Ads are a crucial part of the modern internet, but it is also a very complex and ever-changing market with trends that affect us all. Are there any players that can challenge the power of Google, what are the current data security developments in this space, and what is the next big ad thing?
I've discussed these and some other questions with Vitaliy Gerko, co-founder and Chief Product Officer of OTM, acquired in 2021 by Veon global digital operator to elaborate on the current trends in 2022.
Please share some background on OTM and your story in AdTech and MarTech
I have more than 15 years of experience in the tech industry, it all started back in 2005 after I graduated from university. At that time, back in Belarus, I opened a web development and programming company, and we worked in the international market.
After the release of the first iPhone, I became very interested in apps and AppStore, and in 2011, I was invited to join a new project team. It was a mobile application that offered motivated traffic, where users do certain things for bonuses. I was responsible for the creation of the product and its commercial success. After selling this project in 2014, I joined the team of my current partner Dmitry: the company OTM, which at the time was engaged in SMS marketing. We began building a full-stack programmatic platform, and since then, I have been responsible for the product and its technological development.
We provide a fully automated stack of buying and selling ad inventory, we work directly with publishers, aggregating the traffic and selling it to our own DSP platform, where we have a lot of direct clients and agencies. We also trade that traffic to BigTech (Google, Yandex, VK) and international programmatic platforms. We're building OTM based on the experience of American companies, covering the full value chain: from publishers to advertisers. That way, you have the best control over the whole money chain between them.
Our platform is full-stack, we have full-service and self-service DSP, DMP, several SSP, and ad exchanges, a lot of predictive and ML models which allow you to optimize traffic for KPIs and benchmarks of clients.
In addition, my previous experience helps a lot when it comes to numbers. I have a good understanding of the unit economy and user acquisition, I know how third-party platforms work: DV360 by Google, and Meta, and use it for the development of OTM. We also use examples of such American platforms as Index Exchange and The Trade Desk.
This year we will finish the realization of our deal with VEON, a global digital operator that provides mobile connectivity and services to 217 million customers all over the world. For us, this means that we will fully integrate the operator's capabilities into our own. At the same time, we are not implementing a full merger of the company into an operator, as we are trying to take into account the mistakes in the cases of Verizon after acquiring AOL and Yahoo, as well as AT&T after acquiring AppNexus. We are keeping the OTM brand, and we will use the flexibility of a small company to quickly get a slice of a big advertisement pie. We are moving all the operator's capabilities to us: data, communication channels, and we will build a holistic MarTech product based on OTM.
What’s your view on the strained position that marketers find themselves in today, with all privacy-focused trends?
Over the past few years, BigTech and regulators have become concerned about privacy and the protection of user data. Of course, this has affected the tech market. For example, starting from iOS 14, the system came out with the ability for the user to hide personal data from targeting advertising opportunities, By year-end 2023, Google plans to officially stop supporting third-party cookies on its Chrome browser, the most popular browser in the world. Google already has a monopoly position because of its browser, and if it prohibits using third-party cookies for targeted advertising, advertisers will be forced to carry money in closed ecosystems (walled garden), which Google is. There's also Meta, Amazon Advertisement, but still now, Google's action could be seen by the regulator as a concession to itself.
But the reality is that in the last year we've seen that others started working on technical solutions to get around the ban on third-party cookies.
So, operators can issue a stable ID. In fact, for a telecom operator, the ID is a phone number, and it knows IDFA / GAID and user’s cookies, which allows using stable ID as an alternative replacement of third party cookies.
Criteo and The Trade Desk and some other companies are joined the Unified ID 2.0 initiative to keep working in the cookieless world. This initiative is a new approach to identity that preserves the value exchange of advertising on the open internet, while providing improved consumer controls. It will be open source, interoperable, non-commercial and administered by an independent organization.
Data privacy regulations also put analytics through hard times. Firms complying with GDPR in Europe and following an opt-in model (not tracking analytics unless a visitor grants them permission), recorded as much as 90% traffic declines. Nevertheless, a cookieless version of Google Analytics allows you to capture some traffic with the help of Client IDs.
So, even though restrictions are getting tighter, on the other hand, we shall also see more opportunities.
How does your company tackle user data protection?
We fully comply with local and global user data regulations, operate only with IDs and no personal data. We use them for further matching and audience segmentation.
Our clients can use this information of impersonal user cohorts, without specific user information for targeting and ad campaign setup.
Do you think that due to the recent changes and buzz around ads people generally have become more educated on advertisement mechanisms?
I don't think users have come to understand the advertising ecosystem very deeply, rather, their understanding has somewhat progressed. But I do know that, in general, we are all very tired of advertising as it is now.
Certainly, users have understood that all devices, platforms, and services are following us to using information about our behavior, purchases and clickstream for their commercial purposes basically to show ads. I think the solution is not the choice between paid service/platform/content with no ads, and free access with ads. I think there is an option to make some kind of balance between these extremes.
Of course, users data has a direct impact on the advertising ecosystem. But as Tim O'Reilly assessed in his article "Data is the New Sand," the money that a user can get from "selling" their data to Google and Facebook is negligible.
Since users generally have now more advertisement literacy, for example, they know how retargeting works, it's likely that in the attention economy there will be some sort of equal exchange, and users will take their place in that value chain. So that for their attention and data, they could get some kind of value point. What it will be is a question, it is unlikely to be about money. Perhaps it will be resolved at the level of granting access to content and services.
What ‘privacy-first’ solutions do you see as most promising?
After the deal with VEON, we solved the problem for ourselves, because telecom operators have unique IDs in the form of phone numbers. So you can match IDFA, GAID and cookies with the phone number, The operator has a lot of user data, and we can make models based on operator data involving stable IDs.
The other issue is that any operator in the world doesn't take 100% of the population. Of course, it would be desirable that all operators create a single platform with stable IDs.
I have not seen such a solution in the U.S., but it is generally possible. On any request to this platform on a commercial basis, this platform will give you stable IDs. No matter, Verizon, AT&T or Wi-Fi operator: the user goes to the site, the publisher sends this incoming request to the platform, and gets a unique unified ID. And you can use this ID to build knowledge about this user and use ID to collect the necessary segment for targeting ad campaigns
In general, we use operator capabilities, but we also follow developments of other programmatic platforms and big tech: Google, Meta, Amazon, and the ecosystem trends in general.
Final question, what are the most powerful current tech trends that will also affect online advertising?
The transition to the creators' economy and everything that is happening now in the AdTech and MarTech markets foreshadows that the entire advertising ecosystem, BigTech, everything will change one way or another.
Right now my interest is most attracted to the Web3 industry, Blockchain and Crypto-projects are sprouting numerous talented people, groups of serious and advanced specialists, even though there are a lot of scams and other disadvantages in these areas at the moment.
The advertising system will change a lot, because, for example, blockchain technology is about transparency, including advertising money. There's a lot of fraud on the ad market, and a lot of money and budgets are wasted, so blockchain is more likely to have a positive effect. Only a small part of the money from the chain reaches the publisher, users are very little valued, and, most likely blockchain will correct this, it is only unknown how quickly there will be qualitative changes in the value chain.