Retailers, It’s Closing Time for Open Web Advertising
The digital ad industry is now living in the future we’ve been warned about for years — or one facet of that future, at least. We’re effectively living in a post-third-party-cookie world. But it’s not the end for retail marketing.
What’s changing for advertisers
What is ending is much of what we’ve known about targeting and measuring campaigns on the open web. In response to regulations and consumer concerns, leading browsers such as Chrome, Safari, and Firefox are ending or already ended the practice of enabling third-party cookies by default.
Additionally, Apple and Google have dropped new bombs on open web campaigns. With iOS 14.5, Apple mandated IDFA could be used by advertisers and other third parties only with the users opt-in — and Flurry reports only 6% have done so. With these changes, ad targeting and measurement on iOS will be more challenging than ever.
Meanwhile, Google is replacing third-party cookies with FLoCs (Federated Learnings of Cohorts), throwing a wrench in how targeting and measurement works. Advertisers will be able to see how “cohorts” (audiences) perform in aggregate, but they will not have access to individual-user results.
The solution already exists
These trends are only going to grow. As a result, open web ad campaigns will perform more poorly and retailers won’t have the insights to figure out how to make them better. The solution? Retailers should finally give up on the open web.
Look — users respond well to personalization, but all of these industry changes signal the end of personalization and measurement as we know it on the open web. Even with personalization, Google data shows just five clicks per 10,000 impressions. The absence of user-level targeting will only make conversions more challenging. And Google’s cookie alternative FLoC is too experimental to trust — not with so much money at stake. From Google to Apple, the open web is changing for the worse, and it’s time for retail advertisers to move on.
Let’s not mourn the devaluation of the open web. Retailers have their own e-commerce sites, Amazon shops, and booming social channels such as Facebook, Instagram, Pinterest, Snapchat, and TikTok. This is an opportunity to focus on these walled garden environments, where targeting and measurement can be done with greater confidence.
Advertisers have been inching away from the open web and toward walled gardens for years. Even in 2020, a year of great volatility and limited increases in ad spend, Google, Facebook, and Amazon grew their combined market share, commanding 62.3% of the digital market. Retailers who haven’t been following this trend need to catch up. The benefits of walled gardens are myriad: highly engaged users, convenient and efficient ways to test campaigns, and, increasingly, e-commerce shops that are natively built into leading social platforms.
Compared to the open web, social platforms have always been a far more natural fit for retail advertising.
DTC, which has really triumphed on social platforms, is a great proof point. Social media is the number one acquisition channel for 61% of DTC brands. Companies like Warby Parker, Away, Casper, and countless other insurgent retail businesses have built their names through social marketing. When Instagram launched shopping in Instagram Stories, 90 million people were clicking on Instagram shopping posts every month. Facebook is such a powerful retail channel that agencies reported their ecommerce advertisers resumed spend immediately after the Facebook boycott many brands joined last summer — and some of those advertisers increased spend to catch up.
Moreover, this deep user engagement and the intimate interaction brands enjoy with consumers on social platforms is a perfect opportunity for marketers to bulk up their first-party data. In other words, it’s a way to break the dependency on third-party data and move toward something better. With this first-party data, personalization and effective retargeting will live on within social media communities.
The challenge in ramping up investment in social and other walled gardens is that their data is siloed. Advertisers need a holistic view to optimize and spend effectively. Several social platforms offer built-in measurement tools — handy for creators and SMBs, less enticing for larger retailers who need greater scale. Retailers will need to get their measurement toolkits in order to solve the fragmentation problem and put their first-party data to best use.
Ready or not, we’re in the future. And in social media, retailers have what they need to future-proof their advertising in this transitional moment. They just need to seize the opportunity at hand.
Declan Kennedy is CEO of StitcherAds.