Why The Industry Needs Independent Ad Tech; Amazon Enters The "Clean Room" Wars; And Why You NEVER Should Ignore Privacy
The Challenge Of Maintaining An Ad Tech Stack
This week Taboola announced a scarcely believable 30 year deal with Yahoo to provide content recommendation at the bottom of the web pages across its media properties.
The terms are a little confusing, to say the least. It would seem both sides are getting a good outcome.
Taboola can bank on $1 billion in gross revenue by 2025, getting them closer to its own target revenue number of a billion ex-TAC. The Taboola stock shot up by nearly 50% on the news. Seems there is life in the old chumbox model still.
So, what did Yahoo’s owners Apollo get from this partnership? Apollo reportedly got 25% of Taboola in return for the 30 year exclusive agreement.
As you can see, it’s an odd deal. It even had a bunch of bankers involved. Did Apollo try to buy Taboola? Highly unlikely. Apollo seems to be going down the route of spinning out Yahoo’s core money-making assets, namely Finance, Sports and Yahoo Mail.
So what’s really going on here? It appears that Yahoo is jettisoning some of its ad tech stack to boost profitability. You can bet that Yahoo’s own native platform, Gemini, will be sunsetted in the near future as this Taboola partnership kicks off.
What Yahoo’s owners, Apollo, does next in the ad tech space is anyone's guess. But again this news just highlights how difficult it is to build and maintain backbone infrastructure.
Ad tech is a necessity when running a successful media and marketing business.
You will often hear the refrain: build, borrow or buy. Most companies in this space should borrow (i.e. license) - as it will save them more money in the long run.
Specialism and focus should be front of mind. It’s very difficult to run a strong media or marketing business (unless of course you are super scaled) while maintaining a stack in a hyper competitive segment like ad tech.
FPC funds independent ad tech because it is core to our industry, enabling buy-side and sell-side to execute, target, measure and make money. Indie ad tech will always win out.
Amazon Launches A “Clean Room”
The clean room term has always been a reductive term. It’s deliberately analogous to simplify the complexity of the data management and execution. It is good PR.
Still that isn't deterring the big guns from launching new clean room products. Amazon this week announced that it is launching a “clean room”.
Effectively, what it is saying is that it has launched its own cloud-based DB with querying capabilities that will enable those with 1st party data to work together on scalable data-driven buys.
Snowflake has recently verticalised its own DB (used by over 7000 companies) to cater for digital marketers, allowing it to build a bridge head into the digital marketing sector.
FPC believes that this will end in a shootout between the big cloud DB players with Amazon and Snowflake leading the way. We could still see Microsoft and Google enter the market. There could be M&A: it would not be inconceivable to see Microsoft buying Infosum to power an Azure clean room offering.
Ultimately this is not an area of the data tech stack any ad tech player should really be playing in. And it is probably a really bad idea to be calling yourself a clean room right now.
Building on these solutions would be the smarter play for MadTech. There are a bunch of opportunities further up the stack around interoperability, segmentation, activation, marketplaces, privacy management and managed services.
Amazon’s entrance into the “clean room” segment is exciting as it will enable more advertisers to build out more expansive data strategies. Huge opportunities ahead.
Privacy & Big Fines Have Not Gone Away You Know
The Irish Data Protection Commission (DPC) dished out a $265 million fine to Meta this week. It concludes an investigation by the privacy watchdog into the tech giant’s handling of user data - launched after personal data of over half a million users was published on a hacking website in 2019.
Meta’s eye-watering fine reminds us again about the importance of a cast-iron privacy framework.
Any organisation with a digital footprint needs a robust compliance and privacy strategy.
In the light of this Meta news maybe it’s time you asked yourself some important questions:
Do you know what your third party MadTech partners are doing in terms of how it processes your data?
Do you have an auditing trail in place when a user looks for a “subject access request”?
Are you compliant with updated privacy legislation?
Does your data compliance team or DPO have the tools to manage any potential breaches?
Most organisations seem to be ignoring the risks. This could be a very dangerous strategy. GDPR and privacy are not going away. GDPR fines are now totalling billions.
The financial and PR blowback to a brand or publisher is something all the C-suite should be worried about.
There are solutions out there that can help. Our portfolio company, Wult, has launched a platform for DPOs and compliance teams to help with all of the above. The industry needs to wake up to the realities of privacy - and not hope for the best.
Have a great weekend, readers.