Why The IAB 2021 Digital Ad Ecosystem Report Is Crucial For Modern Retailers

As we enter a cookie-less future, the core “value exchange” of advertising will prove critical

The conversations surrounding the digital transformation that occurred in the post-COVID world have taken on multiple forms and reverberated across countless industries and institutions. The prevailing dialogue, however, has been forward-looking: how do brands and retailers adapt to a changing digital advertising ecosystem? 

The Interactive Advertising Bureau (IAB), in conjunction with PricewaterhouseCoopers, has released a roadmap to chart the way forward. And while it may not have all the answers, the 2021 Digital Ad Ecosystem report provides a number of crucial insights that brands and retailers should take to heart as they navigate this evolving landscape.

The report, gleaned from in-depth interviews with more than 20 industry professionals, takes a look at key pain points that currently exist in digital advertising, and emerging pain points that are on the horizon in a potentially cookie-less future. While there are countless insights in the document, one key takeaway is this: digital advertising needs to center around a value exchange with consumers, a break from decades of thought that has driven the collection of mass quantities of data—sometimes with dubious origins—that has led to inexact targeting which has eroded consumer trust in digital advertising.

Keying in on the “Value Exchange”

With the way some facets of digital advertising have been predatory with respect to consumer data over the years, the concept of a value exchange between consumers and advertisers seems almost oxymoronic. We as consumers have gotten so used to offering our data as a cost of navigating the internet that the idea that brands and retailers may need to offer us something in return for it is such a foreign concept.

For too long this implicit cost to consumers has gone unchecked, and brands and retailers haven’t necessarily needed to justify their use of data. While major tech companies have begun divesting from the shadier sides of data use, particularly third-party cookies, there is also a looming regulatory crackdown on companies cashing in on consumer data.

In New York, for example, the Data Economy Labor Compensation and Accountability Act looks to treat consumer data as a form of labor, hoping to “enact the equivalent of a 2% tax on annual receipts earned off of the data of New York residents.” In short, shady data practices are under a microscope now more than ever.

So what is a “value exchange”? Interestingly, one of the existing value exchange models has been sitting in our living rooms for 60 years. Standard linear television offers a clear value exchange: we as consumers get free content in exchange for viewing advertising.

The IAB report highlights two other avenues for an advertiser-consumer value exchange: personalized discounts and contextually differentiated or improved experiences. Personalized discounts means you offer a brand or retailer stewardship of your data, you receive a discount on a product or service. 

Contextually differentiated or improved experiences is a unique addition to this data landscape, because it is the most malleable for advertisers. This category gives a consumer a “desirable bonus” for a certain action, like sharing data. The bonus can be everything from a loyalty program with earned rewards to enriched experiences on a website, to increased personalization in targeted advertising. It’s broad, but may be the most efficient route for advertisers to give consumers something in return for their data.

“Trust comes from a couple of things,” says Jim Rivera, head of product of the Adobe Experience Platform. “One is, the consumer wants to understand that you’re going to be a good steward of data; that’s the table stakes. But that’s not enough; they need to get some value out of this. In retail, loyalty management is a very clear value benefit they get; highly personalized offers, and unique offers, these are all things that a brand should understand and explore as that value exchange.”

Putting IAB Recommendations to Practice

The IAB report isn’t law, but it is a bellwether of prevailing trends in digital advertising, and should be taken as a clarion call for how brands and retailers should approach the current and approaching upheaval in online commerce. Moreover, the report is clear that action needs to be taken now to pave the way for long-term growth. Or, in other words, “the greatest and most immediate threat to growth of the digital advertising-supported ecosystem is inaction by key players.”

How this refocusing of efforts translates to best practices revolves around a disinvestment in third-party identifiers and a push towards better data generally, whether that be first-party data or so-called “zero-party” data. More than anything, the customer experience must be centered in the conversation to ensure not only regulatory clearance, but to help build brand loyalty and retention.

“The inflection point of more revenue coming in from ecommerce has started to create the frenetic energy that’s happening around [data],” says Sherene Hilal, senior vice-president of product marketing and business operations at Bluecore. “Brands are very worried about what it means in terms of their reach, in terms of their relevance, in terms of the data accessibility. But the brands that I see really leaning into what this change means are focusing on shopper experience.”

Brands and retailers have a great deal of trust to build back with consumers after more than a decade of erosion. We’re living in an era of accountability, which means the brands and retailers who work to bridge the chasm of trust through transparency and a commitment to a value exchange with consumers will be best positioned for growth in the long term.

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