Privacy Is THE Existential Crisis For Ad Tech, TV Messiness; Cannes Is Calling You

We are trying something new with the FPC newsletter from this week onwards. 

Instead of using stock images (or no image at all), FPC is attempting to create some topical art to accompany the weekly newsletter (with the help of text-prompt-to-image AI, Midjourney). 

Ad tech art has never been more fun. We hope you enjoy our peerless text prompting skills. On y va!

Privacy Is Ad Tech’s Greatest Existential Threat

Somewhere in the mists of the Covid era ‘sustainability’ replaced ‘privacy’ as the critical tick box for brands and agencies.

Brian O’Kelley emerged as an ad tech Captain Planet dedicated to saving the planet with his Scope3 carbon emissions model. And everyone got religious on environmental sustainability.

Now, we are not saying that climate change is NOT a crisis. But tweaking around the edges by wrist slapping publishers for carbon emissions is going to have minimal impact. 

We are going to need ‘Manhattan Project’-type projects to fix the untold environmental damage we have done to this planet.

Climate change is existential for humanity - not so much for ad tech.

In the end, this pivot to sustainability was some brief apocalyptic escapism for the industry. We chose to ignore the real threat that has the potential to eat ad tech alive if not properly addressed: namely, privacy.

Privacy is the conundrum legacy ad tech cannot seem to solve. 

This was all brought home vividly this week with two pretty big pieces of news: first, the eye-watering €1.2bn fine over EU-US data transfers, which was deemed a breach of GDPR; and secondly, Google’s definitive decision not to push back the date of 3PC deprecation on Chrome (15 months and ticking).

Everyone in the industry is either in denial of, or paying lip service to, the idea of privacy. But time is nearly up. 

Here are a few hot takes that should steel your mind for the coming privacy shit storm headed your way:

• Meta’s big fine this week could be the first of many, if a new data-sharing deal between the US and EU is not agreed. And ad tech is in the crosshairs. Will US companies bother operating here if they have to localise data storage in the region. Will the high cost of operating force them out of the market? This is no doubt weighing on the minds of execs. It hasn’t stopped local ad tech vendors putting the boot in, highlighting their own compliance with GDPR.

  

• Inertia is going to kill the industry. FPC finds it incredible that most agencies and brands still have no plan to replace the Chrome 3PC. Google announced this week it is not moving the date. The clock is ticking. Hoping Google magics up a solution is akin to commercial suicide. It’s almost guaranteed that whatever Google comes up, it will be designed to trap you in its ecosystem.

• Legacy ad tech’s addiction to IDs. Everything the industry is trying to build for privacy resolves to an ID. SDA (Seller Defined Audiences) is now getting the ID treatment. Let’s summarise why this will be a failed strategy: scale, platform privacy, and the coming legal challenges (followed by hefty fines) around the use of hashed email as a persistent ID. 

• Supply-chain visibility: a business critical issue for brands and agencies. Knowing how your vendor/media-supply partner is processing and using data should be a requisite for any digital business. Everyone is operating in the dark. Tick boxes on a Google/Excel spreadsheet will not protect you when a data breach occurs.

FPC believes we are at an interesting inflection point. Innovation is happening. And adoption will follow. The good news is that FPC is investing heavily in the area with a number of portfolio companies building for privacy. 

The cliff is coming. Fear not, readers, FPC will be there to provide a soft landing.

The Revolution Will be Televised (But On Terrestrial, AVOD, SVOD, YouTube, TikTok and More)

Enders Analysis released some fascinating data on the future makeup of UK video and TV consumption up to 2028. It is not good news for broadcasters:

By 2028, U.K. broadcasters’ share of overall viewing will drop to 48 percent, down from 64 percent in 2022, according to Enders Analysis.

Broadcasters are losing out to both streaming services and short- to mid-form platforms like TikTok, Enders reveals. By 2028, streaming services will account for 23 percent of viewing, up from 15 percent today. YouTube and other platforms offering online content will rise from 22 percent in 2022 to 29 percent.

Overall viewing time is set to rise, Enders continues, increasing from 258 minutes per day last year to 269 minutes in 2028. By then, broadcaster live viewing will be at 88 minutes a day, with non-live at 41 minutes. Meanwhile, an average of 62 minutes will be spent on SVOD, and 78 minutes on YouTube and other online video platforms.

CTV gets all the headlines in ad tech. Programmatic is pushed as the solution for fragmentation. It’s a neat solution - but TV’s reality is more complicated. 

There are going to be lots of walled gardens, making aggregation, targeting and measurement a real issue. An RTB protocol does not fix any of the aforementioned.

FPC sees this fragmented data-driven TV/Video landscape as a fertile area for disruption. 

Here are four companies in our portfolio building solutions to address the big problems in TV:

• LightBoxTV: A planning and execution tool for buyers not only to aggregate a disparate set of TV/Video inventory, but also enable media and data activation. 

• Lumen Research: Lumen is a framework technology for the new attention category. With deprecation of IDs - and soon, IP addresses - we will need some kind of omnichannel currency. Nielsen, BARB and other ancient panel-based models just won’t cut the measurement mustard.

• Pixel.ai: Pixel.ai works with publishers and media owners to surface relevant video for text articles, using (you guessed it) AI. The solution sits within the publisher CMS, enabling editorial and sales to build incremental income while delivering a relevant video content for users.

• Stealth TV contextual startup: We have just seeded a TV contextual solution that is looking at targeting all varieties of TV and video without the use of PII data. We will have some news on that before Cannes (speaking of which…).

Another Reminder: Come Meet FPC In Cannes

Just highlighting again that we will be in Cannes from Sunday (June 18) to Thursday (June 22).. 

Our Cannes network drinks will take place on Tuesday (20 June), which we will be hosting alongside ExchangeWire.

There is a waiting list live (now at 300 and counting). Do reach out to us if you want to attend (contact@firstpartycapital.com). I am sure we can make one or two exceptions.

Again, we are keen to meet any of the following during the week:

• Prospective LPs: those interested in investing in our fund.

• Corp Dev: those interested in buying our portfolio companies.

• PEs: those looking to help scale our portfolio.

• Generalist VC funds: those looking at co-investment and follow-on investment opportunities. 

Send your meeting requests to the following address: contact@firstpartycapital.com.

Have a great weekend, readers.