AT Internet recently held its Media Workshop and found out how Dutch advertising agency Ster’s groundbreaking approach to online advertising is making waves in the media world. By switching its business model from targeted programmatic ad tech to contextual advertising, they have set an important precedent in the industry.
Introduction
Ster is the exclusive sales house for the Dutch public broadcaster and media group NPO. Since 1965, it has been selling ad inventory across the NPO’s range of television & radio channels as well as digital outlets.
Ster’s goal is to ensure that all adverts on NPO’s channels reach as wide an audience as possible. It provides both broad and specific ad targeting that leverages the media group’s quality programming in order to boost the advertisers’ brand awareness and consumer buying intent.
Background
NPO has a display reach of 6.8 million per month, with 30 websites / apps, and online video audience of 8.4 million per month. As the Dutch national broadcaster, NPO is funded by the Dutch Ministry of Education, Culture & Science – however 20% of the funding comes from Ster’s advertising revenue. NPO thus relies heavily on the money it makes through its ad house Ster to provide high quality programmes & content and drive audience reach.
Ster had previously used 3rd party tracking and programmatic ad targeting to maximise the reach and impact of its advertising space and sell inventory. However, the arrival of the GDPR in 2018 led to 90% of visitors opting out of cookie consent and had a significant impact on business. With users increasingly concerned that their personal information was being (ab)used within the digital advertising flow, the agency was left with only 10% of its audience now legally eligible for “normal” targeted advertising. No system was yet available that was GDPR-compliant and that made it possible to serve ads without using or implementing any cookies.
Ster therefore began looking for new GDPR-compliant ways to target its adverts in a transparent ad environment that could be trusted by the public, advertisers and legislators.
Challenges
As well as they issue of personal data being used for advertising purposes, the other hot topic involves the transparency of online technical solutions.
In order to create an ad-tech free and transparent business model, Ster therefore needed a clear picture of the programmatic advertising universe to understand all the players involved. It was also crucial to breakdown the costs of getting an advert from the source to the end user and find ways to reduce or even completely remove the money leakage.
Then there was the issue of persuading advertisers that it was economically viable to carry on buying ads that weren’t based on user behaviour. It’s widely accepted in the industry that cutting out 3rd party trackers/cookies can significantly reduce publisher revenue with some reports claiming a potential loss of up to 50%.
Solution
As Ster intended to operate in a completely ad-tech free environment, they had to design a system that was still able to leverage users’ online interests, without the need to invade their private data.
Understanding tech chain black-boxing
Through a study by the ISBA, the society representing UK advertisers, Ster were able to get a clear overview of the ad tech chain structure and its value.
By clearly displaying all the exchanges with the Demand-side platforms (DSPs), Supply Side Platforms (SSPs) and Data Management Platforms (DMPs), as well as first exchange partners, the study shows how the advertiser’s euro has to pass through many different counters before it reaches the publisher. As well as nearly 50% of the revenue being siphoned off, 15% of the revenue mysteriously disappears in all paths and can’t be traced.
Switching to contextual advertising
To target the most relevant audience without using ad tech, Ster shifted to a data-driven contextual ad model.
Although a long established method which was in place before the rise of ad tech, contextual targeting was previously used as more of a basic indicator of user preference and based on simple elements such as a program’s title and genre – with only a 30% rate of accuracy.
Ster’s innovative approach was to leverage specific metadata from NPO’s programme subtitles (integrated into all their programmes) to get high-precision info about the context. By using a data-driven multidimensional wordcloud called ‘Word2Vec’, Ster is able to ascertain how often words occur together and their distance from different categories or contexts, prioritising the most important words. Then with mathematical formulae based on syntactic relationships, the model is able to connect up the words in the metadata subtitles and pinpoint the context of a program, episode or article with a 95% accuracy rate. This can then be used to sell ad inventory and still reach the most interested and relevant audience.
Successfully measuring cookie-free campaigns
One drawback of running ad campaigns without cookies is that it’s more difficult to measure users after they’ve viewed content. It’s therefore difficult to track the success of the various campaigns.
To work round this, Ster started working with a research partner Brand Metrics, who enabled them to measure the brand effects of cookie-free campaigns. By asking visitors a brief question in the display slot about their relationship with the advertiser, Ster could gain info on the key brand KPIs such as familiarity, consideration, preference and behaviour. This measurement is done carried out before and after campaigns and the difference in the brand KPIs indicates their effectiveness. Although this approach only works for display campaigns, they saw positive results for several advertising brands including Exterioo garden furniture, who saw an 8% increase in awareness as well as larger brands such as DAS and Nationale Nederlanden.
Results
Increased ad sales despite global pandemic
NPO switched from tracking-based targeting to targeting without any personal data in January 2020. In the following weeks, their revenue increased by 61% compared to January 2019. This continued into February, where revenue increased 76% over the previous year. Then despite the arrival of Covid-19, revenue increased 18% in March over the previous year, 9% in April, and 14% in May. In total, Ster saw 27% growth from January – September 2020, vs. 2019 and are expecting up to €2M increased revenue in 2020 vs. 2019.
Improved CTRs and conversion
Ster also saw that contextual campaigns generated clicks more often than non-contextual campaigns.
They also saw this in a number of specific campaigns, which showed that a campaign used in the right context led to stronger conversions. For example, a campaign by a travel advertiser proved to be more effective in the context of travel/holiday programmes than if it was only used for a target group.
No consent module → Improved User Experience
Ster’s new approach has significantly boosted the UX. As there isn’t any personal or login data from NPO users in the new process, Ster no longer need to ask for user consent to carry out personalised advertising. This means the visitor experience is improved as they no longer get bombarded by cookie pop-ups. The reduced number of data points, volume of data shared, and intermediaries also means that the pages load far more quickly. Everything is fully controlled, and they don’t drop any cookies whatsoever.
Streamlining the process
When a user starts a video, Ster receives an ad call in their custom-made adserver, without any personal information. There are then a range of possibilities for 3rd parties to buy their inventory. Advertisers no longer need to use a DSP or agency to buy the content, and they no longer need different SSPs or DMPs to make sure the advert is relevant. Ster have full control over everything happening in their network.
All parties benefit from Ster’s simple setup
Ster have so far demonstrated that it’s entirely possible for advertisers to target the most relevant audience even without using cookies. In an ecosystem free from cookies or the need for personal data, value is based on the content.
Instead of the different exchanges and difficult layouts, all parties profit as the users have a privacy-friendly experience. Advertisers have more exposure for the same budget as they only need the ad-serving fee. By removing all the middle-men, they keep the process as minimal and simple as possible. The publishers also receive more revenue as there are far fewer intermediate parties. Ster is fully transparent with the direct connection to the content inventory and the 15% that previously vanished is no longer an issue.
Moving forward (profitably) without cookies
As well as the campaign results, the outstanding business results have also reassured advertising investors. Ster’s increased 2020 turnover has already generated a lot of positive spin and been a good indicator that their non-cookie-based ad business model is sustainable. They are also carrying out further development in context targeting in terms of delivery and measurement to make it even more specific.
Going into 2021 and beyond, Ster’s model has set the example that it’s possible to entirely remove the cookie-based ad tech ecosystem. They are also keen to share their context & ad serving tools soon with other parties who are dealing with the same no-consent issues.
With the major browsers clamping down on 3rd party tracking, the issue of transparency and the abuse of personal data for online advertising isn’t going anywhere soon…
