiers – advertisers rush to the edge of the cliff whether they like it or not.
We’ve seen a clear example of what happens when third-party data that powers an advertising company suddenly disappears. A simple privacy change Apple made to its smartphones to limit user tracking is expected to cut Facebook sales in 2022 by around $10 billion. Users will now be prompted to choose whether or not they want to be tracked. This data, which was previously collected by default, has greatly contributed to the success of advertisers on Facebook. When Meta (Facebook’s parent company) announced the impact on its Q4 2021 earnings call, it contributed to the biggest one-day drop ever for the company’s stock.
Google has just announced its own version of these privacy changes to its Android operating system, which is used by around 85% of smartphone owners worldwide. Google’s announcement seems less aggressive than Apple’s – for example, it won’t prompt users to ask for permission to track them, but will instead embed privacy measures by default. Google also said it was important for them to continue supporting advertisers and the advertising community.
But Google has also warned the advertising industry that its Chrome browser — the most popular in the world, with more than 60% market share, according to StatCounter – will at some point stop supporting third-party user tracking cookies, small pieces of code that can help advertisers track user journeys across different websites. The move is so big that when Google announced last June that it was delaying the move from 2022 to 2023, ad tech stocks jumped 16%.
By listening to the market, it becomes clear that companies or advertisers that rely on collecting information that identifies users are heading for a cliff.
There is a way forward, but it requires a new approach, or perhaps an old one, one where the context is king, queen and the whole royal family.
Contextual advertising is not about who I am; that’s what I do.
Digital advertising is a juggernaut that continues to show signs of growth, especially in the wake of a pandemic, which has accelerated our comfort with online life. eMarketer valued a 29% increase in digital ad spend in 2021, with global spend reaching $491.7 billion, and over half a trillion in 2022.
In a future where tracking users is much more difficult, the most logical and viable option for advertiser success is contextual targeting, which reaches people based on the context of the page around them, not of their personal data.
Context is a huge indicator of what people in the market are, i.e. what advertisers are looking for – if I watch CNBC, I’m probably in the market to buy or sell stocks. If I visit a children’s park, I’m probably looking for children’s products. If I’m reading Better Home & Gardens, I may be interested in home improvement products. The list is lengthened increasingly. Contextual signals have helped grow the advertising business of Google and Amazon – users literally type in what their current interests are or what they want to buy.
These contextual signals are strong on the open web and journalism, where the signals come from the topics of articles, videos, and more. I may never tell Facebook what really interests me, but I will read it all the time. Estimates show that contextual advertising investments will reach more than $376 billion by 2027.
So what should advertisers do?
- Diversify outside of walled gardens. The open web, a $60+ billion market, is all contextual. What people read and do is what you can target, not who they are.
- Talk to your agencies and media buyers, and work with them on contextual advertising wherever it is – Amazon, Google and other places.
- Create data directly for consumers. Get to know your customers because they want you to know them, because you provide enough value to them to make it worthwhile.
Ten years from now, my son Ozzy will be shocked that there was a time when companies tracked our identities, the same way it’s shocking to us to think that my parents traveled with cigarette smokers 20 years ago. years. I am excited about the future. It’s contextual, it’s private, and it starts now.
— Adam Singolda is the CEO of online contextual advertising company Taboola.