“Many supply-side companies are creating their own, somewhat closed ecosystems,” Collins said. “If you’re a publisher, fragmentation makes perfect sense because you want to protect the value of your inventory and your audience. However, that might not be good for brands or their programmatic efficiencies.”
Walled gardens aside, Verizon has its work cut out in terms of competing with the other mega publishers out there – but it also has an advantage in terms of knowledge around device ownership.
"Google, Facebook and the other guys are pretty far along, so we’re going to have to wait and see how well Verizon’s data gets integrated into the AOL platform,” said Forrester senior analyst Richard Joyce. “But you also have to consider that a lot of deterministic vendors today have to do householding with external data. Verizon wouldn’t necessarily have to do that.”
Minding The PII
Of course, Verizon won’t be able to link its devices to individual users overnight. But Verizon’s direct relationship with its users – including their televisions and their mobile activity – is a unique opportunity.
“The story with mobile advertising’s success has always been the data – who can identify the right user on devices,” said Forrester analyst Jennifer Wise. “Verizon has a lot of data it has been sitting on … and it will be important to see how they use it to layer on value for marketers. Verizon can offer a broader scope of deterministic matching across not only screens, but also to the home level.”
The privacy implications, however, will be a “wait and see” situation, Wise said.
Verizon has had its fair share of privacy woes in recent months. After getting burned by privacy advocates over its so-called zombie cookie in January – DSP Turn was called out for allegedly reviving opted-out cookies using Verizon’s persistent unique identifier header – Verizon gave users the ability to opt out of tracking, which they weren’t previously able to do.
“Historically, Verizon, and other telecoms, were focused on, well, telecom services [and] there was a wall between telecoms and personalized advertising, for many reasons,” said Jonathan Mayer, the Stanford University researcher who originally blew the lid off the Turn/Verizon zombie cookie news.
Chief among those reasons is the fact that “telecoms are in a privileged and trusted position with respect to a customer’s network traffic, i.e., the capability to collect personal information, [which] is extraordinary, and consumers need to trust their ISP to not tamper with traffic,” Mayer noted, which is partly why Verizon “landed in hot water over its advertising header.”
Mayer said he wouldn’t be surprised if the FCC had “something to say” about the AOL deal.
Wondering why Verizon bought AOL? It ain’t the dial-up… pic.twitter.com/Adlo1BWnsQ
— Jonathan Mayer (@jonathanmayer) May 12, 2015
But from LiveIntent president Dave Hendrick’s perspective, AOL’s technology will enable Verizon to embrace people-based marketing in a way that’s “generally more acceptable than other methods that may have been described in the marketplace.”
“By working with a sophisticated audience platform like AOL, Verizon won’t necessarily have to employ tactics that are seen as undesirable by consumers,” said Hendricks, who noted in the interest of full disclosure that both AOL and Verizon are LiveIntent clients.
Probably Going To Be OK
But people-based marketing is a deterministic tactic. What will happen to the pure-play probabilistic players in light of another large deterministic cross-device player buying its way onto the scene?
Although Verizon brings user-level device identity and AOL has additional cross-device data and arguably robust programmatic technology, not much will change for companies like Tapad and Drawbridge in the short term, said Kihn.
“Facebook and Google remain the bigger threats [and] Verizon also faces greater regulatory scrutiny as a telecom if it wants to use its customer data,” Kihn said. “Even if they work around it, Verizon still only has visibility into its own customers – it’s a big footprint, but not complete. Brand advertisers in particular want greater coverage and will still need more comprehensive cross-device data than they can get from Verizon-AOL.”
That said, there may be writing on the wall for probabilistic companies down the line. While Tapad and Drawbridge in particular have built software and data assets that are “difficult to duplicate,” the data constantly needs to be refreshed as people delete cookies and replace phones, Kihn said, noting that “similar cross-device technology is being included as a feature in more products, especially campaign management solutions, marketing hubs and DSPs/DMPs.”
“It will be difficult for most data providers, including Tapad and Drawbridge, to stay both independent and uncommoditized in the long run,” he said.