The data ecosystem is controlled by a few players
FAANG sounds like the name of a sports drink or garage metal band — two ‘A’s’ for that extra “aang”! Alas, it is merely another marketing acronym, meant to easily distinguish the corporate behemoths all industry entities must deal with if there is to be any chance at reaching goals set for key performance indicators (KPI’s) in marketing and advertising. Those corporations are Facebook, Apple, Amazon, Netflix, and Google.
Each FAANG company owns their own piece of the pie (Netflix gets a bit of a pass without an on-platform ad model but don’t believe the hype that your user data is not also a Netflix revenue generator) with multiple overlaps and intersections in the road, because online advertising is essentially an ecosystem of data “pipes” flowing in every direction, connecting and redirecting data more than the warp pipes in Super Mario Bros. But to make it simple, let’s discuss as two sides with vehicles to transport the data through the pipes.
Demand Side
The demand side is called this because this is the suite of organizations that purchase ad space on behalf of the advertiser. In this understanding of market dynamics, the ad inventory is the product for which the industry has demand. This only constitutes part of the demand relationship, however.
One cannot be thorough in the attainment of understanding this industry without talking about the fact that demand for ad space is actually derived (as opposed to autonomous) since it depends on another product to help set the rate for the product being purchased. Guessed what that product is yet?
That’s right, it’s you.
Potential customers – and the eyeballs screwed into their heads to help them discern messages by filtering light into their unique chemical and electrical brain signature to induce interest and ultimately purchase – are the real product. Even though people are referred to as consumers, in this scenario they’re as much the product since their data is the currency upon which all companies in the marketing funnel use to conduct the intricate dance of relevant and/or personalized ad placement.
Always remember the mantra. “If the product is free, the user of the product is also the product.”
Supply Side
The supply side of the equation refers to the publisher and all of the entities that help make the ad space on their pages available to the demand side. The supplier, in this instance, often owns the information that make the derivative product (AKA you the consumer) valuable to the demand side.
Often, the supplier has at least two types of relationships with the demand side. One is a direct relationship, whereby the advertiser or their agency, buy an insertion order (IO). The other is an indirect relationship, whereby software is used to put their inventory into a marketplace for advertisers to buy.
The Transportation
There are many platforms – like ad servers, data aggregators, tag managers and more – that are used by advertisers to bid/buy/place ads in media outlets. Publishers use platforms to hold auctions for their inventory, set up ad space and apply targeting data to their pool of site visitors.
These companies control the purchase of media on their platforms, authenticated user data, selling mechanisms, servers (storage and serving), measurement, privacy regulation; they essentially control the entire ad tech stack, meaning they’re completely vertically integrated. Let’s use one of these organizations as an example to detail just how much they control your data.
While Google’s portfolio would require a mid sized e-book to comprehensively explain the number of places where they happily gobble up your data the below representative list can still be illuminating.
AdSense is the bottom rung of Google advertising products. It is the product that allows a smaller web developer to get hooked on that Google crack. It’s easy to simply post their code, allow them to manage everything from ad placement to billing.
Search Ads 360 is the platform advertisers use to buy search ads. When you see results for a search at the top of the search list, with a bold black “Ad” label next to it, then you know this is where that whole journey started. Furthermore, this is the strongest indicator of intent since the consumer pulls the information rather than the advertiser pushing it.
Display & Video 360 is a place where large advertisers can buy Google’s premium inventory. This is what is reffered to as a demand side platform (DSP), and allows advertisers the ability to buy ad inventory, upload customer lists, and enter parameters for a display (banner) or video ad.
Campaign Manager is an ad server that gives advertisers the control over tools that allow them to understand the effectiveness of their campaigns. Here, they can manage site pixels (code that identifies users upon visitation the page), the dataLibrary, and partner tags (more code that tells an ad partner when their site drove traffic to an advertiser).
Google Chrome is the browser most people use to visit websites. Browsers are important, as they are the key mechanism in data transportation, since they set rules for how cookies are managed. Any basic reading of the current privacy changes to browsers will detail the surprising level of control provided to browsers on cross-site tracking. This is especially important on Google since they own close to 70% of browser traffic.
Google Analytics is a product any advertiser can use to display statistics on site visitation specifics and learn how consumers use their site. Advertisers can use this tool to a run report and create basic visualizations of site behavior.
Google Ad Manager is comprised of two products, which is the ad server for a publisher that wants to manage their supply, and Google Ad Exchange, where publishers can place their inventory in to Google’s auction, where DV360 users (and other DSP platforms) are allowed to bid on publisher inventory in a real-time auction.
And there are many more products, more obscure, like Ads Data Hub which Google allows analysts to run queries on first party data extracted from ads; a site tag (code to collect data from referral links) manager; a data studio for even more visualizations and every conceivable product for the buy and sell side advertiser to manage their inventory and ad buys.
Sounds good to me, what’s the problem?
These companies control consumer data, while also holding it hostage from the advertisers that use their services. So, they’re able to make more money on first party data, by controlling it at every level and limiting access to advertisers and smaller platforms. They do this with more self-imposed regulation that sounds good to the consumer, but puts your most sensitive information in the hands of a few companies with the resources to be able to truly use it in nefarious ways. Simultaneously making it compulsory to use their services in some way, furthering the near ubiquitous scale they enjoy.
Dispersion is the answer.
Good advertising and data collection practices make the internet freer and more enjoyable. Data is the key that turns the relevance engine, which drives the rotor to make this car called egalitarian access to information possible.
The danger is not in an advertiser having access to consumer data, it is in a few highly ambitious technical organizations having access to all of this data, hoarding it, using it for manipulative practices and running machine learning models on it that might precipitate a real-life ‘Black Mirror’ episode. Therefore, to keep the innovation, access and relevance high – and the danger of too much information in a few organizations’ hands – it is imperative that more players in the market access small subsections of the data so no one or few entities can control the entire ecosystem of human interest.
It’s time to break up the companies that comprise FAANG.
This is a truly exceptional and informative article. Will remember this powerful statement: “If the product is free, the user of the product is also the product.” Thanks for this breakdown on FAANG!
I am for the dismantling of conglomerates, even with it meaning more work for all of us. The world is just a better one with specialized people and entities honing their craft.
Yes, this may mean my tech stack looks super crazy, but as long as we understand the benefits, we can’t lose.
Totally. Yeah, it’ll be harder (at first) but itll be better because it’ll force interoperability. Think if integrations were governed by something as agreed upon as the IAB RTB standard? You’d have to do it to make this model useful.