Ad-Tech Firms Seek Financial Relief (and to Save the Cookie)

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Amid the chaos the coronavirus crisis has created in the media industry, separate intriguing petitions aimed at the media industry’s cash-rich platforms have recently emerged.

One request asks Google, Facebook and Amazon to implement more magnanimous policies that industry insiders hope will help reduce friction on Big Tech’s payment terms. Another asks Google to shelve its plans to depreciate cookies in its Chrome browser. Both requests have, at their hearts, a sense of fear of an uncertain world left in the wake of the economic impact of the coronavirus pandemic.

Advertisers are slashing spend, impacting the entire industry and introducing a scenario where the rich are getting richer, while the poor go under. Indeed, many predict a sharp contraction in the total number of ad-tech companies in the years, if not months, ahead. These two requests are appeals to blunt the coming maelstrom.

Big Tech’s public posturing

The online media ecosystem’s duopoly of Facebook and Google have respectively pledged $100 million and $800 million ($250 million in ad credit) to small businesses—despite a report that both could take a $44 billion hit themselves—with each claiming the measures are in the spirit of hospitality.

Multiple sources believe this is a means to placate the long tail of advertisers—small mom-and-pop businesses that have to shutter their operations as entire economies go into lockdown—that collectively make up significant chunks of the behemoths’ revenue.

However, midsize players in the ecosystem are pressing for more. Industry standards body W3C , for example, is requesting that Google postpone its planned phasing out of third-party cookies in its industry-leading Chrome browser by 2022.

The move is part of Google’s plan for answering growing calls for privacy. But the use of third-party cookies in ad targeting is one of the cornerstones of programmatic advertising, and phasing them out would challenge every sector of the online economy.

Speaking earlier with Adweek, Ratko Vidakovic, founder of AdProfs, noted how the current global economic chaos could prompt Google to grant a “stay of execution.”

“One thing is that Google is not known for sticking to its timelines historically,” he noted. “They set the rules, so they can extend things, and they probably will, because it would just be too cruel to continue. Ad-tech companies are already in a bad place, and you would have to think how are they going to re-architect their systems for a cookie-less world?”

Google did not immediately respond to a request for comment.

A grisly Q2 lies ahead

Meanwhile, a second petition lobbying the industry’s largest names to extend payment terms for smaller players—many of whom rely on platforms such as Amazon, Facebook, and Google as traffic sources—also gained traction in recent days.

“Within the industry, it’s well known that Google, Facebook and Amazon have very strict policies around payment terms. … Collectively, they have millions of customers and need the cash flow in order to pay themselves, third-party publishers, and other costs of running the business,” reads a statement on the petition. “With the recent dip in the market and our time with coronavirus so far, it may be a bit less right now.”

The petition has yet to be submitted to the three industry behemoths.

Data from machine learning platform Ezoic depicts an overall decline in ad spend from mid-March through to the end of the month, traditionally a period that sees the beginning of a rise in media budgets as the industry exits the seasonal low of Q1.

More recently, a survey by the IAB found that 24% of buy-side participants paused all ad spend before the end of Q1, with some continuing the cessation into the following quarter.

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