What you need to know:

• Direct business from brands is now the fastest growing part of The Trade Desk’s revenue, per ANZ boss James Bayes.
• He thinks that’s a direct result of marketers seeking to wean themselves of reliance on Google and Meta and was exacerbated by Google’s flip-flop on culling third party cookies – which led to a credibility crisis after years of relaying carefully honed first party data plans and investments to boards and stakeholders.
• The Trade Desk’s latest marketer survey – 100 marketers in ANZ and 500 more globally backs that view, with appetite for greater data transparency and concerns about how customer data is being used rising.
• While Google and Meta continue to outpace the rest of the ad market,  Bayes argues there’s signals that change is coming – i.e. marketer behaviour will soon track the sentiment.
• He points to Google’s earnings as evidence the juggernaut’s ad tech business is no longer a major growth driver – it’s now been back year-on-year for six consecutive quarters.
• Meanwhile, circa half those polled are diversifying media partners – and Bayes thinks a premium publisher network, dubbed the Sellers & Publishers 500+ (S&P 500+) marketplace, can provide ample alternative to platforms on the open web, and reverse brand safety arguments levelled at news.
• Now marketers and publishers just have to move beyond reach and frequency metrics – and prove channels like news and BVOD drive rapid business outcomes.

This time last year, The Trade Desk local boss James Bayes was waking up on Hamilton Island with the DSP’s biggest Australian direct marketer clients to the news that Google wasn’t culling cookies after all.

The subsequent sit down with those CMOs, plus "heads of digital, heads of data,” and Trade Desk’s global product team was fraught, with the clients – representing “comfortably over $200m” in digital ad spend – lamenting shot credibility with their peers and bosses.

“Timing-wise, it was fascinating to be sitting down at breakfast with 10 of the biggest, most sophisticated marketers three hours after this announcement had been had been made, and to see the level of frustration – anger – that years of internal stakeholder management, prioritising work, to be ready for a deadline that never eventuated … To be sitting at that table, listening to the way that they were talking to each other was… insightful,” says Bayes.

“I think one of the words that was used was credibility – you know, the credibility of our industry and the credibility of marketers internally within their own businesses, when significant investment had been made and product roadmaps had been established. And then it got walked back.”

Google’s timing hammered home a nugget of upside to its US$28bn would-be open web competitor.

“There’s a recognition that many brands, for many years, have had an over-reliance on … walled gardens,” per Bayes. Which is precisely the focus of its next top client annual jaunt in a few week’s time – and the DSP has fresh data to make its case for an increasingly direct alternative: A survey of 100 Australian marketers plus 500 global counterparts that suggests growing frustration with returns on their first party data investments via the biggest platforms.

Per that data, 70 per cent of Australian brands feel they are over-dependent on big tech in their output, and 75 per cent are concerned about how consumer data is being used in marketing efforts.

“We're seeing significant signs of acknowledgement from the market that more and more brands are recognising that putting all your eggs into walled gardens is a challenging strategy,” he says.

The question is, what are they doing about it? In the short-term, with massive uncertainty crimping long-term commitments and pressure to deliver demonstrable, rapid return on investment, the glib answer is ‘not much’.

“There is so much crazy in the world right now, and business hates crazy, markets hate crazy,” per Bayes. “Business likes stability. So there is this push to short-termism. Everybody wants measurability and outcomes and those sorts of things. But I think we've got to be really careful that we're not sacrificing real world business outcomes with nonsense metrics in a dashboard that don't correlate to changes in consumer behaviour or more sold products, which I think is a risk when you operate a black box.”

Hence Bayes, and his boss Jeff Green, plan to exploit and assuage those marketer findings and fears – while moving to position the Trade Desk as providing a walled park of premium publishers via the S&P 500 network,  “a curated list of sellers and publishers and supply paths that we think represents the best of the open internet”, per Bayes.

Plus, capitalising on growing recognition that money being pushed by arbitrage black boxes into the low value corners of the web is at best wasted – and at worst abhorrent – and that premium brand channels like BVOD and news also drive performance.

“I think 12 months on [from Google’s cookie flip], we're certainly seeing a recognition from the most sophisticated marketers that having a single point of failure – or being so deeply connected to one single technology provider – is not a smart, sustainable, long-term strategy,” per Bayes. “They need to diversify, and they need to have redundancy in their plans, and that was played out in this research.”

Direct action

Bayes sees signs locally the market is starting to turn – both more broadly, with increasing direct spend not captured by market analysts like SMI, therefore potentially clouding signs of an ad spend recovery – as well as specifically from a Trade Desk perspective.

While caveating that agencies remain “key partners … and that is not going to change,” Bayes underlines that “the fastest growing part of our ANZ business is our brand direct business” as more marketers take chunks of media in-house and seek a direct feedback loop on what outcome their spend, increasingly powered by their own first party data, is delivering.

He said that trend has been increasingly prevalent over the last 18 months.

"I want to be really clear that our business has been built in partnership with agencies for many, many years and will continue to be that way," underlined Bayes.

"We do some of our best work when we have agency, technology and brands sitting around the table together – nothing of that is going to change. But we have a large number of household names that have made the decision that they want to invest in closer relationships with their technology partners, because they recognise that data-driven marketing needs to become a core competence, within their business. It's a core competence, it drives consumer experience and they need to understand what's driving those outcomes," he added.

Which means brands can no longer leave themselves "relying upon a walled garden that gives you partial, patchy or no data out the other side to help you understand what's driving performance".

“This is the issue with black boxes – you really don't know what's driving performance. You're kind of renting your customers: You hand over money, you get outcomes on the side, you don't ever really own that relationship,” says Bayes.

“So more and more brands are coming to us direct because they want to have a more transparent relationship with technology, and we give them the ability to understand what's driving performance and the contribution of premium content.”

Marketers survey topline

Per The Trade Desk’s survey, 99 per cent or marketers polled are integrating first-party data into their campaigns, and 80 per cent are using it in more than half of their efforts.

But despite the widespread uptake, 71 per cent admitted they needed a better understanding of the value of first-party data, and 77 per cent were concerned about how consumer data is being used.  

Meanwhile, 56 per cent of marketers are now prioritising the need to improve campaign performance and return on investment (ROI). While three quarters (75 per cent) were still drawn to big tech’s offerings, one-third (35 per cent) said identity solutions from walled gardens failed to meet their business needs and half (50 per cent) said they are starting to actively diversify their media partnerships.

McDonald’s goes large

Bayes cites McDonald’s Australia as an example of a brand diversifying its publisher and data strategies. The QSR giant recently tapped The Trade Desk’s Unified ID 2.0 (UID2) identity solution to leverage first party data from more than 2 million MyMaccas app users to drive sales on its McSmart Meal.

In a side-by-side test with a third-party data strategy targeting consumers with an affinity for fast-food restaurants, UID2 lookalike audiences outperformed third-party data with a 92 per cent increase in revenue and 87 bump in sales (versus outcomes via the same strategies using third party data), while return on ad spend was up by 31 per cent on the same basis.

“As a generalisation, first party data will always perform better, and yes, we're seeing an increasing number of advertisers use it,” says Bayes.

“Is everybody using it at the moment? No. But that's because most brands are on a journey, over the last three, four, five years, of building out their first party relationships with customers – making sure that they have their data organised in the right way and just [building] readiness in terms of activating in this way.”

Don’t call it the open internet

While The Trade Desk is often positioned as the open internet versus the platforms, Bayes suggests it’s a misleading descriptor.

“We're not talking about the open internet. We're talking about Seven, Nine, 10, Paramount, SBS, Foxtel, Nova, SCA, but also Netflix, HBO …  The open Internet feels like this amorphous concept, but they're all household brands that marketers have been relying upon for decades to drive outcomes.”

The key is measuring those outcomes, “and that doesn’t necessarily mean an industry solution,” says Bayes. “It might be leveraging a retailer's data to show sales uplift from a BVOD campaign, it might be leveraging footfall data to understand how digital audio is driving people in store”.

“There's a range of different ways that we can measure those things … But it all starts and ends with independent third party measurement and not marking your own homework,” says Bayes.

“If we can get measurement right, it has the opportunity to really shine a light on the performance of what we've otherwise thought of as branding mediums in driving outcomes.”

Bayes thinks that would solve a lot of publishers’ current problems.

“It's easy for us to sit here and say, as an industry, we need to support our local publishers. But nobody gets a free kick. At the end of the day, brands need performance – and measurement is our opportunity to be able to show that premium content, premium journalism and premium publishing delivers superior results.”

But he also agrees that publishers could perhaps benefit from driving a shift beyond traditional metrics – as underlined by a growing body of evidence, such as a million customer journey, 1,000 campaign peer reviewed study by Oxford University Associate Professor, Felippe Tomaz, that strongly suggests optimising for reach alone no longer works.

“Managing for reach and frequency is [still] really important,” says Bayes. “But I think the end game is we should be optimising towards a business outcome.”

Curation cure-all?

Bayes recognises the irony that marketers and media buyers cite brand safety and adjacency fears as a reason for taking money out of, for example, newsmedia, yet are piling into black box placements via Meta, Google and others, often with little to no visibility on where those ads end up – until they get called out by the likes of Adalytics.

“It's not an accident that the tech platforms that were delivering ads onto these sites were the ones that manage black boxes. It is not that they are deliberately placing ads there – they are not. But when you have a business model which is predicated on delivering cheap, low cost reach … they are the things that you expose yourself to. So that whole model fuels these challenges that we're having as an industry,” says Bayes.

“But if people's outtakes from that Adalytics report was that the open internet can't be brand safe, then they're wrong … The [safety] tools exist, but there are conflicting priorities that that brands and players in the space are operating that lead us to these kind of outcomes,” per Bayes.

“Curation is a critical part of avoiding these issues,” says Bayes. The alternative is to risk a “knee jerk reaction – ‘we're just going to block a whole bunch more stuff’ – and that's got to be part of the solution. But that's why news publishers are in the position that they're in at the moment.”

Hence the The Trade Desk setting up the S&P500+ network of premium publishers – and acquiring Sincera, a firm that provides ad and publisher data to help gauge which publishers actually are premium.

“Sincera is effectively a publisher metadata company, which gives us insight into which publishers are doing the right things, not just the wrong things – who is investing, which publishers have got low ad refresh rates, what's the viewability on pages like – dozens of different metrics on different publishers,” per Bayes. “So then we can say, ‘well, we're not just going to block the bad stuff, but we're actually going to reward the good stuff’. And that's not a conversation that anybody's having.”