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Are Protected Audiences the Future?


There is a lot of attention going toward Google's Privacy Sandbox lately: what will break, what works, and what will change. Yet few people or companies have built the required technology to share concrete answers or offer solutions. This will hopefully start changing in light of the IAB Tech Lab's new report, but there are still massive knowledge gaps on all sides of the digital advertising ecosystem regarding how Sandbox will function and what advertisers, publishers and platforms can expect from the new system.

Chief among these is the Protected Audience API, or PAAPI (formally FLEDGE), which allows users to be added to Interest Groups that can be targeted with campaign specific advertising.

Despite Protected Audiences having the potential to deliver ad performance and targeting capabilities that maintain consumer privacy, the question remains: Is the industry ready to embrace this new solution (and is the solution ready to be embraced); or will it be a temporary solution that never gets off the ground?

The Promise

At its most basic, Protected Audiences allow brands to target audiences in groups of users called Interest Groups. Fundamentally, an Interest Group can be thought of as analogous to either a data-enriched private marketplace deal (a curated PMP) or a DMP data segment. Instead of living in a DSP or SSP where they are actioned, these Interest Groups are instead cached in Chrome browsers on a user's device. Gone are cookies, gone is the bidstream, gone are the traditional back and forths between DSPs (buyers) and SSPs (sellers). The mechanics are fundamentally very different as everything (targeting, bidding, budgeting, auction) happens in-browser where it is privacy safe.

The Roadblocks

Despite the promise of the idea, in practice, actioning Interest Groups in Chrome requires systemic changes, including the development, implementation and delivery of new technology platforms from all parties involved.

To activate Protected Audiences, platforms, brands, and agencies will need to link into Privacy Sandbox in a multitude of new ways. Data companies will need to build Interest Groups as well as deliver auction details and bidding information directly into the Chrome browser. SSPs will need to completely replicate their auction systems, rebuilding them in Javascript, so that they can be run within the browser (opening significant challenges as SSPs look to protect proprietary IP in an environment that allows anyone to download their auction code). DSPs will need to build brand new bidders directly integrated with Chrome, supported by new systems for sharing bid and budget information, and implement systemic changes to measurement, attribution and billing.

Fundamentally different technological systems are required by everyone in the ecosystem to make Privacy Sandbox work. Not only does this require ad tech companies to build completely new technology, but publishers are also required to invest time in reconfiguring their advertising stack. After all, this necessitates changes to how buyers think about engaging with these new Chrome tools. Everyone is starting again from scratch.

This is a monumental task. The current programmatic ad architecture has developed over the course of 20 years with countless moments of evolution and innovation. Each step required massive partnership efforts to ensure scale across the numerous critical players. On the current Sandbox timeline, the industry has only months to build, test, and operationalize the biggest change in programmatic advertising in decades.

While digital advertising has always been known for its pace of innovation and ad tech platforms are consistently at the forefront of the adoption of new technologies, it's simply unrealistic to assume the entire mechanics of the ecosystem, including technology but also contracting, billing and business practices, can be replaced on such a timeline without adverse effects on publisher and advertisers, which are the lifeblood of our industry.

Significant technical investment is required by all platforms involved in the delivery of digital advertising. Data companies, Verification and Measurement Providers, DSPs and SSPs all need to build Protected-Audience-specific technology and platforms. For many, this means completely redoing much of their stack. There is a real risk that only the largest and best funded platforms will be able to carry out this work (which may mean less choice and less innovation). Moreover, with the technical documentation regarding Sandbox fragmented and incomplete, many platforms have, to date, been reluctant to invest significant technical resources.

Publishers are likewise apprehensive about the effect the introduction of Privacy Sandbox will have on their already challenged media revenues. The industry is united in wanting to see improvements to user privacy, but if the adoption of Privacy Sandbox leads to reduced publisher revenues, then there is a very real chance that many credible publishers will struggle to stay in business.

The truth is that the removal of third-party cookies (and the introduction of Privacy Sandbox) raises the bar significantly in how publisher audiences can be matched to advertiser demand. It's technically possible for publishers to create their own Interest Groups, but practically, this will not work at scale. It's crucial for DSPs, SSPs and Data Companies (such as DMPs, Curators and CDPs) to come together to help solve this problem on behalf of advertisers and publishers.

Back to the Future

The future of ad buying relies on interoperability and an underlying series of deep integrations connecting advertisers, platforms, and publishers and DSPs, DMPs and SSPs will all need to do their new jobs to make this happen in Chrome.

To put it bluntly, there is a lot of work needed across the digital advertising industry to make sure that Protected Audiences both takes root and is as successful as possible for advertisers and publishers. This likely isn't going to happen in 2024. In fact, these changes will make Q4 feel more like 2004 as compared to our current capabilities. But with Google planning to stick to its timelines and no further delays likely, we all have to accept that it's going to be a process of relearning and rebuilding toward a new normal and, over time, we will regain our capabilities and master this new Chrome environment. It's going to be a very busy year for digital advertising. Are you ready?

The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.

Matt Griffith is founder and CTO of Audigent.