Why Marketers Are Still 'hedging their bets' on a Google Breakup, and the End of Cookies

Summary

Next in Media: Episode Summary Episode Title: Why Marketers Are Still 'Hedging their Bets' on a Google Breakup, and the End of Cookies
Release Date: December 22, 2024
Host: Mike Shields
Guest: Joe Duran, Chief Product Officer at Epsilon

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Introduction

In the December 22, 2024 episode of Next in Media, host Mike Shields delves deep into the seismic shifts reshaping the media, marketing, and advertising landscape. The focal point of the discussion centers on the ongoing scrutinies of Google, the phasing out of third-party cookies, and the burgeoning influence of AI in media planning and buying. Shields is joined by Joe Duran, Chief Product Officer at Epsilon, who provides expert insights into these transformative trends.

Scrutiny on Google and Underlying Issues

The episode opens with a discussion on the intense scrutiny facing Google, particularly concerning its dominance as a "walled garden" in the digital advertising ecosystem.

Consumer Choice and Privacy Concerns
Joe Duran identifies two primary drivers behind the scrutiny of Google:

“To me it really comes down to two big things. It is consumer choice...[and] privacy...”
[02:46]

Duran emphasizes that ensuring consumer choice on the open web and respecting privacy are pivotal issues. He highlights that the lack of transparency in how data is managed can lead to significant challenges for both consumers and advertisers.

Impact on Marketers and Strategies

The conversation transitions to the implications for marketers navigating this evolving landscape.

Adapting Marketing Strategies
Duran advises marketers to proactively assess how these changes affect their marketing strategies and business outcomes:

“They need to really be asking the very basic questions like can I talk to my customers and my prospects in this future world...”
[04:15]

He underscores the necessity for marketers to adapt their strategies to maintain effective communication with consumers amidst shifting data practices.

The Post-Cookie World

A significant portion of the discussion revolves around the impending demise of third-party cookies and its ramifications.

Strategies for Survival Without Cookies
Duran outlines multiple avenues for marketers to thrive in a post-cookie environment:

“I think there'll be multiple options because the opportunity to solve this question for marketers is very large...”
[06:03]

He advocates for strengthening first-party data capabilities and leveraging second-party data collaborations and syndicated data providers to compensate for the loss of third-party cookies.

Regulatory Environment and Other Tech Giants

The dialogue broadens to consider the potential regulatory actions against other major players like Meta and Amazon.

Differentiated Scrutiny of Tech Giants
Duran notes that while Google faces unique challenges due to its extensive marketing and advertising stack, other giants will also come under regulatory examination:

“I believe that all of those players will be looked at because... if any one player has too much market position...”
[09:09]

This highlights the industry's anticipation of broader regulatory measures to ensure competitive fairness.

Innovation and Consolidation in Ad Tech

The episode explores the dynamics of innovation and consolidation within the ad tech sector.

Driving Innovation Through Scale and Consolidation
Duran explains that consolidation is driven by the need for scale and the ability to innovate effectively:

“The consolidation is going to continue to happen to really get to the players that are going to be critical...”
[10:24]

He predicts that larger firms will continue to acquire smaller entities to bolster their engineering and data capabilities, fostering innovation across the industry.

Retail Media Trends and Future

Retail media emerges as a rapidly growing segment, with significant investment and expansion.

Growth and Challenges in Retail Media
Duran discusses the explosive growth of retail media, particularly anchored by giants like Amazon and Walmart:

“I believe that next set of 5 to 25 retailers that have critical massive scale of consumers are going to continue to grow...”
[11:55]

He anticipates continued expansion but also acknowledges the complexity marketers face in managing campaigns across numerous retail platforms. Duran suggests that future success may hinge on the development of syndicated networks to streamline these efforts.

The Role of AI in Media Planning and Buying

AI's transformative impact on media planning and buying is a central theme, with a focus on automation and optimization.

Enhancing Media Strategy with AI
Duran asserts that while AI excels at optimizing media execution, strategic decision-making remains a human forte:

“I do not believe that AI is good at making strategic decisions... However, AI is very, very good at making faster decisions than humans can...”
[16:12]

He highlights Epsilon's advancements in leveraging AI to automate media buys, enhancing efficiency and campaign performance without relinquishing strategic control to black-box algorithms.

Evolving Roles in Agencies
The discussion extends to how AI will reshape agency structures and roles:

“I think that the media trader is going to not be going away, but hopefully we can get them to add more value...”
[18:37]

Duran envisions a future where media traders focus more on strategic, value-adding tasks, supported by AI-driven tools that handle the more mundane aspects of media management.

Conclusion

As the podcast wraps up, both Shields and Duran acknowledge the multifaceted challenges and opportunities facing the media and advertising industries. From regulatory pressures and the end of third-party cookies to the integration of AI in media strategies, the landscape is undeniably in flux. Duran emphasizes the importance of adaptability and proactive strategy development for marketers to navigate this new era successfully.

“They’ve got to do it anyway.”
[07:26]

Joe Duran's insights provide a roadmap for marketers and agencies aiming to thrive amidst continual technological and regulatory transformations.

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Notable Quotes:

• “It is consumer choice right. On the open web. Like how do you ensure that consumers have the appropriate choice for them when they're actually browsing?”
  — Joe Duran [02:46]

• “I think marketers need to invest in building out their first party data and having first party data capability.”
  — Joe Duran [06:03]

• “AI is very, very good at making faster decisions than humans can and can scale decisions.”
  — Joe Duran [16:12]

• “I do not believe that AI is good at making strategic decisions.”
  — Joe Duran [16:12]

• “They’ve got to do it anyway.”
  — Joe Duran [07:26]

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This episode of Next in Media offers a comprehensive examination of the current and future state of the media and advertising industries. With expert analysis from Joe Duran, listeners gain valuable perspectives on navigating the complexities of consumer privacy, data strategy, regulatory changes, and technological advancements in AI.

Transcript

[Mike Shields]

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[Joe Duran]

Foreign.

[Mike Shields]

Welcome to NEXT to Media. I'm Mike Shields. I'm here with Joe Durant. He's the Chief Product Officer at Epsilon. Hey Joe, thanks for being here.

[Joe Duran]

Hey Mike, thanks for being here. Thanks for having me. I really excited about today's call and yeah, let's dig in.

[Mike Shields]

Same, you know, we're, we're, we're at the end of 2024 or so. Lots of really interesting things to talk about. One of the big stories of the year has been all this scrutiny on the big walled garden, specifically Google. What do you, besides getting into the cases and the legality and the rulings, what do you think of the underlying issues really that we're talking about here? What's driven all this?

[Joe Duran]

Yeah, when I think about what's really driving this and what's really at the core, you know, besides like the money that's there. To me it really comes down to two big things. It is consumer choice, right. On the open web. Like how do you ensure that consumers have the appropriate choice for them when they're actually browsing? Right. I also think it comes down to privacy. How am I respecting that choice and how am I respecting those privacy related actions that are happening within the ecosystem and because of the lack of transparency, because of a lot of the, the issues around it. If you're not honoring those things, those things are things that could come back and have challenges, especially when you think about consumers and how some of these companies make money. Now. These Two issues, consumer choice and consumer privacy clearly are, you know, implications that we care about as consumers. But you know, we also have, these have big implications for our advertisers and the marketers we talk to and interact with day to day.

[Mike Shields]

Right, because let's talk about that. Like what are, what are you thinking about? What are your clients thinking about? Like what do you, is there an outcome that people are rooting for, quote unquote in the industry? Like what would be, where would you like to see things land? It's, it's so it's such a weird unknown because you have this happening right before you have a new administration coming in. But this case is well on its way and there are others to come. What do people want to see happen here?

[Joe Duran]

I tell you what, we as a industry, and I think about the ad tech and martech industry in broadest terms, the players and attend not to take action until things are imminent. So I think a lot of people are thinking about the things that are happening and wrestling their hands. Some people are being proactive, some things are, people are not being proactive and actually engaging this. So the marketers, when I think about, they need to be thinking about the implications of these changes. Right. Because these changes are going to be massive on their marketing strategy and they need to be thinking about like, how does these changes actually impact my marketing strategy? But more importantly, how is this going to impact the business outcomes that I am trying to drive with my media dollars? Right. Because that's what it really comes down to. And to be frank, they need to really be asking the very basic questions like can I talk to my customers and my prospects in this future world? Today they know how to do it, but in the future world, a lot of those vehicles and those shortcuts to get there, you know, is changing. So this has huge implications for their marketing and their media strategies.

[Mike Shields]

Yeah, it's funny because you think about the consumer aspect is a little bit almost underplayed. You know, with the potential breakup of Google or whoever. I think brands think about where, where's my, my media budget is going to be going in a different place, going in different directions. But if I can't reach the consumer the same way and be as effective, that's going to upend a lot of what I'm trying to do. And that's the kind of stuff they think about.

[Joe Duran]

Exactly. And I would say when we think about consumer choice and privacy on the open web, you know, third party cookies have been gone for three to four years for about half the Internet, it's only Google that is really, with Chrome is really the last kind of like bastion of third party cookies. But that's where marketers have continued to leverage their audience based or people based strategies is really only on half the open web. So they left the other half when people are in those curriculous environments and they haven't really hardened those strategies. So I use every chance I do to really talk to marketers to think deeply about how they're collecting and managing and actually utilizing their first party data that they have and how they're leveraging kind of like the identity that's actually in the ecosystem, the data that's in the ecosystem, AI to overcome some of these limitations that are actually inherent today. As one of the reasons why, you know, I'm very excited about where Epsilon's going because I think we have a strong value prop to bring to bear in those areas.

[Mike Shields]

Well, I want to ask you about that value prop, but let me. But more broadly, when you talk about the post cookie world we've been waiting for forever, it's it hasn't happened the way we want it to. You said it's almost there, we're almost halfway there anyway. Is it going to be a world where if you have first party data you're in good shape, otherwise you're in trouble. Are we going to have three or four really good alternative ideas that emerge? Is it going to be about people based systems? What's the new landscape look like?

[Joe Duran]

I think there'll be multiple options because the opportunity to solve this question for marketers is very large. Right. So I think marketers need to invest in building out their first party data and having first party data capability. But even when they don't have first party data, say if I'm not a direct to consumer company, I need proxies for that purchase behavior, I need proxy for that customer behavior. So I can actually really figure out where people are within that purchase cycle, where are they in the awareness and the consideration in the purchase cycle with me. So I need to have some level of signal whether that comes from my own first party systems, whether I get that from a second party through some of the data collaboration that's going to exist or some of the third party syndicated data providers that actually exist out there. The ecosystem will be there. It's just it needs to not use the legacy pipes that were in place today because we're removing them with a third party cookie and really go to things that we think are going to be more future proofed and Durable.

[Mike Shields]

There is an assumption that there we're, it is, we're going to a place of just more intensified scrutiny on privacy and pushing for choice. But do you think we're also theoretically going to a deregulatory environment? Maybe all the stuff we're worried about isn't going to be such a big deal in the next couple of years.

[Joe Duran]

Yeah, well I think that's where there's a lot of people that will build strategies but not execute on it are kind of like hedging their bets because we've been, we have an industry like we've been waiting for the third party cookie to, to disappear for many, many years and we're still waiting for saying is it really going to happen? And you know, my guidance to the, to those marketers is like, well it doesn't matter whether it happens or not. We're moving towards a consumer choice and consumer privacy open web environment and you need more first party data for you to have better relationships with your consumers and know those consumers in the way they expect to be known and to really participate in the ecosystem. So they got to do it anyway. And I also think there are definitely marketers that are thinking, hey, if this cookie populace happens and the third party cookies are going away, maybe I need to rethink my marketing strategy and go back to very broad reach methods. And I think those are kind of like two different schools of thought.

[Mike Shields]

Do you think, you know, we're waiting to see what happens specifically with the Google case and whether they get broken off within the self pieces or do do something else. Are the other big guys in our industry and you know, I'm probably thinking about Meta and Amazon and others. Do we expect them to get hit similarly? Are they going to have to get out in front of this? What do you think that's going to happen?

[Joe Duran]

I think each one of these players, even though they're walled gardens, I think they're still very unique in their own right. And the Google stack that's been built up around marketing technologies and advertising technologies that's been built up over the past 15 or 20 years, compiled with our consumer services, that is a very different and a very different place in the marketplace as far as like, yeah, we.

[Mike Shields]

Talk about them like the same thing but Meta does not have this SSP stack that the others do. They're in different, totally different ballgame.

[Joe Duran]

Exactly. And Amazon does not have the depth of share within the search marketplace. They definitely have the depth of share and the market position and sponsored ad products or sponsored product ads. They Definitely are a leader in that area. Right. But you see that more as in the retail media space, the very dominant position of Google Search and the very dominant position of Google Chrome in those specific markets and the synergies between those businesses are the ones that are really making this look unique and different from the Amazons, the Apples and the, and the, and the Meadows. But I believe that all of those players will be looked at because. And they should be. If any one player has too much market position, you know, there needs to be like, I'm, you know, believer that the government should keep them in check.

[Mike Shields]

Putting aside the big, you know, the big, the duopoly, tropoly, whatever you want to call it, the you're all of a sudden seeing. I don't know if this is because we're looking at a different economic situation, new new year, new administration, but a lot of innovation in ad tech and consolidation. What is going on there? What do you think is driving that?

[Joe Duran]

Well, what I think is happening, particularly in adtech, is given the changes in the world of consumer choice and privacy. Right. As well as kind of like that continued deepening of the moats that's happening in the walled gardens. I think you need companies that operate at a distinct scale, engineering scale, data scale, just people and business size, so that they can drive the innovation around identity and around the ecosystem that's needed to really drive the scale and the accuracy to kind of like make it happen. So I think that the consolidation is going to continue to happen to really get to the players that are going to be critical. Those players will be either consolidating to go and make the case that either I'm consolidating innovation through acquisition, I'm consolidating scale of market. I'm scaling my engineering teams to go and drive that innovation. So I think that will continue. There's been a lot of that consolidation that's happening, removing players in the ecosystem. But I think the bigger you are, hopefully if you're well managed, you'll drive a lot of innovation for the market and that should help all of us.

[Mike Shields]

Okay, you mentioned two words that may or may not belong together and one's retail media and consolidation. This has been obviously another huge year for retail media. Spending's growing like crazy. There are so many players. Everyone's in the. Everyone who has data and an audience is getting into that business seemingly. Where is this headed next year? Are we going to see just continued, everybody growing? Is it going to be, is there going to be some need for consolidation, change what's happening?

[Joe Duran]

Well, when I think about it, so you have a, I don't know, it's not, not a tale of two cities, it's probably a tale of a thousand cities. But you definitely have the very, very large retail media players that are anchored in and around Amazon and Walmart, the ones of that size. And I believe they will continue to grow at the rates that they're actually probably not, not growing at the same rates are growing, but they'll continue to progress. Really, really well. I believe that next set of 5 to 25 retailers that have critical massive scale of consumers are going to continue to grow and grow and drive demand because there is a core population of OEMs, their OEMs that really have a relationship with that retailer brand and they want to access that retailer's customers and they want to message them. I think that'll actually happen. There's a tremendous amount of retailers that sit around our, our ecosystem that have, you know, have the opportunity to go and create a retail media network and progress. But the really big challenge is as a marketer, how do I manage more than just a handful? It's actually out there today and the tools on the buy side don't really make that as efficient as they probably would happen. So when I think about it, you're going to continue to see some level of consolidation or syndication that may happen on the sell side or on the retailer side that allows for multiple retailers to really aggregate the supply or syndicate their supply so that they can meet the demand to make it easier for the OEMs like Procter and Gamble like to buy right? They, you got to make that easier and I think they'll continue to be more innovation that happens on the buy side and management of multiple entities because right now it's very each one of these retailers, right? And I see this every day in our retail media network because we offer on site sponsored product ads, we offer on site display, we offer off site retail media. And for us it's one buying kind of like experience with that prior. But usually a retailer has three different suppliers in amongst it. So that that's like three different, you know, buying experiences at every single retailer. That, that's very cumbersome.

[Mike Shields]

Not, it's not just the number of, of retailers but the number of businesses within those companies that are selling that that's, it makes it complicated. I, I just wonder if you know, nobody wants to give up this idea of well this, this is easy money, high margin business. I'm going to turn it on. I wonder if you'll see retailers band together or if there's a third party or two that comes in and becomes forms the retail media ad network of the future, I don't know.

[Joe Duran]

I would say that there needs to be somebody that can actually help those retailers come together. There may be a retailer group that actually does it themselves amongst their banners. You see that with some of the retailers that have multiple banners and they can aggregate their loyalty programs into one, I think that's an equivalent. But I think you're going to have to have a provider that builds that syndicated network for them so that you can actually because what you want to have as a retailer. If I was a retailer building this and I'm kind of like an enabler for it, but if I was a retailer, I would want to be able to get the benefits of a syndicated network or an aggregated network. But I definitely want the protection, the payout that's relevant to my data. I don't want to just give my data in there and then have no promise of getting paid. I would like to make money at the commensurate rate of the value of my consumers. And I want to drive some SKU sales too. Right. Because I need to drive some churn. Yeah.

[Mike Shields]

Because that's a double win. All right, let's shift gears of course to AI. Obviously humongous story the last couple of years. So much excitement around Generative, but the action right now seems to be in media planning slash buying optimization. You have been out in front of this issue and talking about how important it is to build it. But there's a worry, I think that the big guys are going to be the only ones that can do it well and we're going to be handing our media strategies off to these black boxes that are the big platforms that built. Where do agencies and brands fit along that entity? Where do you guys want to go?

[Joe Duran]

Well, I think AI is an inevitable. Right. It is going to happen and you know, it's here today and we're seeing a lot of the big name players really doing a great job of bringing in what they call that some of those predictive or you know, performance based solutions to kind of like simplify the media buying and execution. I do not believe that AI is good at making strategic decisions. So I think the humans making strong media strategy decisions that are informed based on, on data. I think that's still going to be the, the case in the future. But I do believe that AI is very, very good at making faster decisions than humans can and can scale decisions and really do the tedious tasks. So like, when I think about that, that's not the media strategy. That tends to be the media planning or some of the media execution. So I think the humans are going to be informed and hopefully have better tools and capabilities to build great media strategy components and, and decent plans. But the execution of those plans. Right, AI is going to really get into those spaces and really help the media planner and the media buyer actually drive a lot of innovation in that area. When I think about that, we at Epsilon have been doing that because we're primarily our Epsilon digital product, which is basically a managed service. DSP has been really driving that automation and driving, you know, having our AI drive those decisions on media execution to really optimize those outcomes. We've been doing that for the past seven to eight years and we've seen significant impact on making it very, very efficient in managing those media buys. We want to continue to go and drive that and make that more exposed to our, our clients in a more transparent way, really. So we can really apply it not just to the media delivery, campaign management, component optimization, but across that whole media value chain. Yeah, right.

[Mike Shields]

As that kind of buying and planning becomes the norm, does that change the kind of people, I guess the structure of big agencies and the kind of people you bring in? You know, there was a time when all of a sudden every agency had to bring in traders and data scientists and people that they've never had before. Is this we're going to see yet another shift into the kind of practitioners you need?

[Joe Duran]

That's a great question. When I look at the practitioners that are there today, if I compared and contrast 10 years ago, you know, we, we had some analytics people, but those analytics teams did not have data scientists. Now they have data scientists in them. And those analytics and data science teams are actually, you know, they'd be lucky if they had a good data set 10 years ago to go and manipulate. Now they have clean rooms or they have access to systems that they didn't have before. So I think that that part of the business is going to continue to be more and more data driven. There's going to be more, you know, AI like tools and capabilities given to them to unlock those audience insights and build more predictive and performing audiences that are actually there. So I think that's going to continue. I think the, the media trader. Right. I think with the push to programmatic, I feel like these traders have been significantly burdened with a lot of rope tasks in the management of media. And I think that's the opportunity to say how do we get those media traders to be making those human decisions that are better instead of doing the rope decisions that are there? Because a lot of times they're like trying to quickly set up a campaign and repeating basic level tasks and doing a lot of bulk line item edits. And it's like I think we can change that paradigm given AI. We can change that paradigm given how you can optimize those campaigns and deliver them to get them to do things which are a little bit more things that humans can do, which is like look at the campaign performance, make decisions that are based on business areas where you have multiple systems that may not be talking to each other and really help impact the campaign performance. I don't think the trader is going away, but hopefully we can get them to add more value.

[Mike Shields]

Sounds like a lot more fun job going forward than grinding on the spreadsheets.

[Joe Duran]

I would hope so. I would like the job to be fun.

[Mike Shields]

Yeah. All right, Joe, awesome conversation. Thanks so much. Have a great rest of your holiday season. We'll talk in the new year.

[Joe Duran]

Awesome. Thank you, Mike. Have a great holiday season.

[Mike Shields]

Thank you. Thanks again to my guest this week, Epsilon's Joe Duran. If you like this episode, please take a moment to rate and leave a review. We have lots more to bring you, so please hit that subscribe button. You'll see you next time for more on what's Next in Media. Thanks for listening.