A few months ago, Spot-On did its usual post-election forecasting and predicted some rough roads ahead of political ad buyers and tech platforms.
We may have understated things.
First, take a look at this story from Bloomberg. Facebook, it seems, changed the technology underlying its political targeting – making it more difficult to find users who easily surfaced in prior election years. Somehow, they neglected to tell anyone.
It’s not your imagination. Fundraising on Facebook isn’t what it used to be. And it’s not coming back.
Now, take a look at the lawsuit that the U.S. Department of Justice and eight states have brought against Google. This is hard look at how Google dominates the ad tech world and uses that domination to its benefit.
The ad tech world likes to say that it buys and sells ads the same way that Wall Street buys and sells stocks. But Wall Street has a lot of rules and a lot of people watching them. Ad tech – not so much. So government lawyers are looking to put a few rules in place.
Looking at the ad tech “ecosystem,” the DOJ worries that since Google controls the technology that publishers use to manage and sell their inventory, it might – might – set conditions that let its customers get preferred terms compared to others. Lawyers are concerned that since Google owns the technology platform that dominates the ad auction business, that maybe – just maybe – Google could manipulate the auction process to its benefit. And, of course since Google’s technology is used to purchase ads, perhaps the firm would be skewing purchasing decisions in its favor. Perhaps.
It will take a while for the lawsuit to unfold. But there are two precedents that are worth noting given how the DOJ actions might affect Google, and by extension, every other ad seller and platform.
The one that’s bandied about most frequently by the antitrust crowd is the break-up of AT&T, which was an equipment company and a transmission company when the government stepped in with lawyers. It took a decade to settle the DOJ case that created what were once known as the “Baby Bells,” and once it was settled, the company’s affairs were overseen by U.S. District Court Judge Harold Greene, who managed the company’s compliance with a lengthy and detailed consent decree. He kept that gig for 14 years.
The other example, a bit more recent, is the DOJ action against Microsoft. Like AT&T, it dragged on for years, and while Microsoft sort of won and didn’t have to break up, it was on the short end of some epically horrible press. The trial, the press and the legal oversight combined to encourage Microsoft to back away from its consumer business to focus more on corporate clients – often to its detriment.
In other words, government lawsuits have knock-on effects. They distract management. They cost lots of money and at some point – like now – changes in product development need to get a “what if” from the lawyers. That gets amplified for political ad buying for one simple reason: it’s a very small part of the ad tech world. As a result, it’s more vulnerable to neglect. And neglect of the small stuff is the first thing that sets in once the lawyers take over.
Take the much-discussed changes that Google has said it will make to tracking users and doing away with ‘cookies’. The current version of that project has come under criticism from folks who say that – wait for it – the current design controls user information to favor Google. Hmmm. Maybe they should consult with antitrust lawyers on this one? Or run the risk of seeing DOJ’s complaint expanded? Or maybe they can just forget the whole thing?
The problem, of course, is that is Google use its dominance to set the rules, then other vendors will come up with other solutions. But since Google is the dominant player – across all aspects of ad technology – those solutions are likely to be limited in scope.
There are other changes. Google’s shedding employees – voluntarily and through lay-offs. The brand ad business is slowing as the post-pandemic economy reorients itself. And Silicon Valley, which has cruised along in a free money, low interest environment, is going though a reset. That bank failure last week? It hit Roku, a favored political ad vendor.
Regular readers know Spot-On doesn’t think relying on large ad platforms for political ad placements is a sound idea. That’s not how things work on the TV side. Or for mail. It’s time that the line between talking to voters and talking to consumers is drawn more clearly. The Google antitrust case won’t do that. But it will create an environment where change isn’t just welcome, it’s necessary.
We’ll be ready. Will you?