Wired has a story that seems slightly obscure at first, but really strikes at the cornerstone of today’s internet. The main Dutch public broadcaster, Nederlandse Publieke Omroep, ran into problems getting their visitor-tracking cookies to work within the EU’s legal limits. Instead of either slipping them in illegally or spending oodles rejigging their systems (which is how most companies do it nowadays), they just… got rid of them altogether. No more targeting viewers with “more efficient, more relevant” ads. And, contrary to every expectation (including their own), their revenues significantly improved:
Here is where the ad tech industry would have predicted calamity. A study performed by Google last year, for example, concluded that disabling cookies reduced publisher revenue by more than 50 percent. (Research by an independent team of economists, however, pegged the cookie premium at only 4 percent. Needless to say, there were methodological differences.) If the Google study was right, then NPO should have been heading for financial disaster. The opposite turned out to be true. Instead, the company found that ads served to users who opted out of cookies were bringing in as much or more money as ads served to users who opted in. The results were so strong that as of January 2020, NPO simply got rid of advertising cookies altogether. And rather than decline, its digital revenue is dramatically up, even after the economic shock of the coronavirus pandemic.
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Like many publishers, NPO relied on Google Ad Manager to sell its ad space. But now it needed an alternative platform that didn’t track users, an option Google doesn’t offer. The job of creating one fell to NPO’s advertising sales house, Ster. It only took a weekend to get started.
“We were having a chat on a Thursday,” recalls Tom van Bentheim, who at the time was Ster’s head of programmatic advertising and is now its manager of digital strategy, operations, and technology. “And we were back in the office on Monday, and [our developer] said, ‘OK, guys, I have a new custom ad server that can serve nonpersonalized ads.’”
The new server was crude, and it could only be operated by the developer who built it, meaning it couldn’t work at scale. But over the next month it allowed Ster to prove an important point: Major advertisers were still willing to buy ads that weren’t targeted based on user behavior. “I think in the first month we made 100,000 euros,” said van Bentheim. “And we were like, oh my God, this is something—we have to make it scalable.” So Ster contracted with a Dutch company, Ortec, to build a new ad server for NPO. Migrating over took a year.
Like Google’s product, the new system is automated. When a user visits an NPO page, a signal automatically goes out to advertisers inviting them to bid to show that user their ad. But there’s a crucial difference: With Google and most other ad servers, advertisers are bidding on the user. With Ster’s new ad server, advertisers are blind—they receive no information on the user. Instead, they get information about what the user is looking at.
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On the whole, the new tracking-free ad server was performing so well that NPO decided to abandon cookies entirely beginning in 2020. As of January, visitors aren’t even asked to opt in or out; the site simply doesn’t track anyone. The results have been striking. In January and February of this year, NPO says, its digital ad revenue was up 62 percent and 79 percent, respectively, compared to last year. Even after the coronavirus pandemic jolted the global economy and caused brands to drastically scale back advertising—and forcing many publications to implement pay cuts and layoffs—NPO’s revenue is still double-digit percentage points higher than last year.
The main explanation is simple: because the network is no longer relying on microtargeted programmatic ad tech, it now keeps what advertisers spend rather than giving a huge cut to a bunch of middlemen.