Covatic, a six-year-old start-up exploring the use of mobile based algorithms to bring smart personalisation to apps, was born out of a simple desire – a more ethical approach to advertising. From this came A-Type, a private-by-design solution for cross-platform connected advertising and marketing.
It offers 100% addressability and detailed audience segmentation, but their ‘on-device’ approach means no personal data is exposed or on-sold.
AdNews spoke to Nick Pinks, founder and CEO of Covatic, around the challenges broadcasters face, the regulatory developments that are driving the take-up of A-Type and the tightrope advertisers walk when prioritising personalisation.
Pinks said that both the advertising and marketing industries face the same challenge – trying to get the right message to the right people at the right time – but this is difficult to do without knowing who the end user is.
“The traditional approach has been to track somebody’s online activity, maybe you might embed a tracker (a cookie or equivalent) on a website. A lot of companies are using that approach but it is not at all desirable from a privacy standpoint and regulators, tech giants, citizens, and consumers are all beginning to say ‘no’ to such tracking. And I’d say rightly so.
“But there's got to be some way in which an agency can say ‘I've got this great product and I need Nick to see it; it's designed for Nick, Nick’s the guy who should see this product’. That’s where A-Type comes along. It can target advertising to groups of users while maintaining every user’s privacy and anonymity."
Pinks said that his experience working as a research engineer at the BBC - “one of the least advertising focused organisations on the planet” - showed him that broadcasters have the same problem as advertisers.
“They're trying to create the right editorial content for the right people, but they don't really know who they're sending it to. Broadcasting, by the very nature of the word, means ‘I speak, everybody listens’.
“In today's world, however, people say, ‘You know what? Maybe I won't listen; maybe I'll look over here or look over there’.
“We thought, instead of putting a tracker in that goes to a back-end cloud system, why don't we publish what advertisers want to say to everyone and let the devices decide for themselves if the message is relevant to their user?”
Pinks said that in taking this approach, the devices keep all the personal data, ensuring that any advertising is tailored to the individual. No personal data is exposed in the process.
“A-Type is essentially the suite of capabilities that allows you to do that. It’s the software development kit that sits on the phone, plus we've got solutions for connected TV, mobile, web and smart speakers.
“It's got analytics reporting tools as well, so we're able to report back in aggregate – using no IDs or personal data - how well that campaign is working and what sort of segments you have in your audience; basically, all the information that you might you try to get from a tracking analytics tool.”
One company who is already utilising A-Type in the UK is Bauer Media, Europe's largest commercial radio group. Octave, a joint-venture digital audio advertising platform between Bauer and News UK’s Wireless, sells the addressable inventory so that advertising is able to be targeted on the platform.
“If you're listening to a radio stream on Absolute Radio for example (one of Bauer’s radio brands), the adverts you hear may well be different for you or for me because our A-Type sitting on these mobile apps is understanding and creating meaning behind the activities that are taking place on the device.
“That may be activities like understanding where the user resides and linking that up with understanding of socioeconomic classification data.
“We're able to get a really, really rich understanding of segments, so when an ad request comes in - that moment you listen to a radio stream and it's time for an advert to play - a request goes to their ad server with some segment information from Covatic, and then their ad server is able to go ‘this is the best advert for that segment’, and it can get inserted, but no personal data is used.”
Pinks (pictured below right) said that the two big drivers in the market that are leading to the take-up of A-Type are global regulation changes and technical changes.
“In the UK, you've got GDPR and in the US, you've got the CCPA. There's a big piece of legislation in the US going through the House and the Senate right now too, which is the anti-tracking bill and it's very GDPR-esque in many ways. There are similar regulatory trends in Australia and in New Zealand as well.
“It's a regulatory change that is making everyone realise they have to be really transparent with their users, but then there's also technical changes taking place with Google and Apple.”
Pinks told AdNews that this doesn’t just comprise of Google preparing to remove cookies in 2024 and Apple already having gotten rid of them, but also the implementation of Apple’s App Tracking Transparency (ATT) in April of last year.
Marketing analytics and attribution company Singular describes ATT as ‘a change to Apple’s privacy and data collection policy that requires mobile marketers to ask consent from users in order to track them. Specifically, marketers will be required to ask user’s permission to track them across apps and websites owned by companies other than Apple’.
“All the big tech companies - Snap, YouTube, Meta etc - lost just shy of $10 billion collectively in ad revenue in Q4 of last year just from that one implementation,” said Pinks.
“That’s insane that it has such a big impact on their revenue, but it's happening quarter by quarter.
“There is real pain being felt, which is why A-Type is a global product, because anywhere that digital advertising is, it faces this huge privacy challenge and A-Type really helps with that. It doesn’t rely on cookies, doesn’t trigger ATT and doesn’t expose personal data.”
Pinks said that advertisers have to shift their mindset and that moving to an approach like A-Type puts broadcasters in a strong position, because if they’re not tracking anybody, they don’t have to get consent to track.
“All of those regulatory challenges kind of disappear because you’re not holding personal data. If somebody hacks your database and steals everything, they’ve got no personal data; they can't trade it online or sell it on the dark web as there's nothing in there that has material value.
“If we could look at it as an industry that there’s an opportunity to shift how we operate, then both the public and the broadcaster or advertiser wins out, because you can target better than you had before and get better quality data, so you can find that right moment and that right person more accurately.
“All that cookies and the technology to date tells you is what someone has viewed online. That doesn't tell you what I'm interested in doing or where I go, it just tells you some of the websites I've visited.”
Pinks said that advertising has some interesting paradigms, one of them being personalisation; balancing the idea of ‘I want to find the right advert for the right person at the right moment in time’ but with the requirement for a lot of people to view the ad to achieve reach and scale.
“I think you've got to be careful, because generally the more personally relevant the better but hyper-targeting can also be quite creepy.
“If you have the capabilities to hyper-target and utilise some of those capabilities, people will, I believe, get put off by that, so it is a balance to get right. In our toolkit, we target groups of users rather than individuals and put further checks in as well, so that you can't target groups smaller than a certain size.”
Pinks said that the clients Covatic works with are choosing them because they want an ethical solution for their advertising and their marketing but don’t want to compromise on data quality and commercial imperatives.
“Right now, the industry is saying ‘we don't like using cookies, we just have to use cookies, but if there's a better thing out there, tell me about it. Help me get to a better place’. Whether it’s agencies or broadcasters, there’s time and learning involved, so it's a small industry that needs a lot of care.”
Pinks told AdNews that Covatic is talking to brands both in Australia and New Zealand at the moment.
“The Australian media market is very similar to the UK media market in the way it sells advertising and the way it operates, so there's a lot of just very natural synergies.
“We're a young company - hungry but growing rapidly – and I think why A-Type has been so widely and positively accepted is because the actual approach we've taken is one that is private by design but requires no compromise to commercial ambitions.”
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