3 Challenges Keeping Chief Growth Officers Up at Night
The role of the Chief Growth Officer is challenging enough without digital ad budgets getting upended. But that’s exactly what’s happening. Thanks to radical changes made by the three largest U.S. online ad platforms, the digital advertising ecosystem is undergoing a transformation, and it is forcing Chief Growth Officers to reconsider their marketing strategies. Here are three challenges keeping Chief Growth Officers up at night—and a straightforward solution for getting more sleep.
Challenge #1: The Cookie Apocalypse
Third-party cookies play a central role in identifying and valuing online audiences—but probably not for long. Changes in the digital advertising ecosystem stand to cause the majority of third-party cookies to disappear. Safari and Firefox already block third-party cookies on their browsers. Earlier this year, Google announced their intention to block third-party cookies on Chrome. This move would increase the market share of cookie-challenged browsers from 19% to a whopping 82%.
That means, in order to target ads to a specific audience, brands will have to spend their advertising dollars with the likes of Facebook or Amazon—where a walled garden and a plethora of first-party data enables these properties to deliver targeted ads to logged-in consumers. But shifting dollars to Facebook and Amazon presents challenges of its own.
Challenge #2: Rising Facebook CPMs
Facebook has long been an advertising staple, so it makes sense that skyrocketing CPMs would keep Chief Growth Officers up at night. Facebook CPMs grew by 122% from January 2017 to January 2018, and indicators suggest that the trend upward will continue.
Facebook CPMs are increasing due to a number of factors. First, there’s a classic case of demand outweighing supply. Brands are willing to pay a premium to advertise to a targeted, logged-in audience. Meanwhile, Facebook’s growth is plateauing. Each new advertiser increases scarcity, causing CPMs to increase as campaigns scale.
Facebook exacerbated the supply versus demand problem when it launched changes to its news feed algorithm in January. The changes prioritize status updates from friends and family over promoted brand posts, reducing ad impressions and increasing competition. The result: higher CPMs.
Challenge #3: Amazon as a Top Ad Platform
Amazon has become quite the e-commerce behemoth, but it’s not done shaking up markets. According to Juniper Research, Amazon’s advertising business has become the third largest online ad platform in the US, behind Google and Facebook. The research firm estimates that over the next five years, Amazon’s ad business will grow more than 470%.
The problem? If you’re a digital publisher, then you’re likely losing revenue as a result of retail and CPG brands shifting their digital ad spend to Amazon. And if you’re one of the retail or CPG brands looking to spend on Amazon? Sure, you benefit from a targeted audience. But while Amazon can deliver targeted ads based on their own data troves, the full datasets from a brand campaign are not shared with advertisers. Advertisers are, in essence, generating additional data for Amazon—data Amazon can use to compete, not only with its own advertisers but eventually with the brands, too.
How Chief Growth Officers Can Get More Sleep at Night
Fortunately, one strategy can address all three of these challenges. That is a robust first-party data strategy with the email address at its foundation. By requiring users to log in to digital properties with an email address, brands can capture intent that is associated with a person instead of a third-party cookie. Furthermore, that data belongs to the brand. The data can be used to deliver personalized content as well as inform a digital advertising strategy—without relying on another platform’s data or a third-party cookie, both of which are becoming increasingly scarce.
Changes within the digital advertising ecosystem are beyond the Chief Growth Officers’ control, and because brands rely so heavily on Google, Facebook, and Amazon, these changes are rightfully keeping Chief Growth Officers up at night. But instead of worrying about what they can’t control, Chief Growth Officers should take this opportunity to take matters into their own hands. Its time Chief Growth Officers stop relying on third-party data that offers a limited return on investment and start investing in their own first-party data.
Kerel Cooper is SVP of Global Marketing at LiveIntent.