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Morning <<First Name>>!

A few more days and we can shut the book on this dumpster fire of a year. 🎊

Sure, it'll be a while before things return to normal, but that's no reason to not kick off 2021 bigger, better and stronger!

For my last newsletter of 2020, I wanted to highlight the single most significant event that's going to follow us into 2021 and beyond.

Privacy and the future of a free and accessible internet.

The internet was made for sharing pics of cute cats. What happened?!

It's 1995.

Coolio's 'Gangsta's Paradise' is all over the radio. Caught in a loop-from-hell with the Macarena.

Everyone's watching ER, Seinfeld and Friends.

It's been decreed that Brad Pitt is the sexiest man alive!

You're a brand new publisher eagerly setting up a new website.

Because you think you have something to contribute to the world.

But beyond a mild curiosity, you're not scoring much from investors.

You also don't have any way for people to pay for reading your content.
 
Keep in mind – PayPal wasn't a thing until '98.

Back when we used to call online "The Net", advertising really was the saving grace for many entrepreneurs.

The widespread adoption of the World Wide Web – and the many benefits we enjoy today – would never have been possible without online ads.

As it happens, that's also the internet's Original Sin.

Today the internet is a marketplace built for monetising attention.
It's a model that rewards participation from users, entrepreneurs and advertisers.

Users demand to be entertained and crave convenience.

Entrepreneurs build services that deliver both – in exchange for user data.

And advertisers pay a premium to the platforms that can deliver better targeting and ad-formats.

Freemium is the defacto business model of a free internet.

Revenue from a handful of people keeps everything from Facebook, TikTok, Harvard Business Review, WhatsApp and The Guardian free for everyone else.

That's us. The masses.

But there are side-effects to keeping the internet free, accessible and loosely regulated.

Fragmentation was the biggest inefficiency of the modern ad-supported internet.

Google, Facebook and Amazon solved it by gathering unfathomable amounts of user data.

I repeat: unfathomable amounts of data.

To store just one (1) petabyte you'd need 1.5 million CD-ROM discs.

Or 500 billion pages of standard text.

Google currently processes over 20 petabytes of data. Per day.

The three musketeers of tech giants have arguably contributed more to making online advertising cheaper and more accessible than anyone else.

As a result, they've benefited millions of businesses and people.

So, we're not complaining.

But there are two major drawbacks.

The most obvious one? Online surveillance.

We sacrifice our online privacy to pay for improvements in the quality of service as well as keeping the internet free and accessible to everyone.

The second one is monetising attention.

Social media wants you to be impressed by the growth of daily active users and time spent on-platform per day.

Publishers want you to admire the growth in daily and weekly site visitors.

And to boost these numbers, they come up with ways to play on your insecurities.

By engineering short-cycle dopamine hits that keep you coming back for more.
25 years ago the first commercial website went live.

Since then ad-tech has developed a whole lot faster than consumers' understanding of privacy.

Regulation can't keep up either.

And besides The Big 3, hundreds of other businesses, like big data platform BlueKai, have benefited from the lack of regulation.

Not to mention the lack of interest in privacy from consumers.

But there's no big conspiracy here.

Because a business model built on gathering and monetising data is going to do just that.

Unless it's incentivised to stop.
GDPR was the very first regulation of its kind to introduce financial and legal consequences for abusing consumer privacy.

4 years later we have CCPA as well as a globally renewed interest in updating consumer privacy laws and regulating big tech.

This brings us to one of the biggest news in privacy this year.

Google announced that Chrome will stop supporting third-party cookies in 2022.

But Google isn't the first tech giant to stop supporting third-party cookies.

Both Mozilla and Apple did it well before Google.

But Chrome backing away from third-party cookies is a much bigger deal than Safari or Firefox.

Google's suggesting that we replace third-party cookies (without disrupting online advertising) by switching to their Privacy Sandbox.

In a nutshell, the sandbox is a collection of APIs that perform two major functions:
  • Deliver improved privacy by storing your data in your browser and not sharing it with other websites.
  • Publishers can connect to this API which delivers aggregated data to advertisers for delivering interest-based ads.

In addition, Google is proposing several other APIs – from measuring performance to minimising ad-fraud and limiting underhanded tactics – that collect user data by circumventing traditional controls.

To be fair, this is a huge leap towards better online privacy. But...

But some digital privacy groups are cautious about the impact on advertisers and how segmentation based on aggregated data using FLoC can encourage stereotyping.

Google's solution is far from perfect.

And the advertising industry isn't excited about making Google the supreme custodian of privacy and online advertising.

Obviously, it's in Google's interest that their privacy solution becomes the industry standard.

According to their own estimate, publishers can lose as much as 52% of their ad-generated revenue without third-party cookies.

Plus 71% of Google’s own revenue comes from advertising, most of which is still powered by the third-party cookie.

But unlike most publishers, Google isn't dependant on the third-party cookie alone.

Publishers and adtech were already looking for an alternative solution to the third-party cookie.

And Google's decision to retire it altogether sped up the pace of innovation.

It also started a competition for coming up with the next standard in targeted advertising.
Larger publishers, like the New York Times and The Telegraph, have already introduced new solutions for ad serving.

In the absence of a standardised system for ad serving, it's the smaller publishers, bloggers and site owners that will suffer the most.

Marketers will also need to update their tech stacks and adopt new solutions for measuring performance.

Getting rid of the third-party cookie is a victory for the users.

Again, that's us.

It may also raise the tide for quality journalism and serious journalists.

And that's good for us.

But the bigger truth is that the third-party cookie had already overstayed its welcome.

And there are more ways to resolve user identity than the third-party cookie.

The world is now mobile and connected across multiple platforms and devices.

Phones and apps are already running on first-party data.

Data privacy and advertising within that ecosystem have their own gatekeepers.

Now is as good a time as any to move on.

As Ethan Zuckerman put it, "The internet spies at us at every twist and turn not because Zuckerberg, Brin, and Page are scheming, sinister masterminds, but due to good intentions gone awry".

What we set out to do was build a tool that made it easy for everyone, everywhere to share knowledge.

Opinions and ideas.

Pictures of cute cats.

And that we've had some teething problems shouldn't really be surprising.

The Birth of WWW, as it's known, was only as recently as '89.

And just because the old business model led us down a dark alley – yeah, we screwed up the first version pretty badly – doesn't mean that it's immutable.

What we need to do now, all of us, together, is have a conversation about how we can do this better.

In case you missed

Advertising Age: Reaching consumers during pandemic-driven life transitions

Through our research, we identified 26 different life stages and transitions, spanning ages 13 to 70, and we found common traits among who the world revolves around, namely me, us and you.

  • Me: People in this life stage and transition have a primary focus around individuated identity. It can be relatively easy to meet needs surrounding identity and self-care, but more challenging to meet needs surrounding social connection.

  • Us: These people are in the process of melding identities and balancing self-care with us-care. It can be easy to meet needs surrounding social connection, but more challenging to navigate and negotiate needs surrounding identity and self-care.

  • You: People in this life stage and transition have others reliant on them, making it difficult to maintain a sense of self outside the caregiving role. It can be challenging to meet needs surrounding identity and social connection, and often very difficult to meet self-care needs. 

It’s not just transitions that have been impacted by these highly unusual times. Our research found that 85% of consumers are looking for brands to solve their problems, while 73% say they are looking for brands to enrich their lives.  

Continue reading.
 



Wired: Texas accuses Google and Facebook of an illegal conspiracy

Drawing on internal documents uncovered during its investigation, however, the Texas attorney general claims that Facebook’s leaders didn’t actually want to compete with Google; they wanted Google to buy them off. This seems to have worked. In September 2018, the companies cut a deal. Facebook, the complaint says, agreed to “curtail its header bidding initiatives” and send the millions of advertisers in its Facebook Audience Network to bid on Google’s platform. In return, Google would give the Facebook Audience Network special advantages in ad auctions, including setting aside a quota of ad placements to Facebook, even when the company didn’t make the highest bid. The agreement, the complaint says, “fixes prices and allocates markets between Google and Facebook.”

Continue reading.
 



MIT Sloan Management Review: The essence of Strategy is now how to change

[…] As a result, business leaders need to evolve how they think about strategy in two important ways to be relevant in today’s dynamic and complex environments:

  • First, their focus needs to shift from what is stable to what is changing — and specifically how these changes may neutralize historical sources of advantage and how they may give rise to new opportunities.

  • Second, they need to broaden the number of stakeholders whose needs and potential contributions are evaluated during the strategic planning, review, and refinement process.

Continue reading.
 



Europe lays out its plan to reboot digital rules and tame tech giants

The Digital Services Act (DSA) will update the bloc’s long-standing ecommerce rules while widening requirements to define areas of additional responsibility around content — such as how platforms must handle illegal content or dangerous third party products through mechanisms like standardized reporting and verification checks.

The Commission says the DSA is about bringing online rules up to speed with rules that already apply for offline business.

A second legislative package, the Digital Markets Act (DMA), proposes a system whereby a sub-set of key Internet players are deemed ‘gatekeepers’ and required to abide by specific additional conditions — with the overarching goal of fostering competition in digital markets which can be prone to ‘winner takes all’ dynamics.

The DMA is expected to apply to tech giants like Amazon and Google, though the Commission avoided naming any names today.

Continue reason on TechCrunch.
 



How leading companies are innovating remotely

Within these more successful companies, the pace of innovation is actually accelerating, leading to better outcomes for employees and customers. During the first wave of COVID-19, for example, Mastercard and Microsoft collaborated to accelerate innovation across digital commerce and startup ecosystems, PepsiCo launched a new era of operational agility, and Apple committed to becoming entirely carbon neutral.

Continue reading on MIT Sloan Management Review.

"You're on mute."

- Everyone 

Happy holidays & see you in January!
Aliyar

PS. Are we connected on LinkedIn? No? Let's remedy that, shall we?
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Thanks for reading and sharing! BR, Aliyar.
Had so many espresso shots you can't remember why I'm sending you these emails? You're receiving these email because you opted in (on my website aliyarhussain.com) to get this weekly espresso shot of knowledge, confidence and inspiration to your inbox. That was a good move, but if you want to take a bad turn down a dark alley, you can easily update your preferences using the links below. | Aliyar Hussain, Rysäkuja 3 a 5, Helsinki 00980, Finland

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