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The case for a fragmented adtech ecosystem

24th June  |  
5 minutes
ad tech ecosystem

For many publishers and brands, “adtech” has for years been all but synonymous with the Google stack, a suite of tools and services that assist advertisers, publishers, and agencies in delivering and optimising advertising campaigns across the web. Until now, to be an effective digital marketer or publisher is to be expert at tools including Google Ads, the Google Marketing Platform, and Google Ad Manager. But things appear to be changing…and fast. 

Google’s adtech dominance is on the line 

Today, Google’s continued dominance of the adtech space is far from assured. There are two key reasons for this. 

The first is Google’s ongoing difficulties in phasing out tracking cookies. The emergence of privacy laws worldwide, sparked by the landmark GDPR in 2018, combined with growing consumer awareness of their rights to privacy, mean that tracking cookies need to be replaced with privacy-preserving alternatives.   

Used by Google to fuel everything from tracking user behaviour, to ad targeting/retargeting, to measurement and attribution, Google knows it needs to retire these invasive tracking cookies but is having trouble breaking the cookie habit. Its planned alternative, the Privacy Sandbox, is still in development, but it is already drawing significant criticism from the digital marketing ecosystem. IAB UK, for instance, has reported on several crucial functions within Sandbox – such as frequency capping, video advertising, audience creation, and impression counting – that lack support or are limited. 

In the meantime, the adtech ecosystem is forging ahead with its own privacy-first approaches to enabling programmatic advertising at scale.  While Google drags its heels over cookie deprecation, which has been delayed three times and counting, publishers are now proactively testing alternatives from other adtech companies. With the future of their digital ad revenues on the line, it’s easy to see why. 

Antitrust cases are driving a fragmented adtech ecosystem 

A second trend challenging Google’s market dominance are concerns from regulators worldwide that its adtech stack is anticompetitive. In the US, the government has launched an antitrust case against the company. The substance of the charge is that Google has won out over rivals through anticompetitive mergers and bullied publishers and advertisers into using its adtech products. Bizarrely, although the case has yet to be brought to trial, Google has already paid the $2 million in damages sought by the plaintiffs. 

In Europe, following a two-year investigation into its ad-tech business, the EU’s competition commission found that Google had abused its monopoly in online advertising. As a result, it was ordered to sell off parts of its advertising business. This is not the end of Google’s woes however as it is now facing a £13.6 billion class action lawsuit in the UK brought by a group representing more than 200,000 website publishers who believe that the firm’s anti-competitive practices have caused them to lose out on revenue.  

One bitten, twice shy they say, and regulators are now stepping up their surveillance of Google. Never again, it seems, will Google be allowed to gain such market dominance. In the UK, for example, the Competition and Markets Authority has been keeping a close eye on the development of the Privacy Sandbox. Earlier this year, the regulator raised several competition-related concerns and ordered the company to pause cookie deprecation until these are met (the main reason for Google kicking the can down the road yet again).  

As Google’s dominance wanes, other major platforms are looking to swoop in. Amazon is a case in point. The ecommerce giant has recently launched new adtech tools and is proactively targeting publishers with is products. Concurrently, it is making moves to become the go-to DSP for advertisers, seeing itself as the future gatekeeper of programmatic advertising. 

The benefits of a fragmented adtech ecosystem 

This would be the wrong direction for the industry. With the dominance of one tech giant coming to an end, now is not the time to jump into bed with another. Far better to let adtech fragment into a broader ecosystem of smaller players. The benefits of such a fragmented ad tech ecosystem are clear. Most obviously, a greater number of players increases competition and inspires innovation. Adtech companies will need to up their game to remain in the running, and that can only be a good thing for brands, publishers and, ultimately, the consumer, who will benefit from better and more relevant content. 

As well as improving the quality of products on offer, a fragmented adtech ecosystem will also provide publishers and advertisers greater choice and flexibility over the tools they use. Rather than using the same tech stack to deliver on every campaign, they pick a combination of tools to meet the need of a specific campaign, helping to optimise outcomes. 

Take the area of privacy-compliant identifiers as an example. Rather than having to use an ID from a single provider, publishers and brands will be able to select from the many IDs on the market (there are thirty or so available today) to ensure they have the broadest possible coverage of the audiences they wish to reach. The tables will be turned, with publishers and advertisers in control of the tech they use, combining them on interoperable platforms that integrate seamlessly with the programmatic ecosystem. 

Google has done more than any business to define digital marketing practices. But things are changing fast. Google will have a role to play in the future privacy-first adtech that is emerging, but hopefully it will be just one element of a much more fragmented, rich, and flexible ecosystem – and that can only be a good thing.   

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