Measurement is the Key to an Open Internet!

"The DR budget for unmeasurable media is zero." This is a statement I repeat often, especially when I see new companies addressing the decline of cookies without adequately considering the need for measurement. It's also why a free and open internet is impossible without a fair and transparent measurement ecosystem. As ongoing legal cases like the DOJ's investigation into Google show, measurement isn’t yet the central issue under scrutiny. However, if we are to maintain a truly open internet, it's critical that regulatory bodies, including the DOJ, the EU, and others, address this issue first.

Google and Meta: The Gatekeepers of Measurement

Google and Meta, the two tech giants, have a near monopoly on online measurement, and, as a result, dominate direct response (DR) advertising spend. Google owns both Google Analytics and Google Campaign Manager, the two most widely used media measurement platforms. Similarly, Meta's conversion API feeds vital data directly into its systems. Together, these companies hold unprecedented control over digital sales attribution.

Google, which controls Chrome, has one of the strongest positions when it comes to cookie matching, and both Google and Meta have robust systems for matching users via email addresses and phone numbers when cookies are restricted (again via conversion APIs). Even without cookies, these companies can likely attribute about 70% of online sales at any given time. Compare this to competitors like The Trade Desk, whose reliance on alternative solutions like UID 2.0 results in attribution accuracy closer to half that without cookies.

This disparity puts Google and Meta in a class of their own, where they not only dominate ad reach but also ensure their ads are seen at pivotal moments in a consumer's buying journey. Through predictive algorithms and massive reach, they can target users at the exact time they're likely to make a purchase. Whether the ad truly influenced the sale is almost irrelevant because measurement systems will often attribute the sale to their channels. In old school programmatic this trick was called cookie bombing but that practice has been superseded by the giants blanket reach bomb.

The Invisibility of Attribution and Scrutiny

One of the most concerning aspects of this control is the opacity around their attribution methods. Both Google and Meta have restricted reporting on order IDs, which would otherwise allow advertisers to link sales back to individual transactions and verify results. This lack of transparency is officially justified in the name of privacy, but it's far more likely a tactic to prevent their attribution claims from being scrutinized. Meanwhile, on the open web, where publishers and platforms still provide order-level data, the attribution process faces much more rigorous evaluation.

Despite all this, these measurement systems are very well trusted by marketers. A combination of being easy to use, known by many, a good way to communicate good news (successful marketing) being very powerful. Further these figures are often paraded in front of CEOs and CFOs by highly paid and convincing executives at these firms. Plus the agencies and consultancies who should be scrutinising them are effectively co-opted into backing them up.

To their credit, Meta does offer incrementality tools that can help measure how much of their advertising spend actually drives new conversions. However, these tools still involve Meta "marking its own homework," making independent validation difficult. Google's incrementality tools, on the other hand, falter in one major area: they do not adequately address the role of brand search. Google’s long-standing treatment of brand search as a demand-generating marketing channel is one of the most effective sleight-of-hand tricks in the marketing world. It creates the illusion of significant value, even though the vast majority of the searches and sales they generated would have happened without any ad.

The only weapon left to those experts who believe in fair measurement is to have these figures triangulated by media mix modelling and uplift testing. This is best practice and (mostly) effective (though fiddly). It is though only carried out by the very best and even then the power of the easy always on measurement acts like gravity to suck up spend away from potentially more rewarding avenues.

An Unfair Playing Field for Competitors

The combination of massive reach, advanced measurement systems, and a near monopoly on attribution creates a situation where it's virtually impossible for other players to compete with Google and Meta fairly in the direct response arena. Even if your media performs exceptionally well, you’ll lose the attribution game. As a result, these two companies are siphoning off about 60% of all marketing budgets—a figure that continues to rise.

This dominance extends beyond direct response to brand budgets, as Google and Meta increasingly claim credit for driving impactful media sales. The only real challengers to their supremacy are retail media networks, especially in the consumer goods sector, where retailers control the point of sale and can attribute conversions directly. At the very bottom of the funnel, affiliate marketing also offers some competition. Connected TV (CTV) remains a strong player in brand advertising and consideration, but even this space is not immune to the influence of the digital giants measurement dominance.

The Future Without Cookies

When Google phases out cookies entirely, the dominance of Google and Meta will only grow stronger. Publishers that rely on traditional web display advertising will find it even harder to compete in direct response campaigns.

How Can Publishers Survive?

Given the challenges outlined above, publishers need to adapt quickly. Here are a few strategies for survival:

1. Partnerships with Retail Media: Working with retail media networks offers publishers an opportunity to share in the conversion attribution and capture a piece of the performance marketing pie.
2. Video is a Must: Video content remains highly engaging and can attract brand advertising budgets that are less focused on direct conversions. High-quality video will be essential for competing with the giants.
3. Affiliate Marketing: Many publishers have already embraced affiliate marketing as a way to monetize their content. With affiliate programs, publishers can benefit from the last-click attribution model, giving them more control over their revenue streams.
4. Brand Display with Attention Metrics: For brand advertisers, display advertising still has a place, but publishers will need to show not just impressions but meaningful engagement. Metrics like viewability and attention are becoming more important, and publishers must excel here to claim their share of the market.

However, as a direct response channel, the open web is in a precarious position. Without regulatory intervention to address the fundamental flaws in attribution, it’s hard to see how the open web can survive in the DR space.

How Can Regulators Fix This?

To level the playing field, regulators need to address the root of the problem: conversion APIs. By regulating these APIs and making them accessible to all players under appropriate privacy controls, we could establish a more open and fair measurement system. This would allow all advertisers and platforms to compete on equal terms, rather than reinforcing the dominance of Google and Meta.

If regulators fail to act, the promise of a free and open internet will fade, replaced by a walled garden controlled by a few powerful corporations. It’s time for regulators to recognize that without open measurement, there is no open internet.