Seller-Defined Audiences Heralds A Seismic Shift To The Sell-Side; Apple “Privacy” Push Is Coming For Everything In Ad Tech
This is the FirstPartyCapital weekly newsletter. It covers news and updates about the FirstPartyCapital fund and its portfolio companies.
Seller-Defined Audiences Heralds A Seismic Shift To The Sell-Side
Layser sees SDA as the perfect post-cookie replacement, giving publishers the ability to define their own audience in a privacy-first way.
Layser thinks initiatives like Topics - Google’s latest hack on privacy - is just more of the same data arbitrage that has disadvantaged publishers for the past decade:
Topics API continues to play into the misconception that advertisers can buy the “same” audience they’d find on The Wall Street Journal elsewhere, cheaper. That premise hasn’t served advertisers well, and it has disproportionately rewarded clever ad fraudsters instead of genuinely good publishers. This approach ignores context and the quality of the content. There has to be a better way.
SDA is heralding what FPC has been seeing for some time: a shift of power to the sell-side. It is informing a lot of our investment decisions in the sector.
Kevin Flood, a GP at our fund, has been co-chair of the IAB Tech Lab Taxonomy group since 2015, and has been heavily involved in developing standards for audience taxonomies. The SDA is a product of that groundwork carried out by those contributors. Kevin sums it best here:
The new standards provide a framework for a privacy-first, addressable ecosystem which harnesses the intrinsic relationship between publishers, their content & their audiences.
SDA will use industry standards like the IAB Tech Lab Content Taxonomy, Audience Taxonomy and DataLabel.org, which will improve discoverability, transparency and comparison across multiple data sources (SDA publishers in this case).
It is important to note ONCE AGAIN that much - if not all - of the audience aggregation, segmentation and activation is going to move to the sell-side. From cleanrooms to contextual tech, the sell-side is taking over ad tech. Evolve or die. I for one welcome our sell-side overlords.
Apple Is Coming For The Hashed Email & IP Address - And It’s Going To Be Ugly
Apple’s faux privacy crusade appears to be moving up another gear.
The Information wrote an op-ed this week, suggesting that Apple might extend its privacy functionality to non Apple iCloud+ customers.
The Information speculates that the email (Hide My Email) and IP address (Private Relay) privacy solutions could soon be made available to Apple’s entire customer base - enmeshing them in all the privacy functionality the company has been developing.
This is obviously bad news for legacy ad tech. To keep the id party going, many continue to build workarounds to Apple’s privacy restrictions off the back of hashed emails and IP addresses.
It highlights again the problem with trying to hack privacy: in the end you cannot win against a scaled, well-resourced platform company like Apple.
The id party has been over for some time. And if you don’t get that now, you are in proper trouble.
Don’t you wish you were invested in something that has longevity? Ahem.
The Great Re-Pricing In Private Markets Cometh
Our good friend, Ronan Shields, wrote a great piece on the state of the publicly listed ad tech companies this week.
As you can imagine with all the global economic and political uncertainty, tech stocks are taking a hammering. Instacart, for instance, is now worth $24 billion - down from $40 billion.
There is an investor flight to safety: vanilla slow growth businesses with dependable revenue are in vogue. Fast growth tech companies have fallen out of favour.
Shields asks the question: what effect will this have on the valuations of madtech public stocks?
FirstPartyCapital is featured in the piece. We believe that a re-pricing is inevitable given all the uncertainty in the markets.
Does it mean the end of IPOs for the foreseeable future? Of course. Nobody in their right mind is going to go public until we enter a less volatile period.
Likely, those companies close to a liquidity event will take on further investment or sell themselves to PE.
The one thing the article didn’t touch on was the knock-on effects of public market repricing - specifically on private market startups.
There has been some stupidly frothy valuations in madtech of late - likely benchmarked against lofty mar caps. That pricing is obviously out of whack.
It’s inevitable that these companies will struggle to grow quickly enough into these crazy valuations.
We believe this is ultimately a good thing for the market as we might see a return to sensible expectations.
FirstPartyCapital has been warning its portfolio companies and the industry at large of this eventuality. Thankfully, some have listened to our sage advice - and they now look gleefully to the future.
Have a great weekend, readers.